Document:

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

                          MUSICLAND STORES CORPORATION

                            1998 STOCK INCENTIVE PLAN

                            ADOPTED: January 26, 1998
                       SHAREHOLDER APPROVAL: MAY 11, 1998

                            AMENDED JANUARY 24, 2000,
                        SHAREHOLDER APPROVAL: MAY 8, 2000

                               AMENDED May 8, 2000

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                               Table of Contents

SECTION 1.1     Name and Purpose of the Plan............................       1

SECTION 1.2     Certain Definitions.....................................       1

SECTION 2.1     Authority and Duties of Committee.......................       4

SECTION 2.2     Delegation of Authority.................................       5

SECTION 3.1     Total Shares Limitation.................................       6

SECTION 3.2     Other Shares Limitations................................       6

SECTION 3.3     Awards Not Exercised....................................       6

SECTION 3.4     Dilution and Other Adjustments..........................       6

SECTION 4.1     Participant Eligibility.................................       7

SECTION 5.1    Stock Option Grant and Agreement.........................       7

SECTION 5.2    Stock Option Terms and Conditions........................       7

SECTION 5.3     Grant of Reload Options.................................       9

SECTION 5.4     Termination of Stock Options............................       9

SECTION 6.1     ISO Eligibility.........................................      11

SECTION 6.2     Special ISO Rules.......................................      12

SECTION 6.3     IRS Code Amendments.....................................      12

SECTION 7.1     SAR Grant and Agreement.................................      13

SECTION 7.2     Term of SARs............................................      13

SECTION 7.3     SAR Exercise............................................      13

SECTION 7.4     SAR Grant Terms and Conditions..........................      13

SECTION 8.1     Restricted Stock Grant and Agreement....................      14

SECTION 8.2     Restricted Stock Terms and Conditions...................      14

SECTION 9.1     Performance Stock Grant and Agreement...................      16

SECTION 9.2     Performance Objectives..................................      16

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SECTION 9.3     Adjustment of Performance Objectives....................      16

SECTION 9.4     Other Terms and Conditions..............................      17

SECTION 10.1     Transfer of Participant................................      18

SECTION 10.2     Effect of Leave of Absence.............................      18

SECTION 11.1     Change in Control Defined..............................      18

SECTION 11.2     Acceleration of Awards.................................      19

SECTION 12.1     Awards Deemed Non-transferable.........................      20

SECTION 12.2     Limited Transferability of NQSOs.......................      20

SECTION 13.1     Amendment and Discontinuation of Plan..................      20

SECTION 13.2    Amendment of Grants.....................................      21

SECTION 14.1     Unfunded Status of Plan................................      21

SECTION 15.1     Delivery of Stock Certificates.........................      21

SECTION 15.2    Applicable Restrictions on Stock........................      22

SECTION 15.3     Book Entry.............................................      22

SECTION 16.1     No Implied Rights to Awards or Employment..............      22

SECTION 16.2     Other Compensation Plans...............................      22

SECTION 16.3     Tax Withholding........................................      22

SECTION 16.4     Arbitration............................................      23

SECTION 16.5     Rule 16b-3 Compliance..................................      23

SECTION 16.6     Deferrals                                                    23

SECTION 16.7     Successors.............................................      23

SECTION 16.8     Severability...........................................      23

SECTION 16.9     Governing Law..........................................      23

SECTION 17.1     Plan Adoption..........................................      24

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                          MUSICLAND STORES CORPORATION
                            1998 STOCK INCENTIVE PLAN

                                    ARTICLE I
                      General Purpose of Plan; Definitions

                  SECTION 1.1.  Name and  Purpose.  The name of this plan is the
Musicland Stores Corporation 1998 Stock Incentive Plan (the "Plan"). The purpose
of the Plan is to enable Musicland Stores  Corporation and its Affiliates to (i)
attract and retain directors, officers and other employees who contribute to the
Company's success by providing incentive compensation  opportunities competitive
with other  companies,  (ii)  motivate  Plan  participants  to achieve long term
success and growth of the  Company,  and (iii) align the  interests  of the Plan
participants with those of the Company's public shareholders.

                  SECTION 1.2.  Certain Definitions.  For purposes  of the Plan,
the following terms are defined as set forth below:

                  (a)  "Affiliate"  means any  corporation,  partnership,  joint
         venture or other  entity  controlling,  controlled  by, or under common
         control with the Company as determined by the Board of Directors in its
         discretion.

                  (b) "Award" means any grant under this Plan of a Stock Option,
         Stock Appreciation Right,  Restricted Stock or Performance Stock to any
         Plan participant.

                  (c)  "Board of  Directors"  means the  Board of  Directors  of
         Musicland Stores Corporation, with any individual members thereof being
         referred to as a "Director."

                  (d)  "Cause"  means any  failure by a  participant  to perform
         substantially  his or her duties  with the  Company,  after  reasonable
         notice to the  participant  of such  failure,  conduct by a participant
         that is in  material  competition  with the  Company  or  conduct  by a
         participant  that breaches his or her duty of loyalty to the Company or
         that is materially  injurious to the Company,  monetarily or otherwise,
         which  conduct may include,  but is not limited to, (i)  disclosing  or
         misusing any confidential  information  pertaining to the Company or an
         Affiliate;  (ii)  attempting,  directly  or  indirectly,  to induce any
         employee or agent of the  Company to be  employed  or perform  services
         elsewhere  or  (iii)  disparaging  the Company or any of its respective
         officers or directors. The determination of whether any conduct, action
         or failure to act  constitutes  "Cause" is made by the Committee in its
         sole discretion,  provided

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         that, with respect to any Director,  "Cause"  only refers to removal of
         the Director by the shareholders for cause under Delaware law.

                  (e)  "Code"  means  the  Internal  Revenue  Code of  1986,  as
         amended.  A reference to any provision of the Code includes a reference
         to  any  regulation   promulgated   thereunder  and  to  any  successor
         provision.

                  (f)  "Committee"  means the entity  administering  the Plan as
         provided  in  Section  2.1 of the Plan or, if none has been  appointed,
         then the Board of Directors as a whole.

                  (g)  "Company"   means   Musicland   Stores   Corporation,   a
         corporation  organized  under the laws of the State of Delaware (or any
         successor corporation) and its consolidated subsidiaries.

                  (h)  "Date of Grant"  means  the date on which  the  Committee
         grants an Award or a future date that the  Committee  designates at the
         time of the Award.

                  (i)  "Disability"  means a  participant's  physical  or mental
         incapacity  resulting from personal injury,  disease,  illness or other
         condition,  which (i)  prevents him or her from  performing  his or her
         duties for the Company,  as the same is  determined by the Committee or
         its designee  after  reviewing  any medical  evidence or requiring  any
         medical  examinations  which the  Committee or its  designee  considers
         necessary to its  determination,  and (ii) results in a termination  of
         his or her employment with the Company.

                  (j) "Early  Retirement" means a participant's  retirement from
         active  employment  with the  Company on or after the age of 60 with at
         least ten years of  service  or on or after the age of 55 with at least
         15 years of service.

                  (k) "ERISA" means the  Employee Retirement Income Security Act
         of 1974, as amended.

                  (l) "Exercise Price" means  the purchase  price of a  share of
         Stock covered by a Stock Option.

                  (m) "Fair Market  Value"  means the last closing  price of the
         Stock  (as  reported  on the  Composite  Tape  of the  New  York  Stock
         Exchange,  Inc. or as  reported  by a  successor  exchange on which the
         Stock may be listed)  prior to the Date of Grant,  or the closing price
         on the Date of Grant if the grant is made after the  market  closes for
         such day, or the fair market  value as  determined  by any other method
         adopted by the  Committee,  from time to time,  which the

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         Committee may deem  appropriate  under the  circumstances, or as may be
         required in order to comply with or to conform to the  requirements  of
         applicable laws or regulations.

                  (n)  "Incentive  Stock  Option" or "ISO" means a Stock  Option
         that is  designated  by the  Committee as such at the time of grant and
         which  meets  the  requirements  of  Section  422 of the  Code,  or any
         successor   provision,   and  therefore  qualifies  for  favorable  tax
         treatment.

                  (o) "Nonqualified Stock Option" or "NQSO" means a Stock Option
         that  does not meet the  requirements  of  Section  422 of the Code and
         which is governed by Section 83 of the Code.

                  (p) "Normal   Retirement"   means   retirement   from   active
         employment with the Company on or after the age of 65.

                  (q)  "Outside   Director"  means  a  Director  who  meets  the
         definition  of "outside  director"  set forth in Section  162(m) of the
         Code and  regulations  promulgated  thereunder  and the  definition  of
         "non-employee  director"  set forth in Rule 16b-3 under the  Securities
         Exchange Act of 1934, as amended, or any successor  definitions adopted
         by the Internal Revenue Service and Securities and Exchange Commission,
         respectively.

                  (r) "Performance Stock" is defined in Article IX.

                  (s) "QUADRO" means  a qualified  domestic  relations  order as
         defined by the Code or Title I of ERISA.

                  (t) "Reload Option" is defined in Section 5.3.

                  (u) "Retirement"  means  both  Normal  Retirement  and   Early
         Retirement.

                  (v) "Restricted Stock" is defined in Article VIII.

                  (w) "Stock" means the Common  Stock, par value $.01 per share,
         of Musicland Stores Corporation.

                  (x)  "Stock  Appreciation  Rights"  or "SAR"  means  the right
         pursuant to an Award  granted  under Article VII herein to surrender to
         the  Company  all or a portion  of a Stock  Option in  exchange  for an
         amount,  paid in cash or in Stock,  equal to the excess of (i) the Fair
         Market Value,  as of the date such Stock Option or such portion thereof
         is surrendered,  of the shares of Stock covered by

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         such Stock  Option or  such  portion  thereof,  over (ii) the aggregate
         exercise price of such Stock Option or such portion thereof.

                  (y) "Stock  Option"  means any right to  purchase a  specified
         number  of  shares  of  Stock at a  specified  price  which is  granted
         pursuant  to  Articles V and VI herein  and may be either an  Incentive
         Stock Option, a Nonqualified Stock Option or a Reload Option.

                  (z)  "Vested"  means  that  the  time  has  been  reached,  in
         connection with Stock Options and Stock Appreciation  Rights,  when the
         option to purchase stock first becomes exercisable and any accompanying
         appreciation  right may be  surrendered  for payment and, in connection
         with  Restricted  Stock,  when the  shares  are no  longer  subject  to
         forfeiture and restrictions on transferability.

                                   ARTICLE II
                                 Administration

                  SECTION 2. 1. Authority and Duties of the Committee.

                  (a) The Plan is  administered  by a Committee of not less than
         two  Directors who are appointed by the Board of Directors and serve at
         its pleasure.  Unless  otherwise  determined by the Board of Directors,
         all of the members of the Committee are Outside Directors.

                  (b) The  Board  of  Directors  as a  whole  grants  Awards  to
         Directors who are not employed by the Company and  determines all terms
         and conditions relating to such Awards.

                  (c) The  Committee has the power and authority to grant Awards
         pursuant  to the  terms of the Plan to  officers  and  other  employees
         (including those who also serve as Directors).

                  (d) In particular, the Committee has the authority, subject to
         any limitations specifically set forth in this Plan, to:

                      (i)    select the  officers and  other  employees  of  the
                  Company and its Affiliates to whom Awards are granted;

                      (ii)   determine  the  types  of  Awards  granted  and the
                  timing of such Awards;

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                      (iii)  determine  the  number  of  shares to be covered by
                  each Award granted hereunder;

                      (iv)   determine  the  other  terms  and  conditions,  not
                  inconsistent  with the  terms  of the Plan  and any  operative
                  employment agreement, of any Award granted hereunder;

                      (v)    determine  whether  any  conditions  or  objectives
                  related to Awards have been met;

                      (vi)   subsequently   modify   or  waive   any  terms  and
                  conditions of Awards, not  inconsistent with the terms  of the
                  Plan and any operative employment agreement;

                      (vii)  determine  whether,  to what  extent and under what
                  circumstances, Stock and other amounts payable with respect to
                  any Award is deferred  either automatically or at the election
                  of the participant;

                      (viii) adopt,  alter and repeal such administrative rules,
                  guidelines  and  practices  governing  the  Plan  as it  deems
                  advisable from time to time;

                      (ix)   interpret the terms and provisions  of the Plan and
                  any Award (and any agreements relating thereto); and

                      (x)    otherwise supervise the administration of the Plan.

                  (e)  All  decisions  made  by the  Committee  pursuant  to the
         provisions of the Plan are final and binding on all persons,  including
         the Company, its shareholders and Plan participants.

                  SECTION  2.2.  Delegation  of  Authority.  The  Committee  may
delegate its powers and duties under the Plan to the Chief Executive  Officer of
the Company,  subject to such terms, conditions and limitations as the Committee
may establish in its sole discretion,  provided, however, that the Committee may
not  delegate  its powers and duties under the Plan with regard to Awards to the
Company's  executive  officers.  In addition,  the Committee may delegate to any
other  person  or  persons  ministerial  duties,  and it may  employ  attorneys,
consultants, accountants or other professional advisers.

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                                   ARTICLE III
                              Stock Subject to Plan

                  SECTION  3.1.   Total  Shares   Limitation.   Subject  to  the
provisions of this Article III, the maximum  number of shares of Stock  reserved
and available for  distribution  under this Plan is 3,700,000  shares plus up to
500,000  additional  shares, to the extent authorized by the Board of Directors.
Such shares may consist,  in whole or in part, of authorized and unissued shares
or treasury shares.

                  SECTION 3.2. Other Limitations.

                  (a) ISO  Limitation.  The  maximum  number  of shares of Stock
         available with respect to all options  granted under this Plan that are
         intended to be Incentive Stock Options is 750,000 shares.

                  (b) Stock Award Limitation.  The maximum  number  of shares of
         Stock available  with respect  to all Restricted  Stock and Performance
         Stock Awards granted under this Plan is 500,000 shares.

                  (c) Participant Limitation.  The aggregate number of shares of
         Stock underlying  Awards granted under this Plan to any one participant
         in any calendar year,  regardless of whether such awards are thereafter
         canceled,  forfeited or terminated,  cannot exceed 500,000 shares.  The
         foregoing  annual  limitation  is  intended to include the grant of all
         Awards representing "qualified  performance-based  compensation" within
         the meaning of Section 162(m) of the Code.

                  SECTION  3.3.   Awards  Not   Exercised.   In  the  event  any
outstanding Award, or portion thereof,  expires,  or is terminated,  canceled or
forfeited,  the shares of Stock that would otherwise be issuable with respect to
the unexercised portion of such expired, terminated, canceled or forfeited Award
are available for subsequent Awards under the Plan.

                  SECTION 3.4. Dilution and Other Adjustments. In the event that
the Committee determines that any dividend or other distribution (whether in the
form of cash,  Stock,  other  securities or other  property),  recapitalization,
stock  split,  reverse  stock  split,  reorganization,   merger,  consolidation,
split-up,  spin-off,  combination,  repurchase  or  exchange  of  Stock or other
securities  of the  Company,  issuance of  warrants or other  rights to purchase
Stock or other securities of the Company or other similar corporate  transaction
or event  affects  the  Stock  such  that an  adjustment  is  determined  by the
Committee to be appropriate  in order to prevent dilution or enlargement  of the
benefits  or  potential  benefits intended  to be made available under the Plan,
then the  Committee may, in such manner as it deems equitable, adjust any or all
of (i) the  number  and type of  Stock (or other securities  or other  property)
which

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thereafter may be made the subject of Awards, (ii) the number and type of  Stock
(or other securities or other property) subject to outstanding Awards, (iii) the
limitations  set forth above,  and  (iv) the purchase  or exercise price  or any
performance  measure  with respect  to any Award;  provided,  however,  that the
number of shares  of Stock or other  securities covered by any Award or to which
such Award relates is always a whole number.

                                   ARTICLE IV
                                  Participants

                  SECTION  4. 1.  Eligibility.  Directors,  officers  and  other
regular  active  employees  of the Company and its  Affiliates  are  eligible to
participate in this Plan by receiving,  as a reward for past  performance and as
an  incentive  for future  performance,  Awards  under the Plan.  Other than for
non-employee  Directors whose Awards are determined by the Board of Directors as
a  whole,  the  Plan  participants  may be  selected  from  time  to time by the
Committee  in its sole  discretion,  or, with  respect to  employees  other than
executive  officers,  by the Chief Executive Officer with proper delegation from
the  Committee.  (See  Article  XVII of the Plan  with  respect  to  shareholder
approval requirement.)

                                    ARTICLE V
                               Stock Option Awards

                  SECTION  5.1.  Option Grant and  Agreement.  Each Stock Option
granted  under the Plan (or  delegation  of  authority  to the  Chief  Executive
Officer to grant Stock Options) will be evidenced by minutes of a meeting, or by
a unanimous written consent without a meeting, of the Committee and by a written
agreement  dated as of the Date of Grant and  executed by the Company and by the
Plan participant. With respect to non-employee Directors, the Board of Directors
may establish by resolution  or unanimous  consent a formula for periodic  Stock
Option grants and may change the formula at any time and from time to time.

                  SECTION 5.2.  Terms and  Conditions  of Grants.  Stock Options
granted under the Plan are subject to the following terms and conditions and may
contain such additional terms,  conditions, restrictions and  contingencies with
respect to  exercisability  and/or with respect to the shares  of Stock acquired
upon exercise,  not inconsistent  with the  terms of the Plan and  any operative
employment agreement, as the Committee deems desirable:

                  (a) Exercise  Price.  The Exercise  Price fixed at the time of
         grant will not be less than 100% of the Fair Market  Value of the Stock
         as of the  Date  of  Grant.  If a  variable  Exercise  Price  price  is
         specified at the time of grant, the

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         Exercise  Price  may  vary  pursuant  to  a  formula  or  other  method
         established  by the  Committee which provides a  floor  of Fair  Market
         Value  as of the  Date  of Grant.  Unless pursuant to  the antidilution
         provisions of Section  3.4 of this Plan, no subsequent  amendment of an
         outstanding  Stock Option may reduce the Exercise Price to be less than
         100% of the Fair Market Value of the Stock as of the Date of Grant.

                  (b) Option  Term.  Any  unexercised  portion of a Stock Option
         granted  hereunder  expires at the end of the stated  term of the Stock
         Option.  The Committee  determines the term of each Stock Option at the
         time of grant and may thereafter extend the term in its discretion.  If
         a definite term is not specified by the Committee at the time of grant,
         then the term is deemed to be ten years.

                  (c)  Vesting.   Stock  Options,   or  portions  thereof,   are
         exercisable at such time or times as determined by the Committee in its
         discretion at or after grant. If the Committee  provides that any Stock
         Option   becomes   Vested  over  a  period  of  time,  in  full  or  in
         installments,  the Committee  may waive such Vesting  provisions at any
         time.  If no other  Vesting  provision is specified by the Committee at
         the time of  grant,  then the  Stock  Option is deemed to Vest in three
         installments  (as equal as possible to the whole  share) on the second,
         third and fourth  anniversaries of the Date of Grant.  (Also see Change
         in Control provisions in Article XI.)

                  (d) Method of  Exercise.  Vested  portions of any Stock Option
         may be exercised in whole or in part at any time during the option term
         by giving  written  notice of exercise to the  Company  specifying  the
         number of shares to be  purchased.  The notice must be  accompanied  by
         payment in full of the  Exercise  Price,  along with any  required  tax
         withholding  pursuant to Section 16.3 of this Plan.  The Exercise Price
         may be paid:

                      (i)    in cash in any manner satisfactory to the Company;

                      (ii)   by  tendering  (by either actual delivery of shares
                  or by  attestation)  previously owned shares of Stock acquired
                  at least  six months  prior  to  such  tender  and  having  an
                  aggregate  Fair Market Value on the date of exercise  equal to
                  the  Exercise  Price applicable to such Stock Option exercise,
                  and,  with  respect  to  the  exercise  of  NQSO's,  including
                  Restricted  Stock granted at  least six  months prior  to such
                  tender;

                      (iii)  by a combination of cash and Common Stock; or

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                      (iv)   by  authorizing  a broker to sell, on behalf of the
                  participant,   the  appropriate  number  of  shares  otherwise
                  issuable  to the  participant  upon  the  exercise  of a Stock
                  Option with the  proceeds of sale  applied to pay the Exercise
                  Price  and tax  withholding,  provided  that the  Company  has
                  implemented such a broker-handled same day sale program.

         If the Exercise Price of a NQSO is paid by tendering  Restricted Stock,
         then the  shares  of Stock  received  upon the  exercise  will  contain
         identical  restrictions as the Restricted  Stock so tendered.  Required
         tax  withholding can only be paid by cash received from the optionee or
         through a same day sale transaction.

                  (e) Issuance of Stock. No shares of Stock will be issued until
         full  payment  has been  made.  An  optionee  will  have the  rights to
         dividends  and other  rights of a  shareholder  with  respect to shares
         subject to a Stock Option only after the optionee has become the holder
         of record of such shares  issued upon the proper  exercise of the Stock
         Option.

                  (f) Form.  Unless the grant of a Stock Option is designated at
         the  time of  grant as  an ISO, it is  deemed to be  an NQSO.  ISOs are
         subject to the terms and conditions stated in Article VI of this Plan.

                  SECTION  5.3.  Grant of Reload  Options.  If the  Committee so
provides in its  discretion at or after grant,  an optionee who exercises all or
part of a  Nonqualified  Stock  Option by  payment  of the  Exercise  Price with
previously  owned shares of Stock will be granted an additional  Stock Option (a
"Reload  Option")  for a number of shares of Stock equal to the number of shares
tendered in the exercise of the original Stock Option.  Each Reload Option  will
have a  Date of Grant which is the date as of which the original Stock Option to
which it applies is exercised and will Vest on the six-month anniversary of Date
of Grant.  The Reload Option will have the same  expiration and  all other terms
and conditions as the original Stock Option to which it applies, except that the
Exercise Price will be equal to at least 100% of the Fair Market Value as of the
Date of Grant.

                  SECTION 5.4. Termination of Grants Prior to Expiration. Unless
otherwise provided in an employment agreement entered into between the holder of
a Stock Option and the Company and approved by the  Committee,  either before or
after the Date of Grant,  or otherwise  specified at or after the time of grant,
and  subject to Article VI hereof  with  respect to ISOs,  the  following  early
termination provisions apply to all Stock Options:

                  (a) Termination by Death.  If an optionee's  employment by the
         Company or its Affiliates terminates by reason of his or her death, all
         Stock  Options  held by such  optionee  immediately  become  Vested but
         thereafter  may

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         only  be  exercised  (by the  legal  representative  of the  optionee's
         estate, or by the legatee or heir of the optionee pursuant to a will or
         the laws of  descent  and distribution) for a period of three years (or
         such other  period as the Committee may specify at or after the time of
         grant)  from the date of such  death,  or  until the  expiration of the
         original term of the Stock Option, whichever period is the shorter.

                  (b)  Termination  by Reason of  Disability.  If an  optionee's
         employment by the Company or its Affiliates terminates by reason of his
         or her Disability,  all Stock Options held by such optionee immediately
         become  Vested but  thereafter  may only be  exercised  for a period of
         three years (or such other  period as the  Committee  may specify at or
         after  the  time  of  grant)  from  the  date of  such  termination  of
         employment,  or until the  expiration of the original term of the Stock
         Option,  whichever  period is the shorter.  If the optionee dies within
         such  three-year  period  (or such  other  period as  applicable),  any
         unexercised  Stock  Option held by such  optionee  will  thereafter  be
         exercisable by the legal representative of the optionee's estate, or by
         the legatee or heir of the  optionee  pursuant to a will or the laws of
         descent  and  distribution,  for the  greater of the  remainder  of the
         three-year  period (or other period as  applicable)  or for a period of
         twelve  months from the date of such  death,  but in no event shall any
         portion of the Stock Option be  exercisable  after its original  stated
         expiration date.

                  (c)  Termination  by Reason of  Retirement.  If an  optionee's
         employment by the Company or its Affiliates terminates by reason of his
         or her Retirement,  all Stock Options held by such optionee immediately
         become  Vested but  thereafter  may only be  exercised  for a period of
         three years (or such other  period as the  Committee  may specify at or
         after  the  time  of  grant)  from  the  date of  such  termination  of
         employment,  or until the  expiration of the original term of the Stock
         Option,  whichever  period is the shorter.  If the optionee dies within
         such  three-year  period  (or such  other  period as  applicable),  any
         unexercised  Stock  Option held by such  optionee  will  thereafter  be
         exercisable by the legal representative of the optionee's estate, or by
         the legatee or heir of the  optionee  pursuant to a will or the laws of
         descent  and  distribution,  for the  greater of the  remainder  of the
         three-year  period (or such other period as applicable) or for a period
         of twelve months from the date of such death, but in no event shall any
         portion of the Stock Option be  exercisable  after its original  stated
         expiration date.

                  (d)  Involuntary  Termination  for  Cause.  If  an  optionee's
         employment by the Company or its  Affiliates  is terminated  for Cause,
         all Stock Options (or portions  thereof) which have not been exercised,
         whether  Vested or not, are  automatically  forfeited upon the close of
         business on the last day of employment.

                                      10
<PAGE>

                  (e) Other  Termination.  If an  optionee's  employment  by the
         Company or its Affiliates terminates, voluntarily or involuntarily, for
         any reason other than death,  Disability,  Retirement or for Cause, any
         Vested  portions of Stock  Options held by such optionee at the time of
         termination  may be  exercised  by the  optionee  for a period of three
         months (or such other period as the  Committee  may specify at or after
         the  time of  grant)  from the date of such  termination  or until  the
         expiration of the original term of the Stock Option,  whichever  period
         is the  shorter.  No portion of any Stock Option which is not Vested at
         the time of such termination will thereafter become Vested.

                  (f) Non-employee Directors. If a non-employee Director dies or
         becomes  disabled  (as  determined  by the  Board of  Directors)  while
         serving as a member of the Board of  Directors,  all Stock Options held
         by such Director  immediately  become Vested but thereafter may only be
         exercised  for a period  of three  years (or such  other  period as the
         Board of Directors  may specify at or after the time of grant) from the
         date of such  death or  resignation  due to  disability,  or until  the
         expiration of the original term of the Stock Option,  whichever  period
         is the shorter. If a non-employee Director's resignation (or failure to
         stand for reelection)  occurs for any other reason, any Vested portions
         of Stock  Options held by the Director at the time of  resignation  (or
         failure to stand for reelection) may be exercised for a period of three
         months (or such other period as the Board of  Directors  may specify at
         or after the time of grant) from such date or until the  expiration  of
         the original term of the Stock Option, whichever period is the shorter.
         No portion of any Stock  Option which is not Vested at the time of such
         resignation (or failure to stand for reelection) will thereafter become
         Vested.

                                   ARTICLE VI
               Special Rules Applicable to Incentive Stock Options

                  SECTION 6.1. Eligibility.  Notwithstanding any other provision
of this Plan to the  contrary,  an ISO may only be granted to full or  part-time
employees  (including  officers and  directors  who are also  employees)  of the
Company or of an  Affiliate,  provided  that the Affiliate is also a "subsidiary
corporation" within the meaning of Section 424(f) of the Code.

                                       11
<PAGE>

                  SECTION 6.2 Special ISO Rules.

                  (a)  Term.  No ISO may be  exercisable  on or after  the tenth
         anniversary of the Date of Grant,  and no ISO may be granted under this
         Plan on or after the tenth  anniversary  of the  effective  date of the
         Plan. (See Section 17.1 of the Plan.)

                  (b) Ten  Percent  Stockholder.  No grantee  may receive an ISO
         under the Plan if such grantee, at the time the Award is granted,  owns
         (after  application  of the rules  contained  in Section  424(d) of the
         Code) stock possessing more than 10% of the total combined voting power
         of all classes of the Company's stock,  unless (i) the option price for
         such ISO is at least 110% of the Fair Market Value on the Date of Grant
         and (ii) such ISO is not exercisable on or after the fifth  anniversary
         of the Date of Grant.

                  (c)  Limitation  on Grants.  The  aggregate  fair market value
         (determined  with  respect to each ISO at the time such ISO is granted)
         of the shares of Stock with respect to which ISOs are  exercisable  for
         the first time by a grantee  during any calendar  year (under this Plan
         or any other plan adopted by the Company) shall not exceed $100,000.

                  (d)  Non-transferability.  No  ISO  granted  hereunder  may be
         transferred except by will or by the laws of descent and distribution.

                  (e) Termination of Employment.  No ISO may be exercisable more
         than three months  following  termination  of employment for any reason
         (including  retirement)  other than death or disability,  nor more than
         one  year  following  termination  of  employment  for  the  reason  of
         disability (as defined in Section 422 of the Code).

                  (f) Holding Period. Stock acquired upon the exercise of an ISO
         must be held for a minimum  period of two years  from the Date of Grant
         and one year  from  the date of  exercise,  otherwise  the  disposition
         constitutes a taxable "disqualifying disposition."

                  SECTION  6.3.  Subject  to  Code  Amendments.   The  foregoing
limitations  are designed to comply with the  requirements of Section 422 of the
Code and are  automatically  amended or modified to comply  with  amendments  or
modifications to Section 422 or any successor provisions. Any ISO which fails to
comply  with  Section 422 of the Code is  automatically  treated as a NQSO under
this Plan.

                                       12
<PAGE>

                                   ARTICLE VII
                            Stock Appreciation Rights

         SECTION 7.1. SAR Grant and Agreement. Stock  Appreciation Rights may be
granted in  conjunction  with  all or part of any Stock Option granted under the
Plan,  either at the same time or after the grant of the Stock  Option. Each SAR
granted  under the  Plan (or  delegation of  authority  to the  Chief  Executive
Office  to  grant  SARs)  will be  evidenced by  minutes of  a meeting, or  by a
unanimous  written  consent without a meeting, of the Committee and by a written
agreement  dated as of the Date of Grant and executed by the Company and  by the
Plan participant.

         SECTION 7.2. Term of SARs.  A  Stock  Appreciation Right, or applicable
portion  thereof, granted with respect to a given Stock Option or potion thereof
terminates and is no longer  exercisable upon the termination or exercise of the
related Stock Option, or applicable portion thereof.

         SECTION 7.3. SAR Exercise.  A Stock Appreciation Right may be exercised
by an optionee  by  surrendering  the applicable  portion of the  related  Stock
Option.  Stock Options which have been so surrendered, in whole or in part,  are
no longer exercisable to the extent the related Stock  Appreciation  Rights have
been exercised  and are  deemed to  have been  exercised  for the purpose of the
limitation  set forth in  Article  III of this  Plan on the  number of shares of
Stock to be  issued  under  the Plan,  but only to the  extent of the  number of
shares of Stock actually issued under the Stock  Appreciation  Right at the time
of exercise. Upon exercise and surrender, the optionee is entitled to receive an
amount  determined in the manner prescribed in Section 7.4 below.  However,  the
participant  is responsible  for the payment of any required tax  withholding as
provided in Section 16.3 herein.

                  SECTION  7.4.  Terms  and  Conditions  of  SAR  Grants.  Stock
Appreciation Rights are subject to the following terms and conditions:

                  (a) Stock  Appreciation  Rights are  exercisable  only at such
         time or times and to the  extent  that the Stock  Options to which they
         relate are Vested and  exercisable in accordance with the provisions of
         Article V of this Plan or otherwise as the  Committee  may determine at
         or after the time of grant;

                  (b)  Upon  the  exercise  of a Stock  Appreciation  Right,  an
         optionee is entitled to receive up to, but not more than,  an amount in
         cash or shares of Stock equal in value to the excess of the Fair Market
         Value of one share of Stock over the Exercise Price per share specified
         in the  related  Stock  Option  multiplied  by the  number of shares in
         respect of which the Stock  Appreciation  Right is exercised,  with the
         Committee  having the right in its  discretion to determine the form of
         payment;

                                      13
<PAGE>

                  (c) Stock  Appreciation  Rights are transferable only when and
         to the extent that the  underlying  Stock Option would be  transferable
         under Article XII of this Plan; and

                  (d) Such other terms and conditions, not inconsistent with the
         provisions of this Plan and any operative employment agreement,  as are
         determined from time to time by the Committee.

                                  ARTICLE VIII
                             Restricted Stock Awards

         SECTION 8.1.  Restricted  Stock Grant and Agreement.  Restricted  Stock
Awards  consist  of  shares  of Stock  which  are  issued  by the  Company  to a
participant  at a purchase price which may be well below their fair market value
but are subject to forfeiture and  restrictions  on their sale or other transfer
by the  participant.  Each Restricted Stock Award granted under the Plan will be
evidenced by minutes of a meeting,  or by a unanimous  written consent without a
meeting,  of the  Committee and by a written  agreement  dated as of the Date of
Grant and  executed by the Company  and by the Plan  participant.  The timing of
Restricted  Stock  Awards  and the  number of shares  to be issued  (subject  to
Section  3.2(b)  of this  Plan)  is to be  determined  by the  Committee  in its
discretion.  By accepting a grant of Restricted Stock, the participant agrees to
remit to the  Company  when due any  required  tax  withholding  as  provided in
Section 16.3 herein.

                  SECTION 8.2. Terms and Conditions of Restricted  Stock Grants.
Restricted  Stock granted  under the Plan is subject to the following  terms and
conditions,  which need not be the same for each  participant,  and may  contain
such  additional   terms,   conditions,   restrictions  and   contingencies  not
inconsistent with the terms of the Plan and any operative employment  agreement,
as the Committee deems desirable:

                  (a) Purchase  Price.  The Committee  determines  the prices at
         which  shares of  Restricted  Stock are to be issued to a  participant,
         which may vary from time to time  and among participants and which  may
         be below the Fair  Market Value of such shares of Stock at the date  of
         grant but may not be less than the par value of the Stock.

                  (b) Restrictions.  All shares of Restricted Stock issued under
         this Plan will be subject to such  restrictions  as the  Committee  may
         determine, including, without limitation, the following:

                                      14
<PAGE>

                      (i)    a prohibition against the sale, transfer, pledge or
                  other  encumbrance  of the  shares of  Restricted  Stock, such
                  prohibition  to lapse at such  time or times as the  Committee
                  determines (whether in installments, at the time of the death,
                  Disability  or  Retirement  of the holder of such  shares,  or
                  otherwise,  but see  Change in Control  provisions  in Article
                  XI);

                      (ii)   a requirement  that the  participant  forfeit  such
                  shares of Restricted Stock in the event of  termination of the
                  participant's employment prior to Vesting; and

                      (iii)  a   prohibition    against   employment   of    the
                  participant   by  any   competitor   of  the  Company  or  its
                  affiliates, or against dissemination by the participant of any
                  secret or confidential information belonging to the Company or
                  a subsidiary of the Company.

         The Committee may at any time waive such restrictions or accelerate the
         date or dates on which the  restrictions  will lapse.  However,  if the
         Committee  determines  that  restrictions  lapse upon the attainment of
         specified performance objectives then the provisions of Section 9.2 and
         9.3 below will apply.

                  (c)  Delivery of Shares.  Shares of  Restricted  Stock will be
         registered in the name of the participant and deposited,  together with
         a  stock  power  endorsed  in  blank,  with  the  Company.   Each  such
         certificate will bear a legend in substantially the following form:

                  "The  transferability  of this  certificate  and the shares of
                  Common  Stock  represented  by it are subject to the terms and
                  conditions  (including  conditions of forfeiture) contained in
                  the 1998 Stock Incentive Plan of the Company, and an agreement
                  entered into between the registered  owner and the Company.  A
                  copy of the Plan and agreement is on file in the office of the
                  Secretary of the Company."

         At the end of any time  period  during  which the shares of  Restricted
         Stock are subject to  forfeiture  and  restrictions  on transfer,  such
         shares will be delivered free of all restrictions to the participant.

                  (d) Forfeiture of Shares. If a participant who holds shares of
         Restricted Stock fails to satisfy the restrictions and other conditions
         relating to the  Restricted  Stock prior to the lapse or waiver of such
         restrictions and conditions, the participant is required to forfeit the
         shares and  transfer  them back to the Company in exchange for a refund
         of the consideration paid by the participant or such other amount which
         may be specifically set forth in the Award agreement.

                                      15
<PAGE>

                  (e) Voting and Other Rights. During any period in which shares
         of  Restricted  Stock are subject to  forfeiture  and  restrictions  on
         transfer,  the participant  holding such  Restricted  Stock has all the
         rights of a  stockholder  with  respect to shares of Stock,  including,
         without  limitation,  the  right to vote such  shares  and the right to
         receive any dividends paid with respect to such shares.

                                   ARTICLE IX
                            Performance Stock Awards

                  SECTION  9.1.   Performance  Stock  Grant  and  Agreement.   A
Performance  Stock  Award is a right to  receive  shares of Stock in the  future
conditioned  upon the  attainment of specified  performance  objectives and such
other conditions, restrictions and contingencies as the Committee may determine.
Each Performance Stock Award granted under the Plan will be evidenced by minutes
of a meeting,  or by a  unanimous  written  consent  without a  meeting,  of the
Committee and by a written  agreement dated as of the Date of Grant and executed
by the  Company and by the Plan  participant.  The timing of  Performance  Stock
Awards and the number of shares covered by each Award (subject to Section 3.2(b)
of this  Plan)  is to be  determined  by the  Committee  in its  discretion.  By
accepting a grant of Performance  Stock, the participant  agrees to remit to the
Company  when due any  required  tax  withholding  as provided  in Section  16.3
herein.

                  SECTION 9.2. Performance Objectives. At the time of grant of a
Performance  Stock Award, the Committee will specify the performance  objectives
which,  depending on the extent to which they are met, will determine the number
of shares  that will be paid out to the  participant.  The  Committee  will also
specify the time period or periods (the  "Performance  Period") during which the
performance  objectives must be met. The performance objectives and periods need
not be the same for each participant nor  for each grant.  The Committee may use
performance  objectives  based  on one or  more of the following  targets:  cash
generation, profit, revenue, market share, profit  or  investment return ratios,
shareholder  returns  and/or  specific,  objective and measurable  non-financial
objectives. The Committee may designate a single goal criterion or multiple goal
criteria for performance  measurement purposes,  with  the  measurement based on
absolute  Company or business unit performance and/or on performance as compared
with that of other publicly-traded companies.

                  SECTION  9.3.  Adjustment  of  Performance   Objectives.   The
Committee  may modify,  amend or  otherwise  adjust the  performance  objectives
specified for  outstanding  Performance  Stock Awards if it  determines  that an
adjustment  would be consistent  with the objectives of the Plan and taking into
account the interests of the  participants  and the public  shareholders  of the
Company.  Any such adjustments must

                                      16
<PAGE>

comply with the requirements of Section 162(m) of the Code.  The types of events
which could cause an  adjustment in the performance  objectives include, without
limitation,  accounting changes which substantially  affect the determination of
performance  objectives,  changes in applicable laws or regulations which affect
the  performance  objectives,  and divisive corporate reorganizations, including
spin-offs and other distributions of property or stock.

                  SECTION 9.4.  Other Terms and  Conditions.  Performance  Stock
Awards granted under the Plan are subject to the following  terms and conditions
and  may  contain  such   additional   terms,   conditions,   restrictions   and
contingencies  not  inconsistent  with the  terms of the Plan and any  operative
employment agreement, as the Committee deems desirable:

                  (a)  Delivery  of  Shares.  As soon as  practicable  after the
         applicable Performance Period has ended, the participant will receive a
         payout of the number of shares of Stock earned  during the  Performance
         Period,  depending upon the extent to which the applicable  performance
         objectives were achieved. Such shares will be registered in the name of
         the  participant  and will be free of all  restrictions  except for any
         pursuant to Section 15.2 of this Plan.

                  (b) Termination. A Performance Stock Award or unearned portion
         thereof  will   terminate   without  the  issuance  of  shares  on  the
         termination date specified at the time of grant or upon the termination
         of employment of the participant  during the Performance  Period.  If a
         participant's employment by the Company or its Affiliates terminates by
         reason of his or her death, Disability or Retirement, the  Committee in
         its  discretion at  or after  the time of grant may determine  that the
         participant  (or the  heir,  legatee or  legal  representative  of  the
         participant's  estate)  will  receive  a  payout of a  portion  of  the
         participant's  then outstanding  Performance  Stock Awards in an amount
         which is not more  than the  number  of shares  which  would  have been
         earned by the participant if 100% of the performance objectives for the
         current  Performance  Period had been  achieved  prorated  based on the
         ratio of the number of months of active  employment in the  Performance
         Period to the total number of months in the Performance Period.

                  (c) Voting and Other Rights.  Awards of  Performance  Stock do
         not provide the  participant  with voting rights or rights to dividends
         prior to the participant becoming the holder of record of shares issued
         pursuant  to an Award.  Prior to the  issuance  of shares,  Performance
         Stock  Awards  may  not be  sold,  transferred,  pledged,  assigned  or
         otherwise encumbered.

                                       17
<PAGE>

                                    ARTICLE X
                         Transfers and Leaves of Absence

                  SECTION 10. 1. Transfer  of Participant.  For purposes  of the
Plan,  the  transfer of a  participant among  the Company  and its Affiliates is
deemed not to be a termination of employment.

                  SECTION 10.2. Effect of Leaves of Absence. For purposes of the
Plan,  the following  leaves of  absences are deemed  not to be a termination of
employment:

                  (a) a leave of absence,  approved  in writing by the  Company,
         for military  service,  sickness or any other  purpose  approved by the
         Company, if the period of such leave does not exceed ninety (90) days;

                  (b) a leave of absence in excess of ninety (90) days, approved
         in  writing  by the  Company,  but  only  if the  employee's  right  to
         reemployment  is  guaranteed  either by a statute or by  contract,  and
         provided  that, in the case of any such leave of absence,  the employee
         returns to work within 30 days after the end of such leave; and

                  (c) any  other  absence  determined by the  Committee  in  its
         discretion not to constitute a break in service.

                                   ARTICLE XI
                           Effect of Change in Control

                  SECTION 11.1. Change  in Control  Defined. "Change of Control"
means the occurrence of any of the following:

                  (a) the  acquisition  by any person,  entity or "group" within
         the meaning of Section 13(d)(3) or 14(d)(2) of the Securities  Exchange
         Act of 1934, as amended ("the 1934 Act"), other than the Company or any
         of its Affiliates,  or any employee  benefit plan of the Company and/or
         its  Affiliates,  of beneficial  ownership  (within the meaning of Rule
         13d-3  under the 1934 Act) of  shares  of Stock of the  Company  having
         twenty five percent (25%) or more of the total number of votes that may
         be cast for election of the  Directors of the Company in a  transaction
         or series of transactions not approved in advance by a vote of at least
         three-quarters of the Continuing Directors (as defined below);

                  (b) a change in the composition of the Board of Directors such
         that at any time a majority of the Board are not Continuing  Directors.
         "Continuing Directors" refers to the individuals who serve as Directors
         at the  effective  date of this Plan and any  individual  whose term of
         office as a Director begins

                                      18
<PAGE>

         thereafter if the nomination or election of such Director  was approved
         in  advance  by a  vote  of at least three-quarters of the then serving
         Continuing  Directors (other than a nomination  of an individual  whose
         initial  assumption  of  office is in  connection  with  an  actual  or
         threatened  solicitation with respect to the election or removal of the
         Directors,  as such  terms are  used in  Rule 14a-11 of  Regulation 14A
         under the 1934 Act);

                  (c) the  approval  by the  shareholders  of the  Company  of a
         reorganization,  merger,  consolidation,  liquidation or dissolution of
         the  Company  or of  the  sale  (in  one  transaction  or a  series  of
         transactions) of all or substantially  all of the assets of the Company
         other  than  a  reorganization,  merger,  consolidation,   liquidation,
         dissolution  or  sale  approved  in  advance  by a  vote  of  at  least
         three-quarters of the Continuing Directors; or

                  (d)  any  other  occurrence  if at  least  a  majority  of the
         Continuing  Directors determine in their discretion that there has been
         a change in Control of the Company.

                  SECTION 11.2. Acceleration  of  Awards.  Except  as  otherwise
provided in this Plan or an Award agreement, immediately  upon the occurrence of
a Change in Control:

                  (a) all outstanding Stock Options  automatically become  fully
         exercisable;

                  (b) all Restricted  Stock Awards  automatically  become  fully
         Vested; and

                  (c) all participants  holding  Performance Stock Awards become
         entitled to receive a partial  payout in an amount  which is the number
         of shares  which would have been earned by the  participant  if 100% of
         the performance  objectives for the current Performance Period had been
         achieved  prorated based on the ratio of the number of months of active
         employment in the  Performance Period  to the total number of months in
         the Performance Period.

Notwithstanding the foregoing, the Committee will retain the right to revoke the
automatic acceleration of vesting in connection with any business combination if
the  acceleration  will cause the use of pooling of interests  accounting  to be
disallowed and such  accounting is determined to be in the best interests of the
Company.

                                       19
<PAGE>

                                   ARTICLE XII
                            Transferability of Awards

                  SECTION  12.1.  Awards  Deemed  Non-transferable.  Other  than
pursuant to Section 12.2 below, Awards are deemed to be non-transferable. Awards
may be exercised only by the participant  and may not be transferred  other than
by will or by the laws of descent  and  distribution  or,  with regard to Vested
Awards,  pursuant to a QUADRO.  Awards are  exercisable  during a  participant's
lifetime  only by the  participant  or, as  permitted  by  applicable  law,  the
participant's guardian or other legal representative.  No Award may be assigned,
pledged, hypothecated or otherwise alienated or encumbered (whether by operation
of law or otherwise) and any attempts to do so are null and void.

                  SECTION 12.2. Limited  Transferability of NQSOs. The Committee
in  its  discretion  may  allow  (at  or  after  the  time  of  grant)  for  the
transferability   of  Vested   Nonqualified   Stock  Options  (with  or  without
accompanying  Stock  Appreciation   Rights)  only  by  the  participant  for  no
consideration to Immediate  Family Members or to a bona fide trust,  partnership
or other  entity  controlled  by and for the  benefit  of one or more  Immediate
Family Members or to a charitable organization qualified under Section 501(c) of
the Code. "Immediate Family Members" means the participant's  spouse,  children,
stepchildren,  parents,  siblings and  grandchildren.  With respect to children,
parents,  siblings  and  grandchildren,  the  relationship  may  be  natural  or
adoptive.   Any  permitted  transfer  is  conditioned  on  the  participant  and
transferee agreeing to abide by the Company's then current stock option transfer
guidelines.

                                  ARTICLE XIII
                          Amendment and Discontinuation

                  SECTION 13. 1. Amendment or  Discontinuation of the Plan.  The
Board of  Directors  may  amend,  alter, or  discontinue  the Plan  at any time,
provided that no amendment, alteration, or discontinuance may be made:

                  (a) which would  adversely  affect the rights of a participant
         under any Award granted prior to the date such action is adopted by the
         Board of Directors without the  participant's  express consent thereto;
         and

                  (b) without shareholder  approval,  if shareholder approval is
         required under  applicable laws,  regulations or exchange  requirements
         (including for the purpose of qualification under Section 162(m) of the
         Code as "performance-based compensation").

                                       20
<PAGE>

                  SECTION  13.2.  Amendment of Grants.  The Committee may amend,
prospectively or retroactively, the terms of any outstanding Award or substitute
new  Awards  for  previously  granted  Awards,  provided  that no  amendment  or
substitution is  inconsistent  with the terms of this Plan or impairs the rights
of any holder without his or her consent.

                                   ARTICLE XIV
                           Unfunded Status of the Plan

                  SECTION 14.1.  Unfunded Status.  The Plan is not funded and is
intended  to  constitute   an   "unfunded"   plan  for  incentive  and  deferred
compensation.  Nothing  contained in this Plan gives any  participant any rights
that are  greater  than  those of a  general  creditor  of the  Company.  In its
discretion,  the  Committee  may  authorize  the  creation  of  trusts  or other
arrangements  to meet the  obligations  created  under the Plan with  respect to
Awards hereunder,  provided, however, that the existence of such trusts or other
arrangements  is  consistent  with  the  unfunded  status  of  the  Plan  and no
participant  acquires any right in or title to any assets,  funds or property of
the Company. Participants have only a contractual right to benefits under Vested
Awards unsecured by any assets of the Company.

                                   ARTICLE XV
                               Stock Certificates

                  SECTION 15. 1. Delivery of Stock Certificates.  The Company is
not required to issue or deliver any  certificates for  shares of Stock issuable
with respect to  Awards under this Plan  prior to the  fulfillment of all of the
following conditions:

                  (a) payment  in full for the shares  and for any  required tax
         withholding (See Section 16.3 of the Plan);

                  (b) completion of any  registration or other  qualification of
         such  shares  under any  federal or state laws or under the  rulings or
         regulations of the Securities  and Exchange  Commission  ("SEC") or any
         other  regulating  body which the  Committee  in its  discretion  deems
         necessary or advisable;

                  (c) admission of such shares to listing on all stock exchanges
         on which the Stock is so listed;

                  (d)  in  the  event  the Stock  is not  registered  under  the
         Securities Act of 1933, qualification as a private placement under said
         Act; and

                                      21
<PAGE>

                  (e)  obtaining  of any  approval or other  clearance  from any
         federal  or  state  governmental  agency  which  the  Committee  in its
         discretion determines to be necessary or advisable.

                  SECTION  15.2.  Applicable  Restrictions  on Stock.  Shares of
Stock issued with respect to Awards may be subject to such stock transfer orders
and other  restrictions  as the Committee  may determine  necessary or advisable
under the  rules,  regulations  and  other  requirements  of the SEC,  any stock
exchange  upon which the Stock is then  listed,  and any  applicable  federal or
state securities law and will include any restrictive  legends the Committee may
deem appropriate to include.

                  SECTION  15.3.  Book Entry.  In lieu of the  issuance of stock
certificates  evidencing  shares of Sock,  the  Company  may use a "book  entry"
system in which a  computerized  or manual  entry is made in the  records of the
Company to evidence  the  issuance of such  shares.  Such  Company  records are,
absent manifest error, binding on all parties.

                                   ARTICLE XVI
                               General Provisions

                  SECTION 16.1. No Implied  Rights to Awards or  Employment.  No
potential  participant  has any claim or right to be granted an Award  under the
Plan,  and there is no obligation  of  uniformity  of treatment of  participants
under the Plan.  Neither the Plan nor any Award thereunder shall be construed as
giving any employee any right to  continued  employment  with the Company or any
Affiliate.  The Plan does not  constitute  a  contract  of  employment,  and the
Company and each Affiliate  expressly reserve the right at any time to dismiss a
participant free from liability,  or any claim under the Plan,  except as may be
specifically provided in this Plan or in an Award agreement.

                  SECTION 16.2. Other Compensation  Plans.  Nothing contained in
this Plan  prevents the Board of Directors  from  adopting  other or  additional
compensation  arrangements,  subject to shareholder approval if such approval is
required, and such arrangements may be either generally applicable or applicable
only in specific cases.

                  SECTION 16.3. Tax Withholding. Each participant must, no later
than the date as of which the value of an Award first becomes  includible in the
gross income of the participant for income tax purposes,  pay to the Company, or
make arrangements satisfactory to the Company regarding payment of, any federal,
state or local taxes of any kind  required by law to be withheld with respect to
the Award. The obligations of the Company under the Plan are conditional on such
payment,  and the  Company,  to the extent  permitted  by law,  has the right to
deduct  any  such  taxes  from  any  payment  of  any  kind  otherwise  due to a
participant.

                                      22
<PAGE>

                  SECTION 16.4.  Arbitration.  All Award agreements will include
appropriate  provisions  respecting mediation and/or arbitration of any disputes
thereunder.  If arbitrated,  notice of demand for  arbitration  must be given in
writing  within a  reasonable  time after the claim or dispute has  arisen.  Any
decision  rendered  by an  arbitrator  must  be  made  in  accordance  with  the
provisions  of the Plan,  will be final and  judgment  may be entered upon it in
accordance with applicable law in any court having proper jurisdiction.

                  SECTION 16.5. Rule 16 b-3 Compliance.  The Plan is intended to
comply  with all  applicable  conditions  of Rule 16b-3 of the 1934 Act, as such
rule  may  be  amended  from  time  to  time.  All  transactions  involving  any
participant  subject to Section  16(a)  shall be subject to the  conditions  set
forth in Rule 16b-3,  regardless  of whether such  conditions  are expressly set
forth in the Plan. Any provision of the Plan that is contrary to Rule 16b-3 does
not apply to such participants.

                  SECTION  16.6.  Deferrals.   The  Committee  may  unilaterally
postpone the  exercising of Awards,  the issuance or delivery of Stock under any
Award or any  action  permitted  under the Plan to  prevent  the  Company or any
Affiliate  from being denied a Federal  income tax deduction with respect to any
Award other than an Incentive  Stock Option.  The Committee,  in its discretion,
may permit a participant to defer receipt of the payment of cash or the delivery
of Stock that would otherwise be delivered to a participant  under the Plan. Any
deferral elections are subject to such rules and procedures as the Committee may
determine.

                  SECTION 16.7. Successors.  All obligations of the Company with
respect to Awards  granted  under the Plan are binding on any  successor  to the
Company,  whether  as a  result  of  a  direct  or  indirect  purchase,  merger,
consolidation  or otherwise of all or  substantially  all of the business and/or
assets of the Company.

                  SECTION 16.8. Severability.  In the event any provision of the
Plan, or the application thereof to any person or circumstances, is held illegal
or invalid  for any reason,  the illegality or  invalidity shall not affect  the
remaining  parts  of the  Plan, or other  applications,  and the  Plan  is to be
construed  and  enforced  as if the  illegal or invalid  provision  had not been
included.

                  SECTION  16.9.  Governing  Law. To the extent not preempted by
federal law, the Plan and all Award agreements pursuant thereto are construed in
accordance  with and  governed  by the laws of the  State of  Minnesota,  or, if
applicable, the General Corporation Law of the State of Delaware.

                                      23
<PAGE>

                                  ARTICLE XVII
                           Effective Date of the Plan

                  SECTION 17.1.  Plan  Adoption.  Subject to the approval of the
shareholders of the Company at the Annual Meeting of Shareholders  held in 1998,
the  effective  date of this  Plan is the date of its  adoption  by the Board of
Directors on January 26, 1998. To the extent that Awards are made under the Plan
prior to its approval by  shareholders,  they shall be contingent on shareholder
approval of the Plan.

                                       24<PAGE>

                                  EXHIBIT 10.1
                                  ------------

                              LAS VEGAS SANDS, INC.

                                       and

                           VENETIAN CASINO RESORT, LLC

                      AMENDED AND RESTATED CREDIT AGREEMENT

     This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 14, 2000 and
entered into by and among LAS VEGAS SANDS, INC. ("LVSI"),  a Nevada corporation,
and  VENETIAN  CASINO  RESORT,  LLC  ("Venetian"),  a Nevada  limited  liability
company, as joint and several obligors (each of LVSI and Venetian,  a "Borrower"
and,  collectively,  the "Borrowers"),  THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each  individually  referred to herein as a "Lender" and
collectively as "Lenders"),  and GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP") and
THE BANK OF NOVA SCOTIA  ("Scotiabank"),  as Joint-Lead  Arrangers (each of GSCP
and  Scotiabank in such capacity an "Arranger" and together,  the  "Arrangers"),
GSCP  as  syndication  agent  (in  such  capacity,   "Syndication  Agent"),  and
Scotiabank,   as  administrative  agent  for  Lenders  (in  such  capacity,  the
"Administrative Agent").

R E C I T A L S

     WHEREAS, pursuant to that certain Credit Agreement dated as of November 14,
1997,  as amended by the First  Amendment  thereto dated as of January 30, 1998,
and  further  amended  by the  Limited  Waiver and  Second  Amendment  to Credit
Agreement  dated as of  November  12,  1999,  by and among  Borrowers,  Lenders,
Syndication Agent and Administrative  Agent (such Credit Agreement,  as amended,
the "Existing  Credit  Agreement" ). Lenders  extended the senior secured credit
facilities set forth in the Existing Credit  Agreement to Borrowers to provide a
portion of the  financings  necessary to develop and construct the Project (this
and other  capitalized  terms  used  herein  shall  have the  meanings  given in
subsection 1.1 of this  Agreement),  and in the case of the Revolving  Loans, to
provide  working  capital  for  the  Project  hotel  and  casino  following  the
Completion Date;

     WHEREAS, Borrowers financed the development and construction of the Project
with (i) equity  contributions to Borrowers from Adelson  consisting of the Real
Estate  Contribution  (approximately  14 acres of which has been released to the
Phase II Subsidiary  upon the completion of a subdivision of such land) and cash
in an aggregate amount of $320,000,000,  (ii) proceeds of the issuance of senior
secured  Mortgage  Notes in an  aggregate  principal  amount  of not  less  than
$425,000,000,   (iii)  proceeds  of  the  issuance  of  Subordinated   Notes  of
approximately  $90,000,000  in  cash,  (iv) the  proceeds  of the  Interim  Mall
Facility (as defined in the Existing Credit Agreement) in an aggregate principal
amount of not less than  $140,000,000,  (v) the proceeds of an equipment finance
loan from the FF&E Lenders of not less than approximately $98,000,000 to finance
furniture,  fixtures  and  equipment  (including,   without  limitation,  gaming
equipment and power station  equipment) a portion of which may be financed on an
interim basis with proceeds of the revolving  loan portion of the senior secured
credit facilities  contemplated hereby, (vi) the proceeds of a contribution from
a joint venture between Atlantic Thermal Systems,  Inc., and Pacific Enterprises
Energy Services,  in an amount up to  approximately  $70,000,000 as necessary to
purchase, construct and install (x) certain equipment that is located at or used
in connection with the heating,  ventilation and air  conditioning  facility for
the Project and (y) certain  equipment that is part of the Project's  mechanical
and/or electrical systems, and (vii) the term loan portion of the senior secured
credit facilities contemplated hereby;

     WHEREAS,  the parties to the Existing Credit  Agreement desire to amend and
restate the Existing  Credit  Agreement in order to (i) provide  additional term
loans in the aggregate  principal amount of $50,000,000,  the proceeds of which,
to the extent of  $30,000,000,  will be applied to the existing  Terms Loans (as
defined in the Existing Credit Agreement) in forward order of maturity,  and the
balance  of which  proceeds  (net of fees and  expenses)  will be applied to the
principal amount of the Revolving Loans  outstanding,  (ii) revise the financial
covenants  set forth in the  Existing  Credit  Agreement  and (iii) make certain
other amendments to the Existing Credit Agreement; and

     WHEREAS,   it  is  the  intention  of  Borrowers,   Syndication  Agent  and
Administrative Agent and each of the Lenders that this amendment and restatement
of the Existing Credit Agreement shall not constitute a refinancing of the Loans
outstanding on the Restatement  Closing Date and that all Obligations  hereunder
(including  the new term  loans to be made  hereunder)  and under the other Loan
Documents, shall continue to be secured by the grant to Administrative Agent, on
behalf of Lenders,  of a First Priority Lien on the First  Priority  Collateral;
and that the  Subsidiary  Guaranty  previously  executed by each  Subsidiary  of
Borrowers shall continue in full force in effect and that each Subsidiary  other
than the  Intermediate  Holding  Companies  shall  continue to secure all of the
Obligations under the Subsidiary  Guaranty by granting to Administrative  Agent,
on behalf of Lenders, a First Priority Lien on the First Priority Collateral.

<PAGE>

     NOW,  THEREFORE,  in  consideration  of the  premises  and the  agreements,
provisions and covenants herein contained,  Borrowers,  Lenders and Agents agree
as follows:

Section 1.        DEFINITIONS

1.1    Certain Defined Terms.
       ----------------------

     The  following  terms  used in this  Agreement  shall  have  the  following
meanings:

               "Adelson" means Sheldon G. Adelson, an individual.

               "Adelson  Completion  Guaranty"  means  that  certain  Completion
               Guaranty  dated as of the  Closing  Date  executed  by Adelson in
               favor of the  Administrative  Agent,  Interim Mall Lender and the
               Mortgage  Notes  Indenture  Trustee  (acting  on  behalf  of  the
               Mortgage Note Holders).

               "Adelson  Contributions"  means the Real Estate  Contribution and
               the Adelson Equity Contribution.

               "Adelson Equity Contribution" means the cash equity contributions
               received  by  Borrowers  from  Adelson or his  Affiliates  in the
               aggregate amount of not less than $95,000,000.

               "Adelson   Intercreditor   Agreement"  means  the   Intercreditor
               Agreement  (Adelson) dated as of November 14, 1997 among Adelson,
               Venetian,  Mall Construction  Subsidiary,  Administrative  Agent,
               Mortgage  Note  Indenture  Trustee,  Interim  Mall Lender and the
               Subordinated Notes Indenture Trustee in substantially the form of
               Exhibit XVI hereto.

               "Adelson  Subordination  Agreement"  has the meaning  assigned to
               that term in subsection 5.20.

               "Additional  Contingent  Claims" has the meaning assigned to that
               term in subsection 5.17A.

               "Additional  Billboard  Space" has the  meaning  assigned to that
               term in the Cooperation Agreement.

               "Additional  Indebtedness"  has the meaning assigned to that term
               in subsection 7.1(xv).

               "Adjusted   Eurodollar   Rate"  means,   for  any  Interest  Rate
               Determination  Date with  respect  to an  Interest  Period  for a
               Eurodollar Rate Loan, the rate per annum obtained by dividing (i)
               the arithmetic average (rounded upward to the nearest 1/16 of one
               percent) of the offered quotations,  if any, to first class banks
               in the  interbank  Eurodollar  market  Lenders  for  U.S.  dollar
               deposits  of  amounts  in  same  day  funds   comparable  to  the
               respective  principal  amounts  of the  Eurodollar  Rate Loans of
               Scotiabank for which the Adjusted  Eurodollar  Rate is then being
               determined with maturities  comparable to such Interest Period as
               of approximately 10:00 A.M. (New York time) on such Interest Rate
               Determination  Date by (ii) a percentage  equal to 100% minus the
               stated  maximum rate of all reserve  requirements  (including any
               marginal,  emergency,  supplemental,  special or other  reserves)
               applicable on such Interest Rate Determination Date to any member
               bank of the Federal  Reserve  System in respect of  "Eurocurrency
               liabilities"  as  defined  in  Regulation  D  (or  any  successor
               category of liabilities under Regulation D).

               "Administrative  Agent" has the meaning  assigned to that term in
               the  introduction  to this  Agreement and also means and includes
               any  successor   Administrative   Agent  appointed   pursuant  to
               subsection 9.5.

               "Advance  Confirmation Notice" has the meaning assigned that term
               in the Disbursement Agreement.

               "Affected  Lender"  has the  meaning  assigned  to  that  term in
               subsection 2.6C.

<PAGE>

               "Affiliate",  as applied to any  Person,  means any other  Person
               directly  or  indirectly  controlling,  controlled  by,  or under
               direct or indirect  common  control  with,  that Person.  For the
               purposes  of  this   definition,   "control"   (including,   with
               correlative  meanings,  the terms "controlling",  "controlled by"
               and "under common control with"), as applied to any Person, means
               the possession, directly or indirectly, of the power to direct or
               cause  the  direction  of the  management  and  policies  of that
               Person,  whether through the ownership of voting securities or by
               contract or otherwise.

               "Agent" means,  individually,  each of the Administrative  Agent,
               each  Arranger and each  Syndication  Agent,  and "Agents"  means
               Administrative   Agent,    Arrangers   and   Syndication   Agent,
               collectively.

               "Agreement"  means this  Amended and  Restated  Credit  Agreement
               dated as of June 14, 2000.

               "Anticipated  Future Work" has the meaning  assigned to that term
               in the Disbursement Agreement.

               "Applicable Tax Percentage" means the highest aggregate effective
               marginal  rate of  federal,  state and local  income tax or, when
               applicable,  alternative  minimum  tax,  to which  any  direct or
               indirect  member or S  corporation  shareholder  of the Borrowers
               subject to the highest  marginal  rate of tax would be subject in
               the  relevant  year  of   determination   (as  certified  to  the
               Administrative  Agent by a nationally  recognized  tax accounting
               firm),  taking into account only that  member's or S  corporation
               shareholder's share of income and deductions  attributable to its
               interest in the Borrowers.

               "Approved  Equipment Funding Commitment" has the meaning assigned
               that term in the Disbursement Agreement.

               "Arranger" and "Arrangers" has the meaning assigned to such terms
               in the introduction to this Agreement.

               "Asset  Sale"  means  the  sale  by a  Borrower  or  any  of  its
               Subsidiaries to any Person of (i) any of the stock of any of such
               Person's  Subsidiaries,  (ii)  substantially all of the assets of
               any  division  or line of  business  of a Borrower  or any of its
               Subsidiaries,  or (iii) any other  assets  (whether  tangible  or
               intangible) of a Borrower or any of its Subsidiaries  (other than
               (a)  inventory  or  goods  (other  than  equipment)  sold  in the
               ordinary  course of business,  (b) any other assets to the extent
               that the  aggregate  fair market value of such assets sold during
               any Fiscal Year,  is less than or equal to  $1,000,000 or (c) any
               transfers or dispositions permitted by clauses (v) through (xix),
               inclusive, and (xxi) of subsection 7.7).

               "Assignment   Agreement"   means  an   Assignment   Agreement  in
               substantially the form of Exhibit VII annexed hereto.

               "Bankruptcy  Code"  means  Title  11 of the  United  States  Code
               entitled  "Bankruptcy",  as now and  hereafter in effect,  or any
               successor statute.

               "Base Rate" means,  at any time, the higher of (x) the Prime Rate
               or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
               Effective Rate.

               "Base  Rate  Loans"  means  Loans   bearing   interest  at  rates
               determined   by  reference  to  the  Base  Rate  as  provided  in
               subsection 2.2A.

               "Billboard" means H & H of Nevada, LLC.

               "Billboard Master Lease" means that certain Lease Agreement dated
               November   14,  1997  by  and  between   Venetian  and  New  Mall
               Subsidiary, as successor to Mall Subsidiary (as successor to Mall
               Construction   Subsidiary)   pursuant   to  which  the  New  Mall
               Subsidiary, as successor to Mall Subsidiary (as successor to Mall
               Construction Subsidiary), is leasing from Venetian the Additional
               Billboard Space.

               "Billboard  Operating  Lease"  means  that  certain  Amended  and
               Restated  Restaurant Lease dated June 26, 1997 by and between New
               Mall Subsidiary, as successor to Mall Subsidiary and Venetian and
               Billboard,  as successor to B.L.  International  of Nevada,  Inc.
               (together with all assignments, modifications, amendments, riders
               and addendas thereto).

               "Billboard  Space"  means  the  space  covered  by the  Billboard
               Operating Lease (including the Additional Billboard Space).

<PAGE>

               "Borrowers"  has  the  meaning  assigned  to  that  term  in  the
               introduction  to this  Agreement  and shall mean,  as the context
               requires, any or all of the Borrowers.

               "Business  Day" means (i) for all purposes  other than as covered
               by clause (ii) below, any day excluding Saturday,  Sunday and any
               day which is a legal  holiday  under the laws of the State of New
               York or Nevada or is a day on which banking  institutions located
               in either such state are  authorized  or required by law or other
               governmental  action  to  close,  and (ii)  with  respect  to all
               notices, determinations, fundings and payments in connection with
               the Adjusted  Eurodollar Rate or any Eurodollar  Rate Loans,  any
               day that is a Business Day described in clause (i) above and that
               is also a day for trading by and between banks in Dollar deposits
               in the London interbank market.

               "Capital Lease", as applied to any Person, means any lease of any
               property  (whether  real,  personal  or mixed) by that  Person as
               lessee that,  in  conformity  with GAAP,  is  accounted  for as a
               capital lease on the balance sheet of that Person.

               "Cash" means (i) money,  (ii) currency or (iii) a credit  balance
               in a Deposit Account.

               "Cash  Equivalents"  means  (a)  [intentionally  deleted]  (b)(i)
               direct  obligations  of the United  States of America  (including
               obligations issued or held in book-entry form on the books of the
               Department  of the  Treasury of the United  States of America) or
               obligations  fully  guaranteed  by the United  States of America,
               (ii)  obligations,   debentures,   notes  or  other  evidence  of
               indebtedness   issued  or  guaranteed  by  any  other  agency  or
               instrumentality  of the  United  States,  (iii)  interest-bearing
               demand or time deposits (which may be represented by certificates
               of deposit) issued by banks having general  obligations rated (on
               the date of  acquisition  thereof) at least "A" or the equivalent
               by  Standard & Poor's  Corporation  ("S&P") or Moody's  Investors
               Service,  Inc.  ("Moody's")  (S&P and Moody's  together  with any
               other  nationally  recognized  credit rating agency if neither of
               such   corporations  is  then  currently   rating  the  pertinent
               currently  rating the pertinent  obligations,  a "Rating Agency")
               or, if not so rated,  secured at all times,  in the manner and to
               the extent provided by law, by collateral  security in clause (i)
               or (ii) of this definition, of a market value of no less than the
               amount of monies so invested, (iv) commercial paper rated (on the
               date of  acquisition  thereof)  at  least  "A-1"  or "P-1" or the
               equivalent  by  any  Rating  Agency  issued  by any  Person,  (v)
               repurchase  obligations  for  underlying  securities of the types
               described  in clause  (i) or (ii)  above,  entered  into with any
               commercial  bank  or  any  other  financial   institution  having
               long-term  unsecured  debt  securities  rated  (on  the  date  of
               acquisition  thereof) at least "A" or "A2" or the  equivalent  by
               any  Rating  Agency in  connection  with  which  such  underlying
               securities are held in trust or by a third-party custodian,  (vi)
               guaranteed  investment  contracts  of any  financial  institution
               which has a  long-term  debt  rated  (on the date of  acquisition
               thereof)  at least "A" or "A2" or the  equivalent  by any  Rating
               Agency, (vii) obligations (including both taxable and non-taxable
               municipal  securities)  issued or  guaranteed  by,  and any other
               obligations  the  interest on which is  excluded  from income for
               Federal  income  tax  purposes  issued  by,  and any state of the
               United   States  of  America  or  District  of  Columbia  or  the
               Commonwealth or Puerto Rico or any political subdivision, agency,
               authority or instrumentality  thereof,  which issuer or guarantor
               has (A) a  short-term  debt  rated  (on the  date of  acquisition
               thereof) at least "A-1" or "P-1" or the  equivalent by any Rating
               Agency and (B) a long-term debt rated (on the date of acquisition
               thereof)  at least "A" or "A2" or the  equivalent  by any  Rating
               Agency,  (viii) investment contracts of any financial institution
               either (A) fully secured by (1) direct  obligations of the United
               States,  (2) obligations of a Person  controlled or supervised by
               and acting as an agency or  instrumentality  of the United States
               or (3) securities or receipts  evidencing  ownership  interest in
               obligations or special portions  thereof  described in clause (1)
               or  (2),  in  each  case  guaranteed  as full  faith  and  credit
               obligations  of the  United  States of  America,  having a market
               value at least equal to 102% of the amount deposited  thereunder,
               or (B) with  long-term  debt  rated  (on the date of  acquisition
               thereof)  at least "A" or "A2" or the  equivalent  by any  Rating
               Agency  and  short-term  debt  rated (on the date of  acquisition
               thereof) at least "A-1" or "P-1" or the  equivalent by any Rating
               Agency,  (ix) a contract or investment  agreement with a provider
               or guarantor (A) which provider or guarantor is rated (on the

<PAGE>

               date  of  acquisition  thereof)  at  least  "A"  or  "A2"  or the
               equivalent by any Rating Agency  (provided that if a guarantor is
               a party to the rating,  the guaranty  must be  unconditional  and
               must be  confirmed  in  writing  prior to any  assignment  by the
               provider to any subsidiary of such guarantor), (B) providing that
               monies invested shall be payable to the Disbursement  Agent while
               the  Disbursement  Agreement  is  in  effect  and  thereafter  to
               Administrative  Agent without  condition  (other than notice) and
               without  brokerage fee or other  penalty,  upon not more than two
               Business  Days'  notice for  application  when and as required or
               permitted  under the Collateral  Documents,  and (C) stating that
               such   contract  or   agreement   is   unconditional,   expressly
               disclaiming  any  right of setoff  and  providing  for  immediate
               termination  in the  event  of  insolvency  of the  provider  and
               termination  upon  demand  of the  Disbursement  Agent  while the
               Disbursement   Agreement   is  in  effect   and   thereafter   to
               Administrative  Agent  (which  demand  shall  only be made at the
               direction of the  Borrowers)  after any payment or other covenant
               default  by the  provider,  or (x) any  debt  instruments  of any
               Person which  instruments  are rated (on the date of  acquisition
               thereof) at least "A," "A2",  "A-1" or "P-1" or the equivalent by
               any Rating  Agency,  provided  that in each case of  clauses  (i)
               through (x),  such  investments  are  denominated  in Dollars and
               maturing  not more  than 13 months  from the date of  acquisition
               thereof;  (c) investments in any money market fund which is rated
               (on the date of acquisition  thereof) at least "A" or "A2" or the
               equivalent by any Rating Agency;  (d) investments in mutual funds
               sponsored by any securities  broker-dealer of recognized national
               standing having an investment policy that requires  substantially
               all  the  invested   assets  of  such  fund  to  be  invested  in
               investments described in any one or more of the foregoing clauses
               and having a rating of at least "A" or "A2" or the  equivalent by
               any  Rating  Agency;  or (e)  investments  in  both  taxable  and
               nontaxable (i) periodic auction reset securities which have final
               maturities between one and 30 years from the date of issuance and
               are  repriced  through a dutch  auction or other  similar  method
               every 35 days or (ii) auction  preferred  shares which are senior
               securities of leveraged  closed end municipal  bond funds and are
               repriced  pursuant  to a variety of rate reset  periods,  in each
               case having a rating (on the date of  acquisition  thereof) of at
               least "A" or "A2" or the equivalent of any Rating Agency.

               "Casino Lease" means that certain  Casino Lease between  Venetian
               as lessor and LVSI as lessee  dated  effective  as of the Closing
               Date with respect to the operation of the casino for the Project.

               "Certificate   re   Non-Bank    Status"   means   a   certificate
               substantially  in the form of Exhibit IX annexed hereto delivered
               by a  Lender  to  Administrative  Agent  pursuant  to  subsection
               2.7B(iii).

               "Class" means, as applied to Lenders, each of the following three
               classes  of  Lenders:  (i)  Lenders  having  Tranche  A Term Loan
               Exposure,  (ii) Lenders  having  Tranche B Term Loan Exposure and
               (iii) Lenders having Revolving Loan Exposure.

               "Closing  Date"  means  the date on  which  the  Existing  Credit
               Agreement and Disbursement Agreement were executed and delivered,
               which date was November 14, 1997.

               "Code" means the Internal Revenue Code of 1986, as amended to the
               date hereof and from time to time  hereafter,  and any  successor
               statute.

               "Collateral" means,  collectively,  all of the real, personal and
               mixed  property  (including  capital  stock)  in which  Liens are
               purported to be granted  pursuant to the Collateral  Documents as
               security for the Obligations.

               "Collateral  Account Agreements" has the meaning assigned to that
               term in the Disbursement Agreement.

               "Collateral Documents" means the Company Security Agreement,  the
               Deed  of  Trust,  the  Mall  Construction   Subsidiary   Security
               Agreement,  the  Collateral  Account  Agreements  (other than the
               Mortgage  Notes  Collateral  Account  Agreement),  any Subsidiary
               Security  Agreements  and  all  other  instruments  or  documents
               delivered  by a Loan Party  pursuant to this  Agreement or any of
               the  other  Loan  Documents  in order  to grant to  Intercreditor
               Agent,  Disbursement Agent or Administrative  Agent, on behalf of
               Lenders,  a Lien on any real,  personal or mixed property of that
               Loan Party as security for the Obligations.

               "Collection  Account" has the meaning  assigned  that term in the
               Disbursement Agreement.

<PAGE>

               "Commercial  Letter  of  Credit"  means  any  letter of credit or
               similar  instrument  issued  for the  purpose  of  providing  the
               financing  payment  mechanism in connection  with the purchase of
               any  materials,  goods or services by a Borrower in the  ordinary
               course of business of such Borrower.

               "Commitment"  means the  commitment  of a Lender to make Loans as
               set  forth in  subsection  2.1A,  and  "Commitments"  means  such
               commitments of all Lenders in the aggregate.

               "Company Security Agreement" means the Company Security Agreement
               executed  and  delivered  by  Borrowers  and  Mall   Construction
               Subsidiary  on the  Closing  Date,  substantially  in the form of
               Exhibit XII annexed hereto.

               "Completion Date" means November 12, 1999.

               "Completion  Guaranty"  means  each  of the  Direct  Construction
               Guaranty,  the  Indirect  Construction  Guaranty  and the Adelson
               Completion   Guaranty   or  any  one  of  them  and   "Completion
               Guaranties" means the Direct Construction  Guaranty, the Indirect
               Construction   Guaranty  and  the  Adelson  Completion   Guaranty
               collectively.

               "Completion  Guaranty Loan" means any amounts advanced by Adelson
               under the Adelson Completion Guaranty, which is treated as a loan
               to  Venetian  in an  aggregate  principal  amount  not to  exceed
               $25,000,000  at  any  time,  plus  accrued  and  unpaid  interest
               thereon,  evidenced by a Completion  Guaranty Note and subject to
               the terms of the Adelson Intercreditor Agreement.

               "Completion  Guaranty  Note" means a note in the form attached to
               the Interim  Mall Credit  Agreement  (as in effect on the Closing
               Date).

               "Compliance Certificate" means a certificate substantially in the
               form of Exhibit IV annexed  hereto  delivered  to  Administrative
               Agent and Lenders by Borrowers pursuant to subsection 6.1(iv).

               "Conforming  Adelson  L/C"  means an  unconditional,  direct  pay
               letter of credit  which (a) is  obtained by Adelson or one of his
               Affiliates (but not Borrowers or any of their Subsidiaries),  (b)
               either (x) has an  expiration  date of not less than  twenty-four
               (24) months or (y) has an expiration date of not less than twelve
               (12) months with an automatic  extension of one twelve (12) month
               period  unless the issuer of such letter of credit gives  Drawing
               Agent not less than sixty (60) days prior written  notice that it
               will not renew the letter of credit for such successive term, (c)
               either (x) is  irrevocable  or (y) provides  that the issuer will
               deliver  not less than sixty (60) days  prior  written  notice to
               Drawing  Agent of its  intention to revoke such letter of credit,
               (d) is issued by a financial  institution  acceptable  to each of
               the Agents in their  reasonable  judgment and (e) is otherwise in
               form and  substance  acceptable  to each of the  Agents  in their
               reasonable  judgment,  provided  that any such  letter  of credit
               shall only qualify as a Conforming  Adelson L/C if it states that
               it may be drawn upon by the Conforming  Adelson L/C Drawing Agent
               and applied in  accordance  with the terms of this  Agreement and
               the Conforming  Adelson L/C Drawing Agreement upon the occurrence
               of any Conforming  Adelson L/C Draw Event,  and provided  further
               that neither  Borrower nor any of their  Subsidiaries  shall have
               any obligations  (contingent or otherwise) in respect of any such
               letter of credit.

<PAGE>

               "Conforming  Adelson L/C Draw Event" shall mean,  during the time
               that the Conforming Adelson L/C remains in full force and effect,
               the  occurrence  of any of the  following (a) an Event of Default
               (which is  continuing  and has not been  waived) (i) set forth in
               Section 8.1 hereof  (failure to make payments when due), (ii) set
               forth in Section 8.2 hereof (default under Other  Indebtedness or
               Contingent  Obligations),  (iii) set forth in Section  8.6 hereof
               (involuntary  bankruptcy;   appointment  of  receiver,  etc.)  or
               Section  8.7  hereof   (voluntary   bankruptcy,   appointment  of
               receiver, etc.), (iv) set forth in Section 8.13 (default under or
               termination  of Operative  Documents),  and (v) resulting  from a
               breach of any of the  covenants  set forth in Section  7.6 hereof
               (financial  covenants);  (b) a draw on the Conforming Adelson L/C
               by or on behalf of the agent under the FF&E Facility; (c) if such
               Conforming  Adelson L/C has a maturity  of less than  twenty-four
               (24) months,  either (x) Drawing  Agent's  receipt of notice from
               the issuer of the  Conforming  Adelson  L/C that such issuer will
               not renew the Conforming Adelson L/C or (y) the date that is five
               days prior to the expiration of the Conforming Adelson L/C if the
               Administrative  Agent has not  received  evidence  of the renewal
               thereof, provided that the Administrative Agent may not draw down
               on the Adelson  Conforming  L/C under such  circumstances  if and
               only if (1) the failure to obtain the renewal of such  Conforming
               Adelson  L/C was not  caused by  Adelson  or his  Affiliates  and
               Adelson and/or his  Affiliates  have made  reasonable  efforts to
               obtain the  renewal  thereof  and (2)  Adelson or his  Affiliates
               substitute  cash equity in  Borrowers  in an amount  equal to the
               face  amount  of  the  Conforming  Adelson  L/C  in  lieu  of the
               Conforming  Adelson  L/C on or  before  the date that is five (5)
               days  prior  to  the  expiration   thereof  (such  equity  to  be
               substituted  for  the  withdrawn  Conforming  Adelson  L/C in the
               calculation  of  Consolidated  Adjusted  EBITDA);  or (d) Drawing
               Agent's  receipt  of notice  from the  issuer  of the  Conforming
               Adelson  L/C that such  issuer  intends to revoke,  terminate  or
               cancel the Conforming Adelson L/C.

               "Conforming  Adelson L/C Drawing Agent" means the "Drawing Agent"
               as defined in the Conforming Adelson L/C Drawing Agreement.

               "Conforming  Adelson L/C Drawing  Agreement" means the Conforming
               Adelson Drawing  Agreement,  dated as of the Restatement  Closing
               Date,  between  the  Administrative  Agent and  General  Electric
               Capital Corporation, as agent for the FF&E Lenders under the FF&E
               Facility  Agreement,  in  substantially  the form of  Exhibit  XX
               attached  hereto,  pursuant  to which  drawings,  if any,  on the
               Conforming  Adelson L/Cs shall be made and the  proceeds  thereof
               distributed ratably to the Lenders and the FF&E Lenders.

               "Consents"  means  consents  to  the  collateral   assignment  by
               Borrowers  of  Project  Documents  in  substantially  the form of
               Exhibit S to the Disbursement Agreement.

               "Consolidated  Adjusted EBITDA" means, for any period, the sum of
               the  amounts  (without   duplication)  for  such  period  of  (i)
               Consolidated  Net Income,  (ii)  Consolidated  Interest  Expense,
               (iii)  provision for taxes based on income to the extent deducted
               in calculating  Consolidated Net Income,  (iv) total depreciation
               expense, (v) total amortization  expense, and (vi) other non-cash
               items  reducing   Consolidated  Net  Income  (including   without
               limitation any reductions to Consolidated  Net Income as a result
               of  minority  or  preferred  interests  of  Venetian)  less other
               non-cash items  increasing  Consolidated  Net Income,  all of the
               foregoing as determined on a consolidated basis for Borrowers and
               their  Subsidiaries  in  conformity  with GAAP.  Any cash  equity
               contributions  made by  Adelson or any of his  Affiliates  (other
               than one of the Borrowers) to Borrowers and/or the face amount of
               any  Conforming  Adelson L/C  delivered to Drawing  Agent for the
               benefit of the Lenders and the FF&E  Lenders  during any quarter,
               in an  aggregate  amount for such cash equity  contributions  and
               face amounts of Conforming Adelson L/Cs not to exceed $15,000,000
               per quarter, may at the written election of Borrowers be included
               in Consolidated Adjusted EBITDA for such quarter for all purposes
               hereunder,  provided  that  Borrowers  may not include  such cash
               equity contributions or the face amount of the Conforming Adelson
               L/C, or any combination thereof, in Consolidated  Adjusted EBITDA
               (a) if any  Conforming  Adelson  L/C Draw  Event or any  Event of
               Default  or  Potential  Event  of  Default  has  occurred  and is
               continuing  at the time  such cash  contribution  is made or such
               Conforming Adelson L/C is provided to Drawing Agent or (b) in any
               event,  after two  consecutive  quarters  unless,  following  any
               exercise  of such  election  to  include  any  such  cash  equity
               contributions and/or face amount of any Conforming Adelson L/C in
               Consolidated  Adjusted EBITDA,  Borrowers have thereafter been in
               compliance with subsection 7.6 on a rolling four quarter basis on
               any test date  occurring  after  such  election  (without  giving
               affect to any previous cash  contributions or Conforming  Adelson
               L/C).

<PAGE>

               "Consolidated  Capital  Expenditures"  means, for any period, the
               sum of (i) the  aggregate of all  expenditures  (whether  paid in
               cash  or  other  consideration  or  accrued  as a  liability  and
               including  that portion of Capital Leases which is capitalized on
               the  consolidated  balance  sheet of  Borrowers) by Borrowers and
               their  Subsidiaries  during that period that, in conformity  with
               GAAP, are included in "additions to property, plant or equipment"
               or comparable  items reflected in the  consolidated  statement of
               cash flows of  Borrowers  plus (ii) to the extent not  covered by
               clause (i) of this  definition,  any  expenditures  by  Borrowers
               (excluding  any  Excluded  Subsidiaries)  during  that  period to
               acquire (by  purchase or  otherwise)  the  business,  property or
               fixed  assets of any  Person,  or the stock or other  evidence of
               beneficial  ownership  of any  Person  that,  as a result of such
               acquisition,  becomes a Subsidiary  of the Borrowers or either of
               them.

               "Consolidated  Cash  Interest  Expense"  means,  for any  period,
               Consolidated   Interest  Expense  for  such  period,   excluding,
               however,  any  interest  expense not  payable in Cash  (including
               amortization  of  discount  and  amortization  of  debt  issuance
               costs).

               "Consolidated   Current   Assets"  means,   as  at  any  date  of
               determination,   the  total   assets  of   Borrowers   and  their
               Subsidiaries  on a  consolidated  basis  (excluding  any Excluded
               Subsidiaries)  which may properly be classified as current assets
               in conformity with GAAP, excluding Cash and cash equivalents.

               "Consolidated  Current  Liabilities"  means,  as at any  date  of
               determination,  the  total  liabilities  of  Borrowers  and their
               Subsidiaries  on a  consolidated  basis  (excluding  any Excluded
               Subsidiaries)   which  may  properly  be  classified  as  current
               liabilities  in  conformity  with  GAAP,  excluding  the  current
               portions of Funded Debt and any liabilities  otherwise classified
               as  current  liabilities  in  conformity  with GAAP to the extent
               incurred   under  the   Operative   Documents   with  respect  to
               construction of the Project.

               "Consolidated  Excess Cash Flow" means, for any period, an amount
               (if positive) equal to (i) the sum, without  duplication,  of the
               amounts for such period of (a)  Consolidated  Adjusted EBITDA and
               (b) the  Consolidated  Working Capital  Adjustment minus (ii) the
               sum, without  duplication,  of the amounts for such period of (a)
               voluntary and scheduled  repayments of Consolidated Total Debt to
               the extent actually paid (excluding repayments of Revolving Loans
               except to the extent the Commitments  are permanently  reduced in
               connection  with  such  repayments),   (b)  Consolidated  Capital
               Expenditures (net of any proceeds of any related  financings with
               respect to such  expenditures),  (c)  Consolidated  Cash Interest
               Expense  other than any  interest  expense in respect of Employee
               Repurchase  Notes,  (d) any amounts  distributed by Borrowers for
               tax payments in accordance  with  subsection  7.5 with respect to
               such period and (without  duplication)  the provision for current
               taxes based on income of Borrowers  (excluding any  Subsidiaries)
               and payable by Borrowers to any Governmental  Instrumentality  in
               cash with respect to such period, (e) any amounts  distributed to
               Borrowers or their  Subsidiaries  from New Mall Subsidiary,  Mall
               Subsidiary,  Mall  Direct  Holdings,  New  Mall  Manager  or Mall
               Manager  following  the sale or other  disposition  of all or any
               portion of the Mall or any interest therein (including by sale or
               other  disposition of any equity interest in New Mall Subsidiary,
               Mall  Subsidiary,  Mall  Direct  Holdings,  Mall  Holdings,  Mall
               Manager or New Mall  Manager)  or any  issuance of debt or equity
               securities   of  such   entities   to  the  extent   included  in
               Consolidated  Adjusted EBITDA up to the amount of the proceeds of
               such sale,  disposition or issuance (net of any  distribution for
               Permitted Quarterly Tax Distributions made in accordance with the
               last sentence of subsection  2.4B(iii)(g))  and (f) the amount of
               any Conforming Adelson L/C to the extent included in Consolidated
               Adjusted EBITDA.

               "Consolidated  Fixed  Charges"  means,  for any  period,  the sum
               (without  duplication)  of the  amounts  for such  period  of (i)
               Consolidated Cash Interest Expense,  (ii) scheduled repayments of
               principal on Indebtedness  (other than repayment of the Revolving
               Loan on the Revolving Loan Commitment  Termination  Date),  (iii)
               any  amounts   distributed  by  Borrowers  for  tax  payments  in
               accordance  with  subsection  7.5 with respect to such period and
               (without  duplication)  provisions  for  taxes  based  on  income
               payable by Borrowers to any  Governmental  Instrumentality,  (iv)
               Consolidated  Rental  Payments,   and  (v)  Consolidated  Capital
               Expenditures,   all  of  the   foregoing  as   determined   on  a
               consolidated  basis  for  Borrowers  and  their  Subsidiaries  in
               conformity with GAAP.

<PAGE>

               "Consolidated  Interest  Expense"  means,  for any period,  total
               interest expense (including that portion  attributable to Capital
               Leases in  accordance  with  GAAP and  capitalized  interest)  of
               Borrowers and their  Subsidiaries  on a  consolidated  basis with
               respect to all outstanding  Indebtedness of Borrowers,  including
               all  commissions,  discounts and other fees and charges owed with
               respect to letters of credit and  bankers'  acceptance  financing
               and net costs under  Interest  Rate  Agreements,  but  excluding,
               however,  any amounts  referred to in  subsection  2.3 payable to
               Agents and Lenders on or before the Closing Date.

               "Consolidated  Net Income" means, for any period,  the net income
               (or loss) of Borrowers and their  Subsidiaries  on a consolidated
               basis  for  such  period  taken  as a  single  accounting  period
               determined in conformity with GAAP;  provided that there shall be
               excluded  (i) the income (or loss) of any  Person  (other  than a
               Subsidiary of a Borrower),  except to the extent of the amount of
               dividends or other  distributions  actually  paid to Borrowers or
               any of their Subsidiaries by such Person during such period, (ii)
               the income (or loss) of any Person  accrued  prior to the date it
               is merged into or  consolidated  with  Borrowers or that Person's
               assets are acquired by Borrowers,  (iii) any  after-tax  gains or
               losses  attributable to Asset Sales or returned surplus assets of
               any  Pension  Plan,  (iv)  dividends  or  distributions  from any
               Excluded Subsidiary to Borrowers or any Subsidiary which are used
               to fund  Permitted  Quarterly Tax  Distributions  and (v) (to the
               extent not included in clauses (i), (ii) and (iii) above) any net
               extraordinary gains or net non-cash extraordinary losses.

               "Consolidated  Net Worth" means, as of any date of determination,
               (i) the sum of the following  items, as shown on the consolidated
               balance  sheet of LVSI and its  Subsidiaries  as of such date (a)
               the  common  equity  of LVSI  and its  Subsidiaries,  (b)(1)  the
               aggregate liquidation  preference of preferred stock or preferred
               membership  interests  of LVSI and its  Subsidiaries  and (2) any
               increase in  depreciation  and  amortization  resulting  from any
               purchase  accounting  treatment  from an  acquisition  or related
               financing;  (ii) less any  goodwill  incurred  subsequent  to the
               Closing  Date and (iii) less any write up of assets (in excess of
               fair  market  value)  after the Closing  Date,  in each case on a
               consolidated  basis for LVSI and its Subsidiaries,  determined in
               accordance with GAAP; provided, that in calculating  Consolidated
               Net  Worth,  any  gain or loss  from  any  Asset  Sale  shall  be
               excluded.

               "Consolidated   Rental  Payments"  means,  for  any  period,  the
               aggregate  amount of all rents paid or payable by  Borrowers  and
               their   Subsidiaries  on  a  consolidated  basis  (excluding  any
               Excluded  Subsidiaries)  during  that  period  under all  Capital
               Leases  to  which  either  Borrower  or any of  their  respective
               Subsidiaries is a party as lessee. Notwithstanding the foregoing,
               payments under the HVAC Services  Agreement  shall in no event be
               included in Consolidated Rental Payments.

               "Consolidated Total Debt" means, as at any date of determination,
               the aggregate  stated balance sheet amount of all Indebtedness of
               Borrowers and their  Subsidiaries,  determined on a  consolidated
               basis in accordance with GAAP,  excluding,  however, any Employee
               Purchase  Notes entered into in accordance  with  subsection  7.1
               (xi).

               "Consolidated   Working   Capital"  means,  as  at  any  date  of
               determination,  the excess (or deficit) of  Consolidated  Current
               Assets over Consolidated Current Liabilities.

               "Consolidated  Working Capital  Adjustment" means, for any period
               on a  consolidated  basis,  the  amount  (which may be a negative
               number) by which Consolidated Working Capital as of the beginning
               of such  period  exceeds (or is less than)  Consolidated  Working
               Capital as of the end of such period.

               "Construction  Agency Agreement" means that certain  Construction
               Agency Agreement dated as of the Closing Date by and between HVAC
               Provider and Venetian.

               "Construction  Consultant" means Tishman Construction Corporation
               of Nevada,  or any other person  designated  from time to time by
               the  Administrative  Agent,  the  Interim  Mall  Lender  and  the
               Mortgage  Notes  Indenture  Trustee,  in their  sole  discretion,
               acting pursuant to the Intercreditor  Agreement,  to serve as the
               Construction Consultant under the Disbursement Agreement.

               "Construction Consultant Engagement Agreement" means that certain
               engagement  letter  dated  November  14,  1997 by and  among  the
               Construction Consultant, Borrowers, Administrative Agent, Interim
               Mall Lender,  Goldman Sachs Mortgage Company,  the Mortgage Notes
               Indenture Trustee and Goldman Sachs & Co.

<PAGE>

               "Construction  Litigation" has the meaning  assigned to that term
               in subsection 5.17A.

               "Construction    Management   Agreement"   means   that   certain
               Construction  Management  Agreement dated as of February 15, 1997
               between  Borrowers and Construction  Manager for the construction
               of the Project as amended and assigned to Venetian  pursuant to a
               certain  Assignment,  Assumption  and  Amendment of  Construction
               Management Agreement dated as of the Closing Date.

               "Construction  Manager"  means Lehrer  McGovern Bovis Inc., a New
               York  corporation and its successors and assigns  permitted under
               the Construction Management Agreement.

               "Construction    Related   Obligations"   means   certain   Legal
               Requirements  in connection  with the  development of the Project
               including,  without  limitation,  obligations  under the Harrah's
               Shared  Roadway  Agreement  and the  obligations  referred  to in
               clause (v) of the definition of "Standby Letter of Credit".

               "Contingent  Obligation",  as  applied to any  Person,  means any
               direct or indirect  liability,  contingent or otherwise,  of that
               Person (i) with respect to any Indebtedness,  lease,  dividend or
               other  obligation  of  another if the  primary  purpose or intent
               thereof by the Person  incurring the Contingent  Obligation is to
               provide  assurance to the obligee of such  obligation  of another
               that such  obligation of another will be paid or  discharged,  or
               that any  agreements  relating  thereto will be complied with, or
               that the holders of such  obligation  will be protected (in whole
               or in part) against loss in respect thereof, (ii) with respect to
               any letter of credit  issued for the account of that Person or as
               to which that Person is  otherwise  liable for  reimbursement  of
               drawings,  or (iii) under  Interest Rate  Agreements.  Contingent
               Obligations  shall  include (a) the direct or indirect  guaranty,
               endorsement  (otherwise  than for  collection  or  deposit in the
               ordinary  course  of  business),   co-making,   discounting  with
               recourse or sale with  recourse by such Person of the  obligation
               of another,  (b) the  obligation to make  take-or-pay  or similar
               payments if required  regardless of  non-performance by any other
               party or parties to an  agreement,  and (c) any liability of such
               Person  for the  obligation  of  another  through  any  agreement
               (contingent  or  otherwise)   (X)  to  purchase,   repurchase  or
               otherwise acquire such obligation or any security therefor, or to
               provide  funds for the payment or  discharge  of such  obligation
               (whether in the form of loans, advances, stock purchases, capital
               contributions  or  otherwise)  or (Y) to maintain the solvency or
               any balance sheet item, level of income or financial condition of
               another  if,  in  the  case  of  any  agreement  described  under
               subclauses  (X) or (Y) of this sentence,  the primary  purpose or
               intent  thereof is as described in the  preceding  sentence.  The
               amount of any Contingent  Obligation shall be equal to the amount
               of the  obligation so  guaranteed  or otherwise  supported or, if
               less,  the  amount  to  which  such   Contingent   Obligation  is
               specifically limited.

               "Contractors"  means  any  architects,   consultants,  designers,
               contractors,  sub-contractors,  suppliers,  laborers or any other
               Person engaged by any  Borrower(s) in connection with the design,
               engineering,  installation and construction of the Project (other
               than Construction Manager).

               "Contracts" means, collectively, the contracts entered into, from
               time to time,  between any  Borrower(s)  and any  Contractor  for
               performance  of services or sale of goods in connection  with the
               design, engineering, installation or construction of the Project.

               "Contractual  Obligation",  as applied to any  Person,  means any
               provision  of  any  Security  issued  by  that  Person  or of any
               material   indenture,   mortgage,   deed  of   trust,   contract,
               undertaking,  agreement or other  instrument to which that Person
               is a party or by which it or any of its properties is bound or to
               which it or any of its properties is subject.

               "Cooperation  Agreement"  means that certain Amended and Restated
               Reciprocal Easement,  Use and Operating Agreement dated as of the
               Closing Date by and between  LVSI,  Venetian,  Mall  Construction
               Subsidiary  (replaced  by  New  Mall  Subsidiary  pursuant  to an
               amendment  dated  December 20,  1999),  Phase II  Subsidiary  and
               Interface.

               "Deed of Trust" means that certain Deed of Trust,  Assignment  of
               Rents and Leases and  Security  Agreement  in the form of Exhibit
               XIII  annexed  hereto,  dated  effective  as of the Closing  Date
               granted by  Borrowers  to the Title  Company,  for the benefit of
               Administrative Agent, as agent for the Lenders.
<PAGE>
               "Deposit Account" means a demand, time, savings, passbook or like
               account with a bank,  savings and loan association,  credit union
               or like  organization,  other  than  an  account  evidenced  by a
               negotiable certificate of deposit.

               "Direct  Construction  Guarantor"  means Bovis,  Inc., a New York
               corporation   or  any  successor   permitted   under  the  Direct
               Construction Guaranty.

               "Direct  Construction  Guaranty"  means that certain  Guaranty of
               Performance  and Completion  dated as of August 19, 1997 executed
               by the Direct Construction Guarantor in favor of LVSI.

               "Disbursement  Agent"  means  Scotiabank,   in  its  capacity  as
               Disbursement  Agent  under the  Disbursement  Agreement,  and any
               successor  Disbursement  Agent appointed pursuant to the terms of
               the Disbursement Agreement.

               "Disbursement  Agreement"  means  that  certain  Funding  Agents'
               Disbursement and Administration Agreement dated as of the Closing
               Date  among  Borrowers,  the Mall  Construction  Subsidiary,  the
               Administrative  Agent, the Mortgage Notes Indenture Trustee,  the
               Interim  Mall  Lender,  the HVAC  Provider  and the  Disbursement
               Agent.

               "Disbursement  Agreement  Event of  Default"  means  any Event of
               Default under and as defined in the Disbursement Agreement.

               "Dollars"  and the sign "$" mean the  lawful  money of the United
               States of America.

               "Eighth  Month  Certificate"  has the  meaning  set  forth in the
               Disbursement Agreement.

               "Eligible  Assignee"  means (A) (i) a commercial  bank  organized
               under the laws of the United States or any state thereof;  (ii) a
               savings and loan  association or savings bank organized under the
               laws  of  the  United  States  or  any  state  thereof;  (iii)  a
               commercial  bank organized under the laws of any other country or
               a political  subdivision thereof;  provided that (x) such bank is
               acting through a branch or agency located in the United States or
               (y) such bank is organized  under the laws of a country that is a
               member  of  the   Organization   for  Economic   Cooperation  and
               Development or a political  subdivision of such country; and (iv)
               any other entity which is an "accredited investor" (as defined in
               Regulation D under the  Securities  Act) which extends  credit or
               buys  loans  as  one  of  its  businesses   including   insurance
               companies,  mutual funds and lease financing  companies;  and (B)
               any Lender and any  Affiliate  of any  Lender;  provided  that no
               Affiliate  of  Borrowers  shall  be  an  Eligible  Assignee;  and
               provided  further that so long as no Event of Default  shall have
               occurred and be continuing, no (i) Person that owns or operates a
               casino  located in the State of Nevada or the State of New Jersey
               (or is an  Affiliate of such a Person)  (provided  that a passive
               investment  constituting less than 20% of the common stock of any
               such  casino  shall  not  constitute  ownership  thereof  for the
               purposes of this definition), (ii) Person that owns or operates a
               convention,  trade  show or  exhibition  facility  in Las  Vegas,
               Nevada or Clark County, Nevada (or an Affiliate of such a Person)
               (provided that a passive investment constituting less than 20% of
               the common stock of any such  convention  or trade show  facility
               shall  not   constitute   ownership   for  the  purpose  of  this
               definition),  or (iii)  union  pension  fund  (provided  that any
               intermingled  fund or  managed  account  which has as part of its
               assets under  management the assets of a union pension fund shall
               not be disqualified from being an Eligible Assignee  hereunder so
               long as the manager of such fund is not  controlled  by a union),
               shall be an Eligible  Assignee,  in each case which  Person shall
               not  have  been  denied  an  approval  or  a  license,  or  found
               unsuitable under the Nevada Gaming Laws applicable to Lenders.

               "Employee  Benefit  Plan" means any  "employee  benefit  plan" as
               defined in Section  3(3) of ERISA which is or was  maintained  or
               contributed to by Borrowers,  any of its  Subsidiaries  or any of
               their respective ERISA Affiliates.

               "Employee   Repurchase  Notes"  has  the  meaning  set  forth  in
               subsection 7.1.

               "Environmental Claim" means any investigation,  notice, notice of
               violation,  claim, action, suit,  proceeding,  demand,  abatement
               order or other order or directive (conditional or otherwise),  by
               any  governmental  authority  or any other  Person,  arising  (i)
               pursuant to or in connection with any actual or alleged violation
               of any  Environmental  Law, (ii) in connection with any Hazardous
               Materials or any actual or alleged Hazardous  Materials Activity,
               or (iii) in connection with any actual or alleged damage, injury,
               threat  or harm  to  health,  safety,  natural  resources  or the
               environment.
<PAGE>
               "Environmental   Laws"  means  any  and  all  current  or  future
               statutes,  ordinances,   orders,  rules,  regulations,   guidance
               documents,  judgments,  Permits,  or any  other  requirements  of
               governmental  authorities relating to (i) environmental  matters,
               including  those  relating to any Hazardous  Materials  Activity,
               (ii) the generation, use, storage,  transportation or disposal of
               Hazardous  Materials,  or (iii)  occupational  safety and health,
               industrial hygiene, land use or the protection of human, plant or
               animal health or welfare,  in any manner  applicable to Borrowers
               or  any of  its  Subsidiaries  or  any  Facility,  including  the
               Comprehensive Environmental Response, Compensation, and Liability
               Act  (42  U.S.C.ss.   9601  et  seq.),  the  Hazardous  Materials
               Transportation  Act (49  U.S.C.ss.  1801 et seq.),  the  Resource
               Conservation  and Recovery Act (42 U.S.C.ss.  6901 et seq.),  the
               Federal Water Pollution Control Act (33 U.S.C.ss.  1251 et seq.),
               the  Clean  Air  Act  (42  U.S.C.ss.  7401 et  seq.),  the  Toxic
               Substances  Control Act (15 U.S.C.ss.  2601 et seq.), the Federal
               Insecticide,  Fungicide and  Rodenticide  Act (7  U.S.C.ss.136 et
               seq.), the Occupational  Safety and Health Act (29 U.S.C.ss.  651
               et seq.),  the Oil Pollution  Act (33 U.S.C.ss.  2701 et seq) and
               the  Emergency  Planning  and  Community  Right-to-Know  Act  (42
               U.S.C.ss.  11001 et seq.),  each as amended or supplemented,  any
               analogous  present or future state or local statutes or laws, and
               any regulations promulgated pursuant to any of the foregoing.

               "Equipment  Component"  has the meaning  assigned to that term in
               the Disbursement Agreement.

               "ERISA"  means the  Employee  Retirement  Income  Security Act of
               1974, as amended from time to time,  and any  successor  thereto.
               "ERISA  Affiliate"  means,  as  applied  to any  Person,  (i) any
               corporation   which  is  a  member  of  a  controlled   group  of
               corporations  within the meaning of Section 414(b) of the Code of
               which  that  Person  is a  member;  (ii) any  trade  or  business
               (whether  or not  incorporated)  which is a member  of a group of
               trades or businesses  under common  control within the meaning of
               Section 414(c) of the Code of which that Person is a member;  and
               (iii) any  member  of an  affiliated  service  group  within  the
               meaning  of  Section  414(m)  or (o) of the  Code of  which  that
               Person,  any  corporation  described  in clause  (i) above or any
               trade or business described in clause (ii) above is a member. Any
               former ERISA Affiliate of Borrowers or any of their  Subsidiaries
               shall  continue to be considered an ERISA  Affiliate of Borrowers
               or such  Subsidiary  within the meaning of this  definition  with
               respect  to the period  such  entity  was an ERISA  Affiliate  of
               Borrowers  or such  Subsidiary  and with  respect to  liabilities
               arising after such period for which  Borrowers or such Subsidiary
               could be liable under the Code or ERISA.

               "ERISA Event" means (i) a  "reportable  event" within the meaning
               of Section 4043 of ERISA and the  regulations  issued  thereunder
               with respect to any Pension Plan  (excluding  those for which the
               provision  for  30-day  notice  to the PBGC has  been  waived  by
               regulation);  (ii)  the  failure  to  meet  the  minimum  funding
               standard of Section  412 of the Code with  respect to any Pension
               Plan (whether or not waived in accordance  with Section 412(d) of
               the  Code)  or the  failure  to make by its due  date a  required
               installment  under Section 412(m) of the Code with respect to any
               Pension Plan or the failure to make any required  contribution to
               a Multiemployer Plan; (iii) the provision by the administrator of
               any Pension  Plan  pursuant to Section  4041(a)(2)  of ERISA of a
               notice of intent to terminate such plan in a distress termination
               described in Section  4041(c) of ERISA;  (iv) the  withdrawal  by
               Borrowers,  any of its  Subsidiaries  or any of their  respective
               ERISA   Affiliates  from  any  Pension  Plan  with  two  or  more
               contributing sponsors or the termination of any such Pension Plan
               resulting in liability pursuant to Section 4063 or 4064 of ERISA;
               (v) the  institution  by the PBGC of proceedings to terminate any
               Pension Plan, or the  occurrence of any event or condition  which
               might  constitute  grounds under ERISA for the termination of, or
               the  appointment  of a trustee to  administer,  any Pension Plan;
               (vi)  the  imposition  of  liability  on  Borrowers,  any  of its
               Subsidiaries or any of their respective ERISA Affiliates pursuant
               to  Section  4062(e)  or  4069  of  ERISA  or by  reason  of  the
               application of Section 4212(c) of ERISA;  (vii) the withdrawal of
               Borrowers,  any of its  Subsidiaries  or any of their  respective
               ERISA Affiliates in a complete or partial  withdrawal (within the
               meaning   of   Sections   4203  and  4205  of  ERISA)   from  any
               Multiemployer Plan if there is any potential  liability therefor,
               or the receipt by Borrowers, any of its Subsidiaries or any of

<PAGE>

               their   respective   ERISA   Affiliates   of   notice   from  any
               Multiemployer  Plan that it is in  reorganization  or  insolvency
               pursuant to Section 4241 or 4245 of ERISA,  or that it intends to
               terminate or has terminated under Section 4041A or 4042 of ERISA;
               (viii) the occurrence of an act or omission which could give rise
               to the imposition on Borrowers, any of its Subsidiaries or any of
               their respective ERISA Affiliates of fines,  penalties,  taxes or
               related  charges  under  Chapter 43 of the Code or under  Section
               409,  Section  502(c),  (i) or (l),  or Section  4071 of ERISA in
               respect of any Employee  Benefit  Plan;  (ix) the  assertion of a
               material claim (other than routine  claims for benefits)  against
               any Employee Benefit Plan other than a Multiemployer  Plan or the
               assets thereof, or against Borrowers,  any of its Subsidiaries or
               any of their  respective  ERISA Affiliates in connection with any
               Employee  Benefit Plan; (x) receipt from the Service of notice of
               the failure of any Pension  Plan (or any other  Employee  Benefit
               Plan intended to be qualified  under Section  401(a) of the Code)
               to qualify  under  Section  401(a) of the Code, or the failure of
               any  trust  forming  part  of any  Pension  Plan to  qualify  for
               exemption from taxation under Section 501(a) of the Code; or (xi)
               the imposition of a Lien pursuant to Section 401(a)(29) or 412(n)
               of the Code or  pursuant  to ERISA with  respect  to any  Pension
               Plan.

               "Estimation  Period"  means the period  for which a  shareholder,
               partner or member,  who is an  individual is required to estimate
               for federal  income tax purposes his allocation of taxable income
               from a  Subchapter S  corporation  or a  partnership  for federal
               income tax purposes in connection with  determining his estimated
               federal income tax liability for such period.

               "Eurodollar  Rate Loans"  means Loans  bearing  interest at rates
               determined  by  reference  to the  Adjusted  Eurodollar  Rate  as
               provided in subsection 2.2A.

               "Event of Default"  means each of the events set forth in Section
               8.

               "Event of Loss"  means,  with  respect to any  property  or asset
               (tangible or intangible, real or personal), any of the following:
               (A) any loss,  destruction  or damage of such  property or asset;
               (B) any actual condemnation, seizure or taking by exercise of the
               power of eminent  domain or otherwise of such  property or asset,
               or  confiscation  of such property or asset or the requisition of
               the use of such property or asset;  or (C) any settlement in lieu
               of clause (B) above.

               "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
               amended from time to time, and any successor statute.

               "Excluded   Subsidiary"   means  any  Person  excluded  from  the
               definition  of  Subsidiary by virtue of the last sentence of such
               definition  set forth in this  Section  1.1  (including,  without
               limitation,  New  Mall  Subsidiary,  Mall  Subsidiary,  Phase  II
               Subsidiary,  Mall Direct Holdings, Phase II Direct Holdings, Mall
               Manager, New Mall Manager, and Phase II Manager).

               "Existing  Credit  Agreement"  has the  meaning  set forth in the
               first Recital.

               "Facilities"  means  any and all  real  property  (including  all
               buildings,  fixtures or other improvements  located thereon) now,
               hereafter  or  heretofore  owned,  leased,  operated  or  used by
               Borrowers or any of their Subsidiaries or any of their respective
               predecessors or Affiliates  including,  without  limitation,  the
               Site.

               "FDIC" means the Federal Deposit Insurance Corporation.

               "Federal  Funds  Effective  Rate"  means,   for  any  period,   a
               fluctuating  interest  rate equal for each day during such period
               to the weighted  average of the rates on overnight  Federal funds
               transactions  with members of the Federal Reserve System arranged
               by Federal funds brokers,  as published for such day (or, if such
               day is not a Business Day, for the next  preceding  Business Day)
               by the Federal  Reserve Bank of New York, or, if such rate is not
               so published  for any day which is a Business Day, the average of
               the  quotations  for such day on such  transactions  received  by
               Agent from three Federal  funds  brokers of  recognized  standing
               selected by Administrative Agent.

               "FF&E Facility" means the credit facilities,  equipment leases or
               similar   agreements  with  the  FF&E  Lenders  in  an  aggregate
               principal amount of approximately  $97,700,000  (plus accrued and
               unpaid interest  thereon) to finance the purchase and installment
               of the Specified FF&E.

<PAGE>

               "FF&E Facility Agreement" means (i) that certain credit agreement
               among Borrowers,  General  Electric  Capital  Corporation and the
               other FF&E Lenders party thereto  dated  December 22, 1997,  (ii)
               such  other   agreements   among  FF&E  Lender(s)  and  Borrowers
               providing  for all or a portion of the FF&E Facility (not covered
               under  clause  (i))  on  substantially  the  same  terms  as  the
               financing described in clause (i) above, or otherwise  reasonably
               satisfactory to the Arrangers and Administrative  Agent, provided
               in each case that the  applicable  FF&E Lenders have entered into
               intercreditor  agreement(s) in form and substance satisfactory to
               the Administrative Agent.

               "FF&E Intercreditor  Agreement" means that certain  Intercreditor
               Agreement  dated as of December  22, 1997  entered into among the
               Administrative  Agent, the Mortgage Notes Indenture Trustee,  the
               Interim Mall Lender and General Electric  Capital  Corporation as
               agent  for the FF&E  Lenders  and such  other  Persons  as may be
               necessary parties thereunder.

               "FF&E Lenders" means (i) General  Electric  Capital  Corporation,
               and the  other  lenders  that are  parties  to the FF&E  Facility
               Agreement  described in clause (i) of the definition of such term
               and  (ii)  any  other  lenders  under  any  other  FF&E  Facility
               Agreement,  provided  that each such other  lender  described  in
               clause (ii) would be an Eligible Assignee hereunder.

               "Final  Completion" has the meaning set forth in the Disbursement
               Agreement.

               "Final  Completion  Date"  has  the  meaning  set  forth  in  the
               Disbursement Agreement.

               "Financial  Plan"  has  the  meaning  assigned  to  that  term in
               subsection 6.1(xiii).

               "Financing Agreements" means,  collectively,  this Agreement, the
               Disbursement  Agreement,  the Interim Mall Credit Agreement,  the
               Mortgage Notes  Indenture,  the Collateral  Documents,  the Other
               Security  Documents,  the Mortgage Notes, any Approved  Equipment
               Funding Commitment,  the FF&E Facility Agreements, any Completion
               Guaranty  Note,  any  Substitute  Tranche B Note (as such term is
               defined in the Existing Credit Agreement),  and any other loan or
               security  agreements  entered  into by  Borrowers or any of their
               Subsidiaries  on, prior to or after the Closing  Date  (excluding
               the  Permanent  Mall Loan  Agreement)  to finance  the Project in
               accordance  with  subsection  7.13  and,  while  applicable,  the
               Disbursement Agreement.

               "First Priority" means,  with respect to any Lien purported to be
               created in any Collateral  pursuant to any  Collateral  Document,
               that such  Lien is the only  Lien  (other  than  Liens  permitted
               pursuant to subsection 7.2) to which such Collateral is subject.

               "First Priority  Collateral"  means all assets,  property,  real,
               personal and mixed of  Borrowers  and their  Subsidiaries,  other
               than the  Mortgage  Notes  Proceeds  Account,  the GECC  Proceeds
               Account,  the Interim Mall Proceeds Account,  the HVAC Component,
               the stock or membership  interests of  Subsidiaries  and Excluded
               Subsidiaries,  provided,  that any assets expressly excluded from
               the Lien in favor of  Administrative  Agent on behalf of  Lenders
               under  the  Collateral   Documents  shall  not  constitute  First
               Priority  Collateral and provided  further to the extent that the
               Lien of  Administrative  Agent in favor of the  Lenders in any of
               the Specified FF&E shall be released in accordance with the terms
               of the Company  Security  Agreement,  such  Specified  FF&E shall
               thereafter be excluded from the First Priority Collateral.

               "Fiscal Quarter" means a fiscal quarter of any Fiscal Year.

               "Fiscal  Year"  means  the  fiscal  year of  Borrowers  ending on
               December 31 of each calendar year.

               "Funded Debt", as applied to any Person,  means all  Indebtedness
               of that Person  (including any current portions thereof) which by
               its terms or by the terms of any instrument or agreement relating
               thereto matures more than one year from, or is directly renewable
               or  extendable  at the option of that  Person to a date more than
               one  year  from  (including  an  option  of that  Person  under a
               revolving  credit or similar  agreement  obligating the lender or
               lenders to extend credit over a period of one year or more from),
               the date of the creation thereof.

               "Funding   and   Payment   Office"   means  (i)  the   office  of
               Administrative  Agent located at 600  Peachtree  Street NE, Suite
               2700,  Atlanta,  Georgia  30308  or (ii)  such  other  office  of
               Administrative  Agent  as may  from  time  to time  hereafter  be
               designated   as   such  in  a   written   notice   delivered   by
               Administrative Agent to Borrowers and each Lender.

<PAGE>

               "Funding Date" means the date of the funding of a Loan.

               "GAAP"  means,  subject  to the  limitations  on the  application
               thereof  set  forth  in  subsection   1.2,   generally   accepted
               accounting principles set forth in opinions and pronouncements of
               the  Accounting  Principles  Board of the  American  Institute of
               Certified Public Accountants and statements and pronouncements of
               the  Financial  Accounting  Standards  Board  or  in  such  other
               statements  by  such  other  entity  as  may  be  approved  by  a
               significant segment of the accounting profession, in each case as
               the same are  applicable to the  circumstances  as of the date of
               determination.

               "Gaming   License"  means  every  license,   franchise  or  other
               authorization to own, lease,  operate or otherwise conduct gaming
               activities  of  the  Borrowers  or  any  of  their  Subsidiaries,
               including without limitation, all such licenses granted under the
               Nevada  Gaming  Control  Act,  and  the  regulations  promulgated
               pursuant thereto, and other applicable federal, state, foreign or
               local laws.

               "GECC  Proceeds  Account"  means  an  account  funded  solely  by
               proceeds of loans made pursuant to a credit agreement made by and
               between  LVSI  and/or  Venetian  and  General   Electric  Capital
               Corporation and other Lenders party thereto.

               "GMAC  Guaranty" means the guaranty dated as of November 14, 1997
               by Adelson in favor of Interim Mall Lender.

               "Governmental Instrumentality" means any national, state or local
               government   (whether   domestic  or  foreign),   any   political
               subdivision     thereof     or    any     other     governmental,
               quasi-governmental,     judicial,     public     or     statutory
               instrumentality,  authority,  body,  agency,  bureau  or  entity,
               (including the Nevada Gaming  Authorities,  any zoning authority,
               the FDIC, the  Comptroller of the Currency or the Federal Reserve
               Board,  any  central  bank or any  comparable  authority)  or any
               arbitrator with authority to bind a party at law.

               "Harrah's Shared Roadway Agreement" has the meaning assigned that
               term in the Disbursement Agreement.

               "Hazardous  Materials"  means  (i)  any  chemical,   material  or
               substance at any time defined as or included in the definition of
               "hazardous    substances",    "hazardous   wastes",    "hazardous
               materials",   "extremely  hazardous  waste",   acutely  hazardous
               waste",  "radioactive waste",  "biohazardous waste", "pollutant",
               "toxic pollutant",  "contaminant",  "restricted hazardous waste",
               "infectious  waste",  "toxic  substances",  or any other  term or
               expression  intended to define,  list or classify  substances  by
               reason of properties  harmful to health,  safety or the indoor or
               outdoor   environment   (including  harmful  properties  such  as
               ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
               reproductive toxicity,  "TCLP toxicity" or "EP toxicity" or words
               of similar import under any applicable  Environmental Laws); (ii)
               any oil,  petroleum,  petroleum  fraction  or  petroleum  derived
               substance;  (iii) any drilling fluids,  produced waters and other
               wastes associated with the exploration, development or production
               of crude  oil,  natural  gas or  geothermal  resources;  (iv) any
               flammable   substances  or   explosives;   (v)  any   radioactive
               materials;  (vi) any  asbestos-containing  materials;  (vii) urea
               formaldehyde foam insulation;  (viii) electrical  equipment which
               contains any oil or dielectric fluid  containing  polychlorinated
               biphenyls; (ix) pesticides; and (x) any other chemical,  material
               or  substance,  exposure  to  which  is  prohibited,  limited  or
               regulated  by any  governmental  authority  or which may or could
               pose a hazard to the health and safety of the  owners,  occupants
               or any Persons in the  vicinity of any  Facility or to the indoor
               or outdoor environment.

               "Hazardous Materials Activity" means any past, current,  proposed
               or  threatened  activity,   event  or  occurrence  involving  any
               Hazardous Materials, including the use, manufacture,  possession,
               storage,  holding,  presence,   existence,   location,   Release,
               threatened    Release,    discharge,    placement,    generation,
               transportation,  processing, construction,  treatment, abatement,
               removal,  remediation,  disposal,  disposition or handling of any
               Hazardous Materials, and any corrective action or response action
               with respect to any of the foregoing.

               "HC/Mall  Component" has the meaning given that term in Exhibit A
               to the Disbursement Agreement.

               "HVAC  Ground  Lease"  means  that  certain   Ground  Lease  made
               effective as of the Closing  Date  between  Venetian and the HVAC
               Provider.

<PAGE>

               "HVAC  Component" has the meaning given that term in Exhibit A to
               the Disbursement Agreement.

               "HVAC  Letters of Credit" has the  meaning  given to that term in
               Section 2.4 of the Disbursement Agreement.

               "HVAC Provider" means Atlantic-Pacific, Las Vegas LLC, a Delaware
               limited liability  company or its permitted  successors under the
               HVAC  Services  Agreement.   "HVAC  Services   Agreements"  means
               collectively (i) that certain Energy Services  Agreement dated as
               of the Closing Date between Venetian and the HVAC Provider,  (ii)
               the HVAC Ground Lease,  (iii) the  Construction  Agency Agreement
               and (iv) that certain Energy  Services  Agreement dated as of the
               Closing Date between Mall  Construction  Subsidiary  and the HVAC
               Provider.

               "Improvements"   means   the   buildings,   fixtures   and  other
               improvements to be situated on the Site.

               "Indebtedness",   as  applied  to  any  Person,   means  (i)  all
               indebtedness for borrowed money, (ii) that portion of obligations
               with respect to Capital  Leases that is properly  classified as a
               liability on a balance sheet in conformity with GAAP, (iii) notes
               payable and drafts  accepted  representing  extensions  of credit
               whether or not representing  obligations for borrowed money, (iv)
               any obligation owed for all or any part of the deferred  purchase
               price of  property or services  (excluding  any such  obligations
               incurred under ERISA and trade payables and accruals  incurred in
               the  ordinary  course  of  business),  and (v)  all  indebtedness
               secured by any Lien on any  property  or asset  owned or held and
               under  Contracts  by  that  Person   regardless  of  whether  the
               indebtedness  secured  thereby  shall  have been  assumed by that
               Person  or  is   nonrecourse   to  the  credit  of  that  Person.
               Obligations under Interest Rate Agreements  constitute Contingent
               Obligations  and not  Indebtedness.  All  obligations  under  the
               Financing Agreements shall constitute  Indebtedness.  Obligations
               under the HVAC  Services  Agreement  (as in effect on the Closing
               Date)   shall  be   treated  as  a  service   contract   and  not
               Indebtedness.

               "Indemnitee"  has the meaning assigned to that term in subsection
               10.3.

               "Indentures"   means  the  Mortgage   Notes   Indenture  and  the
               Subordinated Notes Indenture or either one of them.

               "Independent  Consultants"  means  collectively  the Construction
               Consultant,  the  Insurance  Advisor  or  in  either  case  their
               successors appointed pursuant to the Disbursement Agreement.

               "Independent Financial Advisor" means an accounting, appraisal or
               investment  banking firm of nationally  recognized  standing that
               is, in the judgment of LVSI's Board of  Directors,  (i) qualified
               to  perform  the task for  which  it has  been  engaged  and (ii)
               disinterested  and  independent  with  respect  to  LVSI  and its
               Subsidiaries and each Affiliate of LVSI and Adelson.

               "Indirect  Construction   Guarantor"  means  The  Peninsular  and
               Oriental Steam Navigation Company, a corporation  organized under
               the laws of England and Wales.

               "Indirect  Construction  Guaranty"  means that  certain  Guaranty
               dated as of August 19, 1997  executed  by  Indirect  Construction
               Guarantor in favor of LVSI.

               "Insurance  Advisor" means Sedgwick James of Tennessee,  Inc., or
               its successor, appointed pursuant to the Disbursement Agreement.

               "Intellectual   Property"   means   all   patents,    trademarks,
               tradenames,  copyrights,  technology, know-how and processes used
               in or  necessary  for the conduct of the business of Borrowers as
               proposed to be conducted pursuant to the Operative Documents that
               are material to the condition (financial or otherwise),  business
               or operations of the Borrowers.

               "Intercreditor  Agent"  means  Scotiabank,  in  its  capacity  as
               Intercreditor  Agent under the Intercreditor  Agreement,  and any
               successor  Intercreditor Agent appointed pursuant to the terms of
               the Intercreditor Agreement.

               "Intercreditor   Agreement"  means  that  certain   Intercreditor
               Agreement  dated as of the Closing Date among the  Administrative
               Agent,  the  Intercreditor  Agent,  the Mortgage Notes  Indenture
               Trustee,  the  Interim  Mall  Lender and the  Subordinated  Notes
               Indenture  Trustee,  in  substantially  the form of  Exhibit  XIV
               annexed hereto.

<PAGE>

               "Interest  Payment  Date" means (i) with respect to any Base Rate
               Loan,  each March 31, June 30,  September  30 and  December 31 of
               each year,  commencing  on the first such date to occur after the
               Closing Date, and (ii) with respect to any Eurodollar  Rate Loan,
               the last day of each  Interest  Period  applicable  to such Loan;
               provided that in the case of each Interest  Period of longer than
               three months "Interest Payment Date" shall also include each date
               that is three months, or an integral multiple thereof,  after the
               commencement of such Interest Period.

               "Interest  Period"  has the  meaning  assigned  to  that  term in
               subsection 2.2B.

               "Interest Rate Agreement" means any interest rate swap agreement,
               interest rate cap  agreement,  interest rate collar  agreement or
               other similar agreement or arrangement.

               "Interest  Rate  Determination  Date" means,  with respect to any
               Interest Period, two Business Days prior to the first day of such
               Interest Period.

               "Interface"   means  Interface   Group-Nevada,   Inc.,  a  Nevada
               corporation.

               "Interface  Lease" means the lease  agreement  dated  November 1,
               1996 between Interface and LVSI.

               "Interim  Mall  Credit   Agreement"  means  that  certain  Credit
               Agreement  dated as of the  Closing  Date among  Borrowers,  Mall
               Construction Subsidiary and Interim Mall Lender.

               "Interim Mall Lender" means GMAC Commercial Mortgage  Corporation
               and its permitted successors and assigns.

               "Interim  Mall  Proceeds  Account" has the meaning  assigned that
               term in the Disbursement Agreement.

               "Intermediate  Holding  Companies"  means Mall  Holdings  and the
               Phase II Holdings.

               "Investment"  means (i) any direct or indirect  purchase or other
               acquisition by Borrowers or any of their Subsidiaries of, or of a
               beneficial  interest  in,  any  Securities  of any  other  Person
               (including   any   Subsidiary),   (ii)  any  direct  or  indirect
               redemption,  retirement, purchase or other acquisition for value,
               by Borrowers or any of their Subsidiaries from any Person, of any
               equity  Securities of any  Subsidiary of Borrowers,  or (iii) any
               direct  or  indirect  loan,   advance  (other  than  advances  to
               employees for moving,  entertainment and travel expenses, drawing
               accounts  and  similar  expenditures  in the  ordinary  course of
               business)  or capital  contribution  by Borrowers or any of their
               Subsidiaries to any other Person,  including all indebtedness and
               accounts  receivable  from that other Person that are not current
               assets or did not arise from  sales to that  other  Person in the
               ordinary  course of business other than Interest Rate  Agreements
               required or permitted hereunder to hedge against  fluctuations in
               interest  rates.  The  amount  of  any  Investment  shall  be the
               original cost of such  Investment  plus the cost of all additions
               thereto,  without any  adjustments  for increases or decreases in
               value,  or write-ups,  write-downs or write-offs  with respect to
               such Investment.

               "Issuing Lender" means, with respect to any Letter of Credit, the
               Lender  which  agrees or is  otherwise  obligated  to issue  such
               Letter of Credit, determined as provided in subsection 3.1B(ii).

               "Joint  Venture"  means a joint  venture,  partnership  or  other
               similar arrangement,  whether in corporate,  partnership, limited
               liability company or other legal form;  provided that in no event
               shall any corporate  Subsidiary of any Person be considered to be
               a Joint Venture to which such Person is a party.

               "Legal Requirements" means all laws, statutes,  orders,  decrees,
               injunctions,   licenses,  permits,   approvals,   agreements  and
               regulations   of   any   Governmental    Instrumentality   having
               jurisdiction over the matter in question.

               "Lender" and "Lenders" means the persons  identified as "Lenders"
               and listed on the signature pages of this  Agreement,  whether or
               not executed by such Lenders,  together with their successors and
               permitted assigns pursuant to subsection 10.1;  provided that the
               term  "Lenders",  when  used  in  the  context  of  a  particular
               Commitment, shall mean Lenders having that Commitment.

<PAGE>

               "Letter of  Credit"  or  "Letters  of  Credit"  means  Commercial
               Letters of Credit and Standby  Letters of Credit  issued or to be
               issued by Issuing  Lenders for the account of Borrowers  pursuant
               to subsection 3.1.

               "Letter of Credit Usage" means, as at any date of  determination,
               the sum of (i) the maximum  aggregate  amount  which is or at any
               time  thereafter  may  become  available  for  drawing  under all
               Letters of Credit then outstanding plus (ii) the aggregate amount
               of all  drawings  under  Letters  of Credit  honored  by  Issuing
               Lenders and not  theretofore  reimbursed by Borrowers  (including
               any such  reimbursement  out of the proceeds of  Revolving  Loans
               pursuant to subsection 3.3B).

               "Leverage Ratio" has the meaning assigned that term in subsection
               7.6B.

               "Lien"  means,  with respect to any asset,  any  mortgage,  lien,
               pledge,  charge,  security interest or encumbrance of any kind in
               respect  of  such  asset,  whether  or  not  filed,  recorded  or
               otherwise   perfected   under   applicable   law  (including  any
               conditional sale or other title retention agreement, any lease in
               the nature thereof, any option or other agreement to sell or give
               a security interest in and any filing of or agreement to give any
               financing statement under the UCC).

               "Liquidated  Damages"  means any proceeds or  liquidated  damages
               paid  pursuant  to any  obligation,  default or breach  under the
               Contracts   and   Indirect   Construction   Guaranty  and  Direct
               Construction  Guaranty (net of actual and  documented  reasonable
               costs  incurred by Borrowers in  connection  with  adjustment  or
               settlement thereof, including taxes and any reasonable provisions
               made in respect of such costs and  expenses  (including  any such
               taxes paid or payable  by an owner of either  Borrower  or any of
               its  Subsidiaries)).  For purposes of this definition,  so-called
               "liquidated  damages"  insurance  policies  shall be deemed to be
               Contracts.

               "Loan"  or  "Loans"  means  one or more of the Term  Loans or the
               Revolving Loans or any combination thereof.

               "Loan Documents" means this Agreement,  the Notes, the Letters of
               Credit (and any applications for, or reimbursement  agreements or
               other documents or certificates executed by Borrowers in favor of
               an  Issuing  Lender  relating  to, the  Letters  of  Credit)  the
               Subsidiary   Guaranties,   the  Disbursement  Agreement  and  the
               Collateral Documents.

               "Loan Exposure" means,  with respect to any Lender as of any date
               of  determination,  the sum of (i) such  Lender's  Tranche A Term
               Loan  Exposure,  (ii) such Lender's  Tranche B Term Loan Exposure
               and (iii) such Lender's Revolving Loan Exposure.

               "Loan Party" means each Borrower,  Mall Construction  Subsidiary,
               each Intermediate  Holding Company and each other Subsidiary of a
               Borrower which may hereafter  become a party to any Loan Document
               and "Loan Parties" means all such Persons, collectively.

               "Loss  Proceeds"  has the  meaning  assigned  to that term in the
               Disbursement Agreement.

               "LVSI" means Las Vegas Sands, Inc., a Nevada corporation.

               "Mall" means the retail mall  component of the Project  described
               in more detail on Exhibit T-7 to the Disbursement Agreement.

               "Mall  Construction  Subsidiary"  means  Grand  Canal  Shops Mall
               Construction,  LLC, a Delaware  limited  liability  company and a
               wholly-owned subsidiary of Venetian.

               "Mall  Construction  Subsidiary  Security  Agreement"  means  the
               Security  Agreement  executed and delivered by Mall  Construction
               Subsidiary  on the  Closing  Date,  substantially  in the form of
               Exhibit XIX annexed hereto.

               "Mall  Direct  Holdings"  means Grand  Canal  Shops Mall  Holding
               Company, LLC, a Delaware limited liability company.

               "Mall  Escrow  Agreement"  has  the  meaning  set  forth  in  the
               Disbursement Agreement.

               "Mall  Holdings" means Mall  Intermediate  Holding Company LLC, a
               Delaware limited liability company and a wholly-owned  Subsidiary
               of Venetian.

<PAGE>

               "Mall  Management   Agreement"  means  that  certain   Management
               Agreement  between LVSI and Mall Operator  pursuant to which Mall
               Operator  has  agreed  to  perform  certain  management  services
               related  to the  Mall,  as the  same has  been  assigned  to Mall
               Subsidiary and subsequently to New Mall Subsidiary.

               "Mall  Manager"  means Grand Canal Shops Mall MM,  Inc., a Nevada
               corporation and a wholly-owned subsidiary of LVSI.

               "Mall Operator" means Forest City Commercial Management, Inc., an
               Ohio  corporation,  and any replacement Mall Operator selected in
               accordance with the terms hereof.

               "Mall  Parcel" means the mall space  subdivided  from the Site as
               one or  more  legally  separate  parcel  and  recorded  with  the
               applicable  Governmental  Authorities as described in more detail
               in Exhibit T-7 to the Disbursement Agreement.

               "Mall Parcel Creation Date" has the meaning assigned to that term
               in the Disbursement Agreement.

               "Mall Release Date" means November 12, 1999.

               "Mall  Retainage/Punchlist  Account" has the meaning set forth in
               the Disbursement Agreement.

               "Mall  Subsidiary"  means  Grand Canal Shops Mall LLC, a Delaware
               limited liability company.

               "Margin  Stock"  has  the  meaning   assigned  to  that  term  in
               Regulation  U of the Board of  Governors  of the Federal  Reserve
               System as in effect from time to time.

               "Material  Adverse  Effect" means (i) a material  adverse  effect
               upon the  business,  operations,  properties,  assets,  condition
               (financial or otherwise) or prospects of either (a) Borrowers and
               any of their Subsidiaries,  taken as a whole or (b) Borrowers and
               any of their Subsidiaries and Excluded  Subsidiaries,  taken as a
               whole or (ii) the material  impairment of the ability of any Loan
               Party  to  observe  or  perform,  or of  Administrative  Agent or
               Lenders to enforce, the Obligations.

               "Material  Contract"  means any contract or other  arrangement to
               which any Borrower(s),  or any of their  Subsidiaries are a party
               (other than the Loan Documents) for which breach, nonperformance,
               cancellation or failure to renew could  reasonably be expected to
               have a Material Adverse Effect.

               "Mortgage  Notes" means the 12.25% Mortgage Notes due 2004 issued
               by Borrowers pursuant to the Mortgage Notes Indenture.  "Mortgage
               Notes Collateral  Account  Agreement" has the meaning assigned to
               that term in the Disbursement Agreement.

               "Mortgage Note Holders" means the holders of the Mortgage Notes.

               "Mortgage Notes Indenture" means that certain  Indenture dated as
               of November 14, 1997 between Borrowers,  certain guarantors named
               therein and the Mortgage Notes Indenture Trustee.

               "Mortgage Notes  Indenture  Trustee" means US Bank Trust National
               Association  (formerly known as First Trust National Association)
               in its capacity as the trustee under the Mortgage Notes Indenture
               and its successors in such capacity.

               "Mortgage  Notes  Proceeds"  means  the gross  proceeds  from the
               issuance  of  the  Mortgage  Notes  in  the  amount  of at  least
               $425,000,000 (before deduction for underwriter's discounts,  fees
               and expenses).

               "Mortgage  Notes  Proceeds  Account" has the meaning set forth in
               the Disbursement Agreement.

               "Mortgage  Policy" has the  meaning  assigned to that term in the
               Existing Credit Agreement.

               "Mortgaged   Property"  means  the  real  property  described  in
               Schedule 5.5.

               "Multiemployer  Plan" means any Employee  Benefit Plan which is a
               "multiemployer plan" as defined in Section 3(37) of ERISA.

<PAGE>

               "Net Asset  Sale  Proceeds"  means the  aggregate  cash  proceeds
               received by any Borrower or any of its Subsidiaries in respect of
               any Asset Sale,  net of the direct  costs  relating to such Asset
               Sale  (including,   without  limitation  legal,   accounting  and
               investment  banking fees and  expenses,  employee  severance  and
               termination  costs,  any trade  payables  or similar  liabilities
               related to the assets sold and  required to be paid by the seller
               as a result thereof and sales,  finders' or broker's commission),
               and any  relocation  expenses  incurred  as a result  thereof and
               taxes  paid or  payable  as result  thereof  (including,  without
               limitation,  any  such  taxes  paid or  payable  by an  owner  of
               Borrower or any of its  Subsidiaries)  (after taking into account
               any  available  tax  credits or  deductions  and any tax  sharing
               arrangements), amounts required to be applied to the repayment of
               Indebtedness secured by a Lien (or amounts permitted by the terms
               of such Indebtedness to be otherwise reinvested in the Project to
               the  extent so  reinvested)  which is prior to the Lien under the
               Collateral  Documents on the asset or assets that are the subject
               of such Asset Sale, all distributions and other payments required
               to be made to minority  interest holders in a Subsidiary or joint
               venture  as a  result  of the  Asset  Sale  and any  reserve  for
               adjustment  in  respect of the sale price of such asset or assets
               or any liabilities  associated with the asset disposed of in such
               Asset Sale.

               "Net Loss Proceeds" means the aggregate cash proceeds received by
               any Borrower or any of its  Subsidiaries  in respect of any Event
               of  Loss,  including,  without  limitation,  insurance  proceeds,
               condemnation  awards or damages  awarded by any judgment,  net of
               the  direct   costs  in  recovery  of  such  Net  Loss   Proceeds
               (including, without limitation, legal, accounting,  appraisal and
               insurance  adjuster  fees and  expenses)  and any  taxes  paid or
               payable as a result thereof (including,  without limitation,  any
               such taxes paid or payable by an owner of  Borrower or any of its
               Subsidiaries)  (after  taking  into  account  any  available  tax
               credits  or  deductions  and any tax  sharing  arrangements)  and
               amounts  required to be applied to the repayment of  Indebtedness
               secured  by a Lien (or  amounts  permitted  by the  terms of such
               Indebtedness  to be  otherwise  reinvested  in the Project to the
               extent  so  reinvested)  which is prior to the  Liens of  Lenders
               under the  Collateral  Documents  on the asset or assets that are
               the subject of the Event of Loss.  Notwithstanding the foregoing,
               all proceeds of so-called "liquidated damages" insurance policies
               shall not be Net Loss Proceeds but shall be Liquidated Damages.

               "Nevada Gaming Authorities" shall mean, collectively,  the Nevada
               Gaming Commission, the Nevada State Gaming Control Board, and the
               Clark County Liquor and Gaming Licensing Board.

               "Nevada Gaming Laws" shall mean the Nevada Gaming Control Act, as
               modified  in  Chapter  463 of the  Nevada  Revised  Statutes,  as
               amended  from time to time,  and the  regulations  of the  Nevada
               Gaming Commission promulgated thereunder, as amended from time to
               time.

               "New Mall  Manager"  means Grand Canal Shops Mall MM  Subsidiary,
               Inc., a Nevada corporation and a wholly-owned  subsidiary of Mall
               Manager.

               "New Mall  Subsidiary"  means Grand Canal Shops Mall  Subsidiary,
               LLC, a Delaware limited liability company.

               "Non-Recourse   Financing"   means   Indebtedness   incurred   in
               connection  with  the  purchase  or  lease  of  personal  or real
               property   useful  in  the  business  of   Borrowers   and  their
               Subsidiaries and (i) as to which the lender upon default may seek
               recourse  or  payment  as  against  a  Borrower  or  any  of  its
               Subsidiaries  only  through the return or sale of the property or
               equipment  so  purchased  or  leased  and (ii) may not  otherwise
               assert a valid claim for payment on such  Indebtedness  against a
               Borrower or any of its  Subsidiaries  or any other  property of a
               Borrower or any of its Subsidiaries.

               "Notes" means one or more of the Term Notes or Revolving Notes or
               any combination thereof.

               "Notice of Borrowing" means a notice substantially in the form of
               Exhibit  I-A and/or  Exhibit  I-B  annexed  hereto  delivered  by
               Borrowers to  Administrative  Agent  pursuant to subsection  2.1B
               with respect to a proposed borrowing.

               "Notice of Conversion/Continuation"  means a notice substantially
               in  the  form  of  Exhibit  II  annexed   hereto   delivered   to
               Administrative  Agent pursuant to subsection 2.2D with respect to
               a proposed conversion or continuation of the applicable basis for
               determining the interest rate with respect to the Loans specified
               therein.

<PAGE>

               "Notice of Funding Request" has the meaning assigned that term in
               the Disbursement Agreement.

               "Notice  of  Issuance  of  Letter  of  Credit"   means  a  notice
               substantially  in the form of Exhibit XV annexed hereto delivered
               by  Borrowers  to  Administrative  Agent  pursuant to  subsection
               3.1B(i)  with  respect to the  proposed  issuance  of a Letter of
               Credit.

               "Obligations"  means all obligations of every nature of each Loan
               Party from time to time owed to Administrative Agent,  Arrangers,
               Syndication  Agent,  Lenders  or  any  of  them  under  the  Loan
               Documents,  whether for  principal,  interest,  reimbursement  of
               amounts   drawn  under   Letters  of  Credit,   fees,   expenses,
               indemnification or otherwise.

               "Officers'  Certificate" means, as applied to any corporation,  a
               certificate  executed  on  behalf  of  such  corporation  by  its
               chairman of the board (if an officer) or its  president or one of
               its vice  presidents  and by its chief  financial  officer or its
               treasurer  (in their  capacity as such  officer);  provided  that
               every Officers' Certificate with respect to the compliance with a
               condition  precedent to the making of any Loans  hereunder  shall
               include  (i) a statement  that the officer or officers  making or
               giving such  Officers'  Certificate  have read such condition and
               any definitions or other  provisions  contained in this Agreement
               relating  thereto,  (ii) a statement  that, in the opinion of the
               signers,   they  have  made  or  have  caused  to  be  made  such
               examination or investigation as is reasonably necessary to enable
               them to  express  an  informed  opinion as to whether or not such
               condition  has been  complied  with,  and (iii) a statement as to
               whether,  in the opinion of the signers,  such condition has been
               complied with in all material respects.

               "Opening   Conditions"   has  the   meaning   set  forth  in  the
               Disbursement Agreement.

               "Opening Date" means the date on which the hotel, casino, or mall
               portion of the Project opened for business.

               "Operating  Lease"  means,  as applied to any  Person,  any lease
               (including  leases  that may be  terminated  by the lessee at any
               time) of any property  (whether real,  personal or mixed) that is
               not a Capital  Lease  other than any such lease  under which that
               Person is the lessor.

               "Operative  Documents"  means the  Financing  Agreements  and the
               Project Documents.

               "Organizational   Documents"   means  (i)  with  respect  to  any
               corporation, its certificate or articles of incorporation and its
               bylaws,  (ii)  with  respect  to  any  limited  partnership,  its
               certificate of limited partnership and its partnership agreement,
               (iii) with respect to any general  partnership,  its  partnership
               agreement,  (iv) with respect to any limited  liability  company,
               its articles or  certificate  of  organization  and its operating
               agreement  and  (v)  with  respect  to  any  other  entity,   its
               equivalent organizational, governing documents.

               "Other  Indebtedness"  means (i) the Indebtedness of any Borrower
               or any of its Subsidiaries  evidenced by the Mortgage Notes, (ii)
               the  Indebtedness  of any  Borrower  or  any of its  Subsidiaries
               evidenced  by  the  Subordinated   Notes,  (iii)   [intentionally
               omitted],  (iv) the  Indebtedness  of any  Borrower or any of its
               Subsidiaries  evidenced by the FF&E Facility  Agreement,  (v) any
               Indebtedness  of any  Borrower  or any  of  its  Subsidiaries  in
               respect of any Completion Guaranty Loan and (vi) any Indebtedness
               of any Borrower under an Employee Repurchase Note.

               "Other  Security  Documents"  means,  the  Security  Documents as
               defined in the Disbursement Agreement,  other than the Collateral
               Documents.

               "Outside Completion  Deadline" means April 21, 1999, as such date
               was  extended   pursuant  to  Section  6.4  of  the  Disbursement
               Agreement.

               "PBGC"  means the Pension  Benefit  Guaranty  Corporation  or any
               successor thereto.

               "Pension  Plan" means any  Employee  Benefit  Plan,  other than a
               Multiemployer  Plan,  which is subject to Section 412 of the Code
               or Section 302 of ERISA.

<PAGE>

               "Permanent  Mall Lender" means any lender party from time to time
               to the Permanent Mall Loan Agreement  including,  but not limited
               to, Goldman Sachs Mortgage Company,  Scotiabank and any permitted
               successor or replacement thereto.

               "Permanent Mall Loan Agreement" means that certain Loan Agreement
               dated as of December  20, 1999 by and among New Mall  Subsidiary,
               as borrower,  Goldman  Sachs  Mortgage  Company,  as  Syndication
               Agent, Scotiabank,  as Collateral Agent and Administrative Agent,
               and the Permanent Mall Lenders party thereto from time to time.

               "Permits" means all authorizations,  consents,  decrees, permits,
               waivers,   privileges,   approvals  from  and  filings  with  all
               Governmental Instrumentalities including, without limitation, the
               Nevada Gaming  Authorities  necessary for the  realization of the
               Project in accordance with the Operative Documents.

               "Permitted  Employee  Repurchase"  has the  meaning  set forth in
               subsection 7.1.

               "Permitted  Liens" means the following types of Liens  (excluding
               any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
               the Code or by ERISA,  any such Lien  relating  to or  imposed in
               connection  with  any  Environmental  Claim,  and any  such  Lien
               expressly  prohibited  by  any  applicable  terms  of  any of the
               Collateral Documents provided in each case that such Liens do not
               secure Indebtedness for borrowed money:

                    (i) Liens for taxes,  assessments or governmental charges or
               claims the  payment  of which is not,  at the time,  required  by
               subsection 6.3;

                    (ii) statutory Liens of landlords,  statutory Liens of banks
               and rights of set-off, statutory Liens of carriers, warehousemen,
               mechanics,  repairmen,  workmen and materialmen,  and other Liens
               imposed by law, in each case  incurred in the ordinary  course of
               business  (a) for amounts not yet overdue or (b) for amounts that
               are overdue and that (in the case of any such amounts overdue for
               a period in excess of 5 days) are being  contested  in good faith
               by appropriate proceedings, so long as (1) such reserves or other
               appropriate  provisions,  if any,  as shall be  required  by GAAP
               shall have been made for any such contested  amounts,  and (2) in
               the case of a Lien with respect to any portion of the Collateral,
               such contest proceedings conclusively operate to stay the sale of
               any portion of the Collateral on account of such Lien;

                    (iii) Liens incurred or deposits made in the ordinary course
               of   business   in   connection   with   workers'   compensation,
               unemployment  insurance and other types of social security, or to
               secure the performance of tenders, statutory obligations,  surety
               and appeal  bonds,  bids,  leases,  government  contracts,  trade
               contracts,   performance  and  return-of-money  bonds  and  other
               similar obligations  (exclusive of obligations for the payment of
               borrowed money),  incurred in the ordinary course of business (a)
               for amounts  not yet overdue or (b) for amounts  that are overdue
               and that (in the case of any such amounts overdue for a period in
               excess  of  5  days)  are  being   contested  in  good  faith  by
               appropriate  proceedings,  so long as (1) such  reserves or other
               appropriate  provisions,  if any,  as shall be  required  by GAAP
               shall have been made for any such  contested  amounts  and (2) in
               the case of a Lien with respect to any portion of the Collateral,
               such contest proceedings conclusively operate to stay the sale of
               any portion of the Collateral on account of such Lien;

                    (iv) any  attachment  or judgment Lien not  constituting  an
               Event of Default under subsection 8.8;

                    (v)  leases  or  subleases   granted  to  third  parties  in
               accordance  with any  applicable  terms of this Agreement and the
               Collateral  Documents and not interfering in any material respect
               with the ordinary conduct of the business of a Borrower or any of
               its Subsidiaries;

                    (vi) easements, rights-of-way,  restrictions, encroachments,
               and other minor defects or  irregularities in title, in each case
               which do not and will not interfere in any material  respect with
               the ordinary  conduct of the business of a Borrower or any of its
               Subsidiaries  or result in a material  diminution in the value of
               any Collateral as security for the Obligations;

                    (vii)  leases   permitted  under   subsection  7.7  and  any
               leasehold  mortgage  in favor of any party  financing  the lessee
               under any lease permitted under  subsection 7.7 provided that (a)
               none of the Borrowers nor any of their Subsidiaries is liable for
               the payment of any  principal  of, or interest,  premiums or fees
               on,  such  financing  and (b) the  affected  lease and  leasehold
               mortgage are expressly  made subject and  subordinate to the Lien
               of the Deed of Trust;

<PAGE>

                    (viii)  Liens  created or  contemplated  by the  Cooperation
               Agreement (as in effect on the Closing Date);

                    (ix) Liens on real property of Borrowers arising pursuant to
               that certain  Harrah's Shared Roadway  Agreement (as in effect on
               the Closing Date);

                    (x) Liens incurred in connection with the  construction of a
               pedestrian   bridge  or  a  pedestrian  tunnel  under  Las  Vegas
               Boulevard and Sands Avenue  provided that such Liens will not (i)
               materially  interfere with,  impair or detract from the operation
               of the  business  of  Borrowers  and  their  Subsidiaries  or the
               construction  or  operation  of the  Project  and  (ii)  cause  a
               material decrease in the value of the Collateral.

                    (xi) Liens  arising  from  filing UCC  financing  statements
               relating  solely to leases  permitted  by this  Agreement;  (xii)
               Liens in favor of customs  and revenue  authorities  arising as a
               matter of law to secure  payment of customs  duties in connection
               with the importation of goods;

                    (xiii)  any zoning or similar  law or right  reserved  to or
               vested  in any  governmental  office  or  agency  to  control  or
               regulate the use of any real property;

                    (xiv) licenses of patents, trademarks and other intellectual
               property rights granted by a Borrower or any of its  Subsidiaries
               in the  ordinary  course of business and not  interfering  in any
               material  respect  with the  ordinary  conduct of the business of
               such Borrower or such Subsidiary; and

                    (xv) Liens created under the HVAC Services Agreements (as in
               effect on the Closing Date);

                    (xvi) Liens created under the  Predevelopment  Agreement (as
               in effect on the Closing Date);

                    (xvii) easements, restrictions, rights of way, encroachments
               and other minor defects or  irregularities  in title  incurred in
               connection  with the traffic study relating to increased  traffic
               on Las Vegas Boulevard as a result of completion of the Project;

                    (xviii)  Liens  incurred in  connection  with  Interest Rate
               Agreements  required or permitted to be maintained  hereunder and
               any Interest Rate Agreement  intended to hedge interest rate risk
               in respect of the FF&E Facility;

                    (xix)  restrictions  created under the Sale and Contribution
               Agreement (as in effect on the Closing Date);

                    (xx)  prior to the  Final  Completion  Date  any  "Permitted
               Liens" under the Disbursement Agreement; and

                       (xxi) Liens listed on Schedule 7.7.

               "Permitted   Quarterly   Tax   Distributions"   means   quarterly
               distributions  of Tax  Amounts  determined  on the  basis  of the
               estimated taxable income of LVSI or Venetian,  as the case may be
               (in each case including any such taxable income  attributable  to
               such  entity's  ownership  of interest in any other  pass-through
               entity for Federal income tax purposes  except that if all or any
               portion of the Completion  Guaranty Loan is outstanding  and held
               by Adelson  or a Related  Party and is not  paying  current  cash
               interest,  then such estimated taxable income shall be determined
               without giving effect to any non-cash  interest  payments on such
               loans held by Adelson or the  Related  Parties to the extent such
               non-cash  interest is  deductible),  for the  related  Estimation
               Period,  as in a statement filed with the  Administrative  Agent,
               provided,  however,  that (A) prior to any  distributions  of Tax
               Amounts the Borrowers shall deliver an officers' certificate with
               a statement to the effect that in the case of distributions to be
               made  by  Venetian,  Venetian  qualifies  as a  partnership  or a
               substantially  similarly treated  pass-through entity for federal
               income tax purposes or that, in the case of  distributions  to be
               made by LVSI, LVSI qualifies as a Subchapter S corporation  under
               the Code or a substantially similarly treated pass-through entity
               for federal  income tax purposes,  as the case may be, and (B) at
               the time of such distributions, the most recent audited financial
               statements  of LVSI reflect that LVSI was treated as a Subchapter
               S corporation under the Code or a substantially similarly treated
               pass-through  entity for federal income tax purposes and Venetian
               was treated as a partnership or substantially  similarly  treated
               pass-through  entity  for  Federal  income tax  purposes  for the
               period covered by such financial statements;  provided,  further,
               that, for an Estimation Period that includes a True-up

<PAGE>

               Determination  Date,  (A) if  the  True-up  Amount  is due to the
               members  or  shareholders,  as the  case  may be,  the  Permitted
               Quarterly Tax  Distribution  payable by LVSI or Venetian,  as the
               case may be, for the Estimation Period shall be increased by such
               True-up  Amount,  and (B) if the True-up Amount is due to LVSI or
               Venetian,  the Permitted  Quarterly Tax  Distribution  payable by
               LVSI or  Venetian as the case may be, for the  Estimation  Period
               shall be reduced by such True-up  Amount and the excess,  if any,
               of  the  True-up  Amount  over  such   Permitted   Quarterly  Tax
               Distribution shall be applied to reduce the immediately following
               Permitted Quarterly Tax Distribution(s) until such True-up Amount
               is  entirely  offset.  The  amount  of  Permitted  Quarterly  Tax
               Distribution relating to an Estimation Period including a True-up
               Determination  Date shall be determined by a Tax Amounts CPA, and
               the amount of Permitted  Quarterly Tax  Distribution  relating to
               all  other  Estimation  Periods  shall be  determined  by LVSI or
               Venetian, as the case may be.

               "Person"  means  and  includes  natural  persons,   corporations,
               limited  partnerships,  general  partnerships,  limited liability
               companies, limited liability partnerships, joint stock companies,
               Joint Ventures,  associations,  companies,  trusts,  banks, trust
               companies,  land trusts,  business trusts or other organizations,
               whether or not legal entities,  and governments (whether federal,
               state or local,  domestic or  foreign,  and  including  political
               subdivisions  thereof)  and agencies or other  administrative  or
               regulatory bodies thereof.

               "Phase II" means a hotel,  casino and mall complex proposed to be
               developed on the Phase II Land.

               "Phase II Casino Lease" means the gaming operations lease between
               the Phase II  Subsidiary  and LVSI or Venetian  pursuant to which
               LVSI or Venetian will operate the gaming  operations of the Phase
               II, entered into in accordance with subsection 7.10.

               "Phase II Direct  Holdings"  means  Lido  Casino  Resort  Holding
               Company, LLC, a Delaware limited liability company.

               "Phase II Holdings" means Lido Intermediate Holding Company, LLC,
               a  Delaware  limited  liability   company,   and  a  wholly-owned
               Subsidiary of Venetian.

               "Phase  II  Land"   means  the  real   property   consisting   of
               approximately  14  acres  of  the  Real  Estate  Contribution  as
               described  in more  detail  in  Exhibit  T-5 of the  Disbursement
               Agreement together with all improvements thereon.

               "Phase II Manager"  means Lido Casino  Resort MM,  Inc., a Nevada
               corporation, and wholly-owned subsidiary of LVSI and the managing
               member of Phase II Subsidiary.

               "Phase II Release  Conditions"  has the meaning  assigned to that
               term in the Disbursement Agreement.

               "Phase II  Subsidiary"  means Lido Casino  Resort,  LLC, a Nevada
               limited liability company.

               "Plans and  Specifications" has the meaning assigned to that term
               in the Disbursement Agreement.

               "Potential  Event of Default"  means a  condition  or event that,
               after notice or lapse of time or both,  would constitute an Event
               of Default.

               "Pre-Completion  Revenues  Account"  has the meaning  assigned to
               that term in the Disbursement Agreement.

               "Predevelopment  Agreement"  means the Sands  Resort Hotel Casino
               Agreement dated February 18, 1997 by and between Clark County and
               LVSI.

               "Prime Rate" means the rate that  Scotiabank  announces  from its
               New York  office  from time to time as its Dollar  prime  lending
               rate,  as in  effect  from  time to  time.  The  Prime  Rate is a
               reference rate and does not  necessarily  represent the lowest or
               best rate  actually  charged to any  customer.  Scotiabank or any
               other Lender may make commercial loans or other loans at rates of
               interest at, above or below the Prime Rate.

<PAGE>

               "Pro  Rata  Share"  means  (i)  with  respect  to  all  payments,
               computations  and other  matters  relating  to the Tranche A Term
               Loan  Commitment  or the Tranche A Term Loan of any  Lender,  the
               percentage  obtained  by  dividing  (x) the  Tranche  A Term Loan
               Exposure of that Lender by (y) the aggregate  Tranche A Term Loan
               Exposure  of all  Lenders,  (ii) with  respect  to all  payments,
               computations  and other  matters  relating  to the Tranche B Term
               Loan  Commitment  or the Tranche B Term Loan of any  Lender,  the
               percentage  obtained  by  dividing  (x) the  Tranche  B Term Loan
               Exposure of that Lender by (y) the aggregate  Tranche B Term Loan
               Exposure  of all  Lenders,  (iii) with  respect to all  payments,
               computations  and other matters  relating to the  Revolving  Loan
               Commitment or the Revolving Loans of any Lender or any Letters of
               Credit issued or participations  therein purchased by any Lender,
               the  percentage  obtained  by  dividing  (x) the  Revolving  Loan
               Exposure  of that  Lender  by (y) the  aggregate  Revolving  Loan
               Exposure of all  Lenders,  and (iv) for all other  purposes  with
               respect to each Lender,  the percentage  obtained by dividing (x)
               the sum of the  Tranche A Term Loan  Exposure of that Lender plus
               the  Tranche  B Term  Loan  Exposure  of  that  Lender  plus  the
               Revolving  Loan  Exposure  of that  Lender  by (y) the sum of the
               aggregate  Tranche A Term Loan  Exposure of all Lenders  plus the
               aggregate  Tranche  B Loan  Exposure  of  all  Lenders  plus  the
               aggregate  Revolving  Loan  Exposure of all Lenders,  in any such
               case as the applicable  percentage may be adjusted by assignments
               permitted pursuant to subsection 10.1. The Pro Rata Share of each
               Lender as of the Restatement Closing Date for purposes of each of
               clauses (i),  (ii),  (iii) and (iv) of the preceding  sentence is
               set  forth  opposite  the name of that  Lender  in  Schedule  2.1
               annexed hereto.

               "Professional  Services  Agreement" means that certain  Agreement
               between Owner and Architect dated as of the Closing Date, between
               Borrowers and Project Architect.

               "Project"  means  the  Venetian-themed   hotel,  casino,  retail,
               meeting  and   entertainment   complex,   with  related  heating,
               ventilation and air conditioning and power station  facilities to
               be developed at the Site, all as more  particularly  described in
               Exhibit T-1 to the Disbursement Agreement.

               "Project Architect" means  collectively,  TSA of Nevada, LLP, and
               WAT&G, Inc. Nevada.

               "Project  Budget"  has  the  meaning  assigned  that  term in the
               Disbursement Agreement.

               "Project  Costs"  has the  meaning  assigned  to that term in the
               Disbursement Agreement.

               "Project Documents" means the Construction  Management Agreement,
               the  Completion  Guaranties,   the  Contracts,   the  Cooperation
               Agreement, the Professional Services Agreement, the HVAC Services
               Agreements, the HVAC Ground Lease, the Mall Management Agreement,
               the  Predevelopment  Agreement,  the Billboard  Master Lease, the
               Harrah's Shared Roadway Agreement,  the Services  Agreement,  the
               Sale and Contribution  Agreement,  the Casino Lease, the Treadway
               Agreement,   the  Work  Continuation  Agreement,   the  operating
               agreements  for each of  Venetian  and the  Intermediate  Holding
               Companies  and any other  document or agreement  entered into on,
               prior to or after the Closing Date,  in  accordance  with Section
               7.13 and, while applicable,  the Disbursement  Agreement relating
               to the development, construction, maintenance or operation of the
               Project  provided,  that  following  the  Mall  Release  Date any
               contracts  and   agreements   relating  to  the  Mall  which  are
               transferred to Mall  Subsidiary or New Mall  Subsidiary  shall no
               longer constitute Project Documents.

               "Project  Schedule"  has the  meaning  assigned  that term in the
               Disbursement Agreement.

               "Quarterly Date" means the last day of each Fiscal Quarter.

               "Quarterly  Payment  Period"  means the period  commencing on the
               tenth day and  ending and  including  the  twentieth  day of each
               month in which  federal  estimated tax payments are due (provided
               that  payments in respect of estimated  state income taxes due in
               January may instead,  at the option of Borrowers,  be paid during
               the last five days of the immediately preceding December).

               "Real Estate  Contribution" has the meaning assigned to that term
               in the introduction to this Agreement and as that term is defined
               in the Existing Credit Agreement.

               "Register"  has the meaning  assigned to that term in  subsection
               2.1D.

<PAGE>

               "Regulation  D" means  Regulation  D of the Board of Governors of
               the Federal Reserve System, as in effect from time to time.

               "Reimbursement  Date" has the  meaning  assigned  to that term in
               subsection 3.3B.

               "Related Parties" means and shall include: (i) Family Members, as
               hereafter  defined;  (ii)  directors  of  LVSI  or  Venetian  and
               employees of LVSI or Venetian who are senior managers or officers
               of LVSI,  Venetian,  Interface or any of their Affiliates;  (iii)
               any person who receives an interest in LVSI or Venetian  from any
               individual   referenced  in  clauses  (i)-(ii)  in  a  gratuitous
               transfer, whether by gift, bequest or otherwise, to the extent of
               such interest;  (iii) the estate of any individual  referenced in
               clauses (i)-(iii); (iv) a trust for the benefit of one or more of
               the individuals  referenced in clauses  (i)-(iii);  and/or (v) an
               entity owned or  controlled,  directly or  indirectly,  by one or
               more of the individuals,  estates of trusts referenced in clauses
               (i)-(iv).  For the purpose of this  paragraph,  a `Family Member'
               shall include:  (i) Sheldon G. Adelson;  (ii) Dr. Miriam Adelson;
               (iii) any sibling of either of the  foregoing;  (iv) any issue of
               any one or more of the  individuals  referenced  in the preceding
               clauses  (i)-(iii);  and (v) the spouse or issue of the spouse of
               one  or  more  of the  individuals  referenced  in the  preceding
               clauses (i)-(iv).

               "Release" means any release, spill, emission,  leaking,  pumping,
               pouring,  injection,   escaping,  deposit,  disposal,  discharge,
               dispersal,  dumping, leaching or migration of Hazardous Materials
               into the indoor or outdoor environment (including the abandonment
               or  disposal  of  any   barrels,   containers   or  other  closed
               receptacles  containing any Hazardous  Materials),  including the
               movement  of any  Hazardous  Materials  through  the  air,  soil,
               surface water or groundwater.

               "Requisite Class Lenders" means, at any time of determination (i)
               for the Class of  Lenders  having  Tranche A Term Loan  Exposure,
               Lenders  having  or  holding  more  than  50% of  the  sum of the
               aggregate  Tranche A Term Loan Exposure of all Lenders,  (ii) for
               the Class of Lenders having Tranche B Term Loan Exposure, Lenders
               having or holding more than 50% of the sum of aggregate Tranche B
               Term  Loan  Exposure  of all  Lenders  and (iii) for the Class of
               Lenders having Revolving Loan Exposure, Lenders having or holding
               more than 50% of the  aggregate  Revolving  Loan  Exposure of all
               Lenders.

               "Requisite Lenders" means Lenders having or holding more than 50%
               of the sum of the  aggregate  Loans and unused  Commitment of all
               Lenders.

               "Restatement  Closing Date" means the date, on or before June __,
               2000,  on which this  Agreement is executed and delivered and the
               Tranche B Term Loans are made.

               "Restaurant   Leases"  means   together  (i)  the  lease  between
               Valentino Las Vegas,  LLC, a Nevada limited liability company and
               Venetian  dated  as of May  15,  1999,  (ii)  the  lease  between
               Positano Las Vegas,  LLC, a Nevada limited  liability company and
               New   Mall   Subsidiary,   as   successor-in-interest   to   Mall
               Construction  Subsidiary  dated as of  November 4, 1999 and (iii)
               the lease between  Carnevale  Coffee Bar,  LLC, a Nevada  limited
               liability company and New Mall Subsidiary,  dated as of April 26,
               2000.

               "Restricted  Junior  Payment"  means  (i) any  dividend  or other
               distribution, direct or indirect, on account of any shares of any
               class of stock of either  Borrower now or hereafter  outstanding,
               except a dividend  or  distribution  payable  solely in shares of
               that  class  of  stock  to the  holders  of  that  class  (or the
               accretion   of  such   dividends  or   distribution),   (ii)  any
               redemption, retirement, sinking fund or similar payment, purchase
               or other acquisition for value, direct or indirect, of any shares
               of any  class  of  stock  of  either  Borrower  now or  hereafter
               outstanding,  (iii) any payment made to retire,  or to obtain the
               surrender of, any outstanding  warrants,  options or other rights
               to acquire shares of any class of stock of either Borrower now or
               hereafter   outstanding,   (iv)  any  payment  or  prepayment  of
               principal  of,  premium,  if any, or interest on, or  redemption,
               purchase, retirement, defeasance (including in-substance or legal
               defeasance),  sinking  fund or similar  payment  with  respect to
               Other  Indebtedness and (v) any payment in respect of a repayment
               or reimbursement of amounts advanced to Borrowers or any of their
               Subsidiaries  by Adelson or any  Affiliate  of Adelson  under the
               Adelson Completion Guaranty.

               "Revolving  Loan  Availability  Date"  means  the  date on  which
               Construction  Consultant  delivers the Six-Month  Certificate  to
               Administrative Agent.

<PAGE>

               "Revolving Loan  Commitment"  means the commitment of a Lender to
               make  Revolving   Loans  to  Borrowers   pursuant  to  subsection
               2.1A(ii), and "Revolving Loan Commitments" means such commitments
               of all Lenders in the aggregate.

               "Revolving  Loan  Commitment  Termination  Date"  means March 15,
               2001.

               "Revolving Loan Exposure" means, with respect to any Lender as of
               any date of  determination  (i) prior to the  termination  of the
               Revolving  Loan   Commitments,   that  Lender's   Revolving  Loan
               Commitment  and (ii) after the  termination of the Revolving Loan
               Commitments,  the sum of (a) the aggregate  outstanding principal
               amount  of the  Revolving  Loans of that  Lender  plus (b) in the
               event that Lender is an Issuing Lender,  the aggregate  Letter of
               Credit  Usage in respect of all Letters of Credit  issued by that
               Lender (in each case net of any participations purchased by other
               Lenders in such  Letters of Credit or any  unreimbursed  drawings
               thereunder) plus (c) the aggregate  amount of all  participations
               purchased by that Lender in any outstanding  Letters of Credit or
               any unreimbursed drawings under any Letters of Credit.

               "Revolving  Loans"  means the Loans made by Lenders to  Borrowers
               pursuant to subsection 2.1A(ii).

               "Revolving  Notes"  means (i) the  promissory  notes of Borrowers
               issued  pursuant to subsection  2.1E on the Closing Date and (ii)
               any  promissory  notes issued by  Borrowers  pursuant to the last
               sentence of subsection 10.1B(i) in connection with assignments of
               the  Revolving  Loan  Commitments  and  Revolving  Loans  of  any
               Lenders,  in each case substantially in the form of Exhibit III-B
               annexed hereto, as they may be amended, supplemented or otherwise
               modified from time to time.

               "Sale and  Contribution  Agreement"  means that  certain Sale and
               Contribution  Agreement  dated  as  of  the  Closing  Date  among
               Venetian, Mall Construction Subsidiary and Mall Subsidiary.

               "Sands  Expo and  Convention  Center"  means the  exposition  and
               meeting   facilities   commonly  known  as  the  Sands  Expo  and
               Convention Center.

               "Scotiabank"  has  the  meaning  assigned  to  that  term  in the
               introduction to this Agreement.

               "Securities"  means any  stock,  shares,  partnership  interests,
               voting   trust   certificates,   certificates   of   interest  or
               participation  in any  profit-sharing  agreement or  arrangement,
               options,  warrants, bonds, debentures,  notes, or other evidences
               of indebtedness, secured or unsecured, convertible,  subordinated
               or otherwise,  or in general any  instruments  commonly  known as
               "securities"  or  any   certificates   of  interest,   shares  or
               participations  in  temporary  or  interim  certificates  for the
               purchase  or  acquisition  of,  or any  right  to  subscribe  to,
               purchase or acquire, any of the foregoing.

               "Securities  Act" means the  Securities  Act of 1933,  as amended
               from time to time, and any successor statute.

               "Services  Agreement"  means that amended and  restated  Services
               Agreement  dated  as of the  Closing  Date,  by and  among  LVSI,
               Interface,  Interface  Holding  Company,  Inc.,  and the  parties
               stated on the schedule thereto.

               "Site"  means the land on which the Project is to be  constructed
               as  described  in more detail in Exhibit T-4 to the  Disbursement
               Agreement.

               "Six-Month   Certificate"  has  the  meaning  set  forth  in  the
               Disbursement Agreement.

               "Solvent" means, with respect to any Person,  that as of the date
               of determination both (A) (i) the then fair saleable value of the
               property of such Person is (y) greater  than the total  amount of
               liabilities (including contingent liabilities) of such Person and
               (z) not less than the  amount  that will be  required  to pay the
               probable liabilities on such Person's then existing debts as they
               become   absolute   and   matured   considering   all   financing
               alternatives  and potential asset sales  reasonably  available to
               such Person; (ii) such Person's capital is not unreasonably small
               in relation to its business or any contemplated or undertaken

<PAGE>

               transaction;  and (iii) such Person does not intend to incur,  or
               believe (nor should it  reasonably  believe)  that it will incur,
               debts  beyond its  ability to pay such debts as they  become due;
               and (B) such Person is  "solvent"  within the meaning  given that
               term  and  similar  terms  under   applicable  laws  relating  to
               fraudulent  transfers  and  conveyances.  For  purposes  of  this
               definition,  the amount of any  contingent  liability at any time
               shall be  computed  as the  amount  that,  in light of all of the
               facts and  circumstances  existing at such time,  represents  the
               amount  that can  reasonably  be  expected to become an actual or
               matured liability.

               "Specified  FF&E" means any  furniture,  fixtures,  equipment and
               other personal  property financed with the proceeds from the FF&E
               Facility.

               "Standby  Letter of Credit" means any standby letter of credit or
               similar  instrument  issued  for the  purpose of  supporting  (i)
               Indebtedness  of  Borrowers in respect of  industrial  revenue or
               development  bonds  or  financings,  (ii)  workers'  compensation
               liabilities  of Borrowers,  (iii) the  obligations of third party
               insurers  of  Borrowers  arising  by  virtue  of the  laws of any
               jurisdiction  requiring  third party insurers,  (iv)  obligations
               with respect to Capital  Leases or Operating  Leases of Borrowers
               or with respect to the Harrah's  Shared  Roadway  Agreement,  (v)
               performance, payment, deposit or surety obligations of Borrowers,
               in any case if required by law or governmental rule or regulation
               (including,  without limitation,  if required by any Governmental
               Instrumentality  or  otherwise  necessary  in order to obtain any
               Permit  related to the Project) or in accordance  with custom and
               practice  in  the   industry   and  (vi)   Construction   Related
               Obligations;  provided that Standby  Letters of Credit may not be
               issued for the purpose of  supporting  (a) trade  payables or (b)
               any Indebtedness  constituting "antecedent debt" (as that term is
               used in Section 547 of Bankruptcy Code).

               "Stop   Funding   Notice"  has  the  meaning  set  forth  in  the
               Disbursement Agreement.

               "Subordinated Indebtedness" means (i) any Indebtedness in respect
               of the  Subordinated  Notes or the  Completion  Guaranty Loan and
               (ii) any Indebtedness in respect of Employee Repurchase Notes.

               "Subordinated Notes" means the $97,500,000 in aggregate principal
               amount  of split  coupon  Senior  Subordinated  Notes due 2005 of
               Borrowers issued pursuant to the Subordinated Notes Indenture.

               "Subordinated  Notes  Indenture"  means the Indenture dated as of
               November 14, 1997 between  Borrowers,  certain  guarantors  named
               therein and the Subordinated Notes Indenture Trustee.

               "Subordinated Notes Indenture Trustee" means First Union National
               Bank in its  capacity  as trustee  under the  Subordinated  Notes
               Indenture and its successors in such capacity.

               "Subsidiary"   means,  with  respect  to  any  Person,   (i)  any
               corporation, partnership, limited liability company, association,
               joint venture or other business  entity of which more than 50% of
               the total  voting  power of  shares  of stock or other  ownership
               interests  entitled  (without  regard  to the  occurrence  of any
               contingency)  to vote in the  election  of the  Person or Persons
               (whether   directors,   managers,   trustees  or  other   Persons
               performing similar functions) having the power to direct or cause
               the direction of the  management  and policies  thereof is at the
               time owned or controlled,  directly or indirectly, by that Person
               or one or more of the  other  Subsidiaries  of that  Person  or a
               combination thereof and (ii) any partnership or limited liability
               company  of  which  more  than  50%  of  such  entities'  capital
               accounts,  distribution  rights,  general or limited  partnership
               interests  or  membership   interests  are  owned  or  controlled
               directly  or  indirectly  by such  Person  or one of  more  other
               Subsidiaries   of  that   Person   or  a   combination   thereof.
               Notwithstanding   the  foregoing,   New  Mall  Subsidiary,   Mall
               Subsidiary,  Phase  II  Subsidiary,  Phase II  Manager,  Phase II
               Direct Holdings,  New Mall Manager,  Mall Manager and Mall Direct
               Holdings and their respective  Subsidiaries  shall not constitute
               Subsidiaries  under this  Agreement  or any other Loan  Document,
               except for purposes of Article 5 (representations and warranties)
               (other than  subsection  5.8) and  subsection  6.1 (as  specified
               therein) and for purposes of any definitions as used in Article 5
               or subsection 6.1.

               "Subsidiary  Guarantor"  means each of the  Intermediate  Holding
               Companies  and  any  other  Subsidiary  of any  of the  Borrowers
               excluding Venetian  Marketing,  Inc. that executes and delivers a
               counterpart  of the  Subsidiary  Guaranty on the Closing  Date or
               from time to time thereafter pursuant to subsection 6.13.

<PAGE>

               "Subsidiary  Guaranty" means the Subsidiary Guaranty executed and
               delivered  by  each of the  Intermediate  Holding  Companies  and
               existing  Subsidiaries of Borrowers on the Closing Date and to be
               executed and  delivered by additional  Subsidiaries  of Borrowers
               from time to time thereafter in accordance with subsection  6.13,
               substantially  in the form of Exhibit XI annexed hereto,  as such
               Subsidiary  Guaranty may  hereafter be amended,  supplemented  or
               otherwise modified from time to time.

               "Subsidiary  Security  Agreement" means each Subsidiary  Security
               Agreement  executed  and  delivered by any  Subsidiary  Guarantor
               other than the Intermediate  Holding  Companies from time to time
               thereafter  in  accordance  with  subsection  6.13,  in each case
               substantially in the form of Exhibit VIII annexed hereto, as such
               Subsidiary  Security  Agreement may be amended,  supplemented  or
               otherwise  modified from time to time, and  "Subsidiary  Security
               Agreements"  means  all  such  Subsidiary  Security   Agreements,
               collectively.

               "Substantial Completion" means all conditions to Final Completion
               have occurred  other than  completion of any  Anticipated  Future
               Work,  as  certified  by  the  Borrowers  and  the   Construction
               Consultant.

               "Substantial Completion Date" means the date on which Substantial
               Completion occurs.

               "Superior  Facilities"  has the meaning  assigned to that term in
               subsection 7.1(xv).

               "Supplemental  Agent" has the  meaning  assigned  to that term in
               subsection 9.1B.

               "Supplier  Joint  Venture"  means any  Person  that  supplies  or
               provides materials or services to any Borrower,  the Construction
               Manager or any  contractor in the Project and in which a Borrower
               or one of its Subsidiaries have Investments.

               "Syndication  Agent" has the meaning assigned to such term in the
               introduction to this Agreement.

               "Tax" or "Taxes" means any present or future tax,  levy,  impost,
               duty,  charge,  fee,  deduction or  withholding of any nature and
               whatever  called,  by  whomsoever,  on  whomsoever  and  wherever
               imposed, levied, collected,  withheld or assessed;  provided that
               "Tax on the overall net income" of a Person shall be construed as
               a reference  to a tax imposed by the  jurisdiction  in which that
               Person is organized or in which that  Person's  principal  office
               (and/or,  in the case of a Lender, its lending office) is located
               or in which that  Person  (and/or,  in the case of a Lender,  its
               lending  office) is deemed to be doing business on all or part of
               the net  income,  profits or gains  (whether  worldwide,  or only
               insofar as such income,  profits or gains are considered to arise
               in or to relate to a particular  jurisdiction,  or  otherwise) of
               that  Person  (and/or,  in the  case  of a  Lender,  its  lending
               office).

               "Tax Amount"  means,  with  respect to a  Estimation  Period or a
               taxable  year,  as the  case  may be an  amount  equal to (A) the
               product of (x) the taxable  income  (including all separate items
               of  income)  of LVSI or  Venetian,  as the case may be,  for such
               Estimation  Period or taxable  year,  as the case may be, and (y)
               the Applicable  Tax  Percentage  reduced by (B) to the extent not
               previously   taken  into   account,   any   income  tax   benefit
               attributable to LVSI or Venetian, as the case may be, which could
               be utilized  (without  regard to the actual  utilization)  by its
               members or  shareholders,  as the case may be, in the  current or
               prior taxable year,  or portion  thereof,  commencing on or after
               the  Closing  Date  (including  any tax  losses or tax  credits),
               computed at the  Applicable  Tax Percentage of the year that such
               benefit is taken into account for  purposes of this  computation;
               provided, however, that, the computation of Tax Amount shall also
               take into account (C) the  deductibility of state and local taxes
               for federal  income tax purposes,  and (D) any  difference in the
               Applicable  Tax  Percentage  resulting from the nature of taxable
               income (such as capital gain as opposed to ordinary income).

               "Tax Amounts CPA" means a nationally  recognized certified public
               accounting firm.

               "Term Loan  Commitments"  shall have the meaning assigned to that
               term in the Existing Credit Agreement.

<PAGE>

               "Term  Loans"  means the  Tranche A Term Loans and the  Tranche B
               Term Loans;  provided that for purposes of subsection 10.6, "Term
               Loans"  shall  have  the  meaning  assigned  to that  term in the
               Existing Credit Agreement.

               "Title  Company"  means,  Lawyers  Title of  Nevada,  Inc.  or an
               Affiliate  thereof  and/or  one or  more  other  title  insurance
               companies reasonably satisfactory to Administrative Agent.

               "Total  Utilization of Revolving Loan  Commitments"  means, as at
               any date of determination, the sum of (i) the aggregate principal
               amount of all  outstanding  Revolving Loans (other than Revolving
               Loans made for the purpose of reimbursing the applicable  Issuing
               Lender  for any amount  drawn  under any Letter of Credit but not
               yet so applied) plus (ii) the Letter of Credit Usage.

               "Tranche A Term Loan Commitment" means the commitment of a Lender
               to make a Tranche A Term Loan to Borrowers pursuant to subsection
               2.1A(i) of the  Existing  Credit  Agreement,  and "Tranche A Term
               Loan  Commitments"  means such  commitments of all Lenders in the
               aggregate.

               "Tranche A Term Loan Exposure" means,  with respect to any Lender
               as of any date of determination, the outstanding principal amount
               of the Tranche A Term Loans made by that Lender.

               "Tranche A Term Loan" or "Tranche A Term Loans" means one or more
               of the Loans made by Lenders to Borrowers  pursuant to subsection
               2.1A(i) of the Existing Credit Agreement.

               "Tranche  A  Term  Notes"  means  (i)  the  promissory  notes  of
               Borrowers  issued pursuant to subsection  2.1E(i) of the Existing
               Credit  Agreement  on the  Closing  Date and (ii) any  promissory
               notes  issued  by  Borrowers  pursuant  to the last  sentence  of
               subsection  10.1B(i) hereof or, of the Existing Credit  Agreement
               if issued prior to the  Restatement  Closing  Date, in connection
               with  assignments  of the  Tranche  A Term  Loan  Commitments  or
               Tranche A Term Loans of any Lenders,  in each case  substantially
               in the form of Exhibit III-A annexed hereto.

               "Tranche B Term Loan Commitment" means the commitment of a Lender
               to make a Tranche B Term Loan to Borrowers pursuant to subsection
               2.1A(iii),  and  "Tranche  B Term Loan  Commitments"  means  such
               commitments of all Lenders in the aggregate.

               "Tranche B Term Loan Exposure" means,  with respect to any Lender
               as of any date of  determination  (i) prior to the funding of the
               Tranche  B  Term  Loans,   that  Lender's  Tranche  B  Term  Loan
               Commitment  and (ii)  after  the  funding  of the  Tranche B Term
               Loans,  the  outstanding  principal  amount of the Tranche B Term
               Loans made by that Lender.

               "Tranche B Term Loan" or "Tranche B Term Loans" means one or more
               of the Loans made by Lenders to Borrowers  pursuant to subsection
               2.1A(iii).

               "Tranche  B  Term  Notes"  means  (i)  the  promissory  notes  of
               Borrowers  issued  pursuant to subsection 2.1E on the Restatement
               Closing  Date and (ii) any  promissory  notes issued by Borrowers
               pursuant  to  the  last  sentence  of   subsection   10.1B(i)  in
               connection   with   assignments   of  the  Tranche  B  Term  Loan
               Commitments or Tranche B Term Loans of any Lenders,  in each case
               substantially in the form of Exhibit III-C annexed hereto.

               "Transaction Costs" means the fees, costs and expenses payable by
               Borrowers  on or before the Closing Date in  connection  with the
               transactions  contemplated  by the Loan Documents and the Project
               Documents.

               "Treadway  Agreement"  means  that  certain  Time  and  Materials
               Agreement  dated  February  10,  1997  by and  between  LVSI  and
               Treadway Industries of Phoenix, Inc., an Arizona corporation.

               "True-up Amount" means, in respect of a particular  taxable year,
               an  amount  determined  by  the  Tax  Amounts  CPA  equal  to the
               difference  between (i) the  aggregated  Permitted  Quarterly Tax
               Distributions  actually  distributed  in respect of such  taxable
               year,  without  taking  into  account  any  adjustments  to  such
               Permitted  Quarterly Tax  Distributions  made with respect to any
               other taxable year (including any adjustment to take into account
               a True-up Amount for the immediately  preceding taxable year) and
               (ii) the Tax Amount  permitted  to be  distributed  in respect of
               such year as determined by reference to LVSI's Internal Revenue

<PAGE>

               Service  Form 1120-S or  Venetian's  IRS Form 1065 filed for such
               year;  provided,  however,  that if  there  is an  audit or other
               adjustment with respect to a return filed by the LVSI or Venetian
               (including  a  filing  of  an  amended  return),   upon  a  final
               determination  or resolution  of such audit or other  adjustment,
               the Tax Amounts CPA shall  redetermine the True-up Amount for the
               relevant taxable year. The amount equal to the excess, if any, of
               the  amount  described  in  clause  (i)  above  over  the  amount
               described  in  clause  (ii)  above  shall be  referred  to as the
               "True-up  Amount  due to  LVSI"  or the  "True-up  Amount  due to
               Venetian",  as the case  may be and the  excess,  if any,  of the
               amount  described  in clause  (ii) over the amount  described  in
               clause (i) shall be referred to as the "True-up Amount due to the
               shareholders or members."

               "True-up  Determination  Date"  means  the date on which  the Tax
               Amounts CPA  delivers a  statement  to the  Administrative  Agent
               indicating  the  True-up  Amount;  provided,  however,  that  the
               True-up  Determination Date shall not be later than 30 days after
               the  occurrence of an event  requiring the  determination  of the
               True-up  Amount  (including,  the filing of the federal and state
               tax returns or the final  determination or resolution of an audit
               or other adjustment, as the case may be).

               "UCC"  means  the  Uniform  Commercial  Code (or any  similar  or
               equivalent   legislation)   as  in  effect   in  any   applicable
               jurisdiction.

               "Venetian"  means Venetian  Casino Resort,  LLC, a Nevada limited
               liability company.

               "Work  Continuation  Agreement"  has the meaning set forth in the
               Disbursement Agreement.

1.2     Accounting Terms; Utilization of GAAP for Purposes of Calculations
        Under Agreement.
        ------------------------------------------------------------------------

     Except as otherwise  expressly  provided in this Agreement,  all accounting
terms not otherwise  defined herein shall have the meanings  assigned to them in
conformity with GAAP.  Financial statements and other information required to be
delivered by Borrowers to Lenders pursuant to clauses (i), (ii), (iii), (iv) and
(xiii) of subsection 6.1 shall be prepared in accordance  with GAAP as in effect
at the time of such preparation (and delivered  together with the reconciliation
statements provided for in subsection  6.1(v)).  Calculations in connection with
the definitions,  covenants and other provisions of this Agreement shall utilize
accounting  principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.

1.3    Other Definitional Provisions and Rules of Construction.
       -------------------------------------------------------

     A. Any of the terms  defined  herein  may,  unless  the  context  otherwise
requires, be used in the singular or the plural, depending on the reference.

     B.  References to  "Sections"  and  "subsections"  shall be to Sections and
subsections,  respectively,  of this  Agreement  unless  otherwise  specifically
provided.

     C.  The  use in any  of  the  Loan  Documents  of  the  word  "include"  or
"including",  when following any general statement, term or matter, shall not be
construed  to limit  such  statement,  term or matter to the  specific  items or
matters  set  forth  immediately  following  such  word or to  similar  items or
matters,  whether or not nonlimiting  language (such as "without  limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but  rather  shall be deemed to refer to all other  items or  matters  that fall
within the broadest possible scope of such general statement, term or matter.

     D. Any reference to any agreement or instrument  shall be deemed to include
a reference to such agreement or instrument as assigned,  amended,  supplemented
or otherwise  modified from time to time in accordance with subsection 7.13 and,
while applicable, the Disbursement Agreement.

     E. Any reference to a term defined in the Disbursement Agreement shall have
the meaning  assigned to it in the  Disbursement  Agreement  whether or not such
agreement remains in effect.

<PAGE>

Section 2.        AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

2.1    Commitments; Making of Loans; the Register; Notes.
       -------------------------------------------------

     A.  Commitments.  Subject to the terms and conditions of this Agreement and
in reliance upon the  representations  and  warranties  of Borrowers  herein set
forth and, while in effect, the  representations and warranties set forth in the
Disbursement  Agreement,  each Lender hereby  severally agrees to make the Loans
described in this subsection 2.1.A.

     (i)  Tranche A Term  Loans.  Each  Lender,  which had a Tranche A Term Loan
     Commitment under the Existing Credit Agreement,  has loaned to Borrowers an
     aggregate  amount not exceeding its Pro Rata Share of the aggregate  amount
     of the  Tranche  A Term Loan  Commitments,  which  amount  was used for the
     purposes  identified  in  subsection  2.5A(i).  The amount of each Lender's
     outstanding  Tranche  A Term  Loan as of the  opening  of  business  on the
     Restatement  Closing  Date is set forth  opposite  its name on Schedule 2.1
     annexed  hereto and the aggregate  amount of the Tranche A Term Loans as of
     the opening of business on the  Restatement  Closing Date is  $133,125,000.
     Amounts  borrowed under this  subsection  2.1A and  subsequently  repaid or
     prepaid may not be  reborrowed.  For the avoidance of doubt,  all Tranche A
     Term Loans made under the Existing  Credit  Agreement  shall continue under
     this  Agreement  except to the extent of the  prepayment  from  proceeds of
     Tranche B Term Loans referred to in Subsection 2.5A(ii).

     (ii)  Revolving  Loans.  Each  Lender  severally  agrees,  subject  to  the
     limitations set forth below with respect to the maximum amount of Revolving
     Loans  permitted to be outstanding  from time to time, to lend to Borrowers
     from time to time during the period from the Closing Date to but  excluding
     the Revolving  Loan  Commitment  Termination  Date an aggregate  amount not
     exceeding its Pro Rata Share of the aggregate  amount of the Revolving Loan
     Commitments to be used for the purposes  identified in subsection 2.5B. The
     amount of each Lender's  Revolving  Loan  Commitment as of the  Restatement
     Closing Date is set forth  opposite its name on Schedule 2.1 annexed hereto
     and the  aggregate  amount  of the  Revolving  Loan  Commitments  as of the
     Restatement  Closing Date is $40,000,000;  provided that the Revolving Loan
     Commitments of Lenders shall be adjusted to give effect to any  assignments
     of the  Revolving  Loan  Commitments  pursuant  to  subsection  10.1B;  and
     provided,  further that the amount of the Revolving Loan Commitments  shall
     be reduced from time to time by the amount of any  reductions  thereto made
     pursuant to  subsections  2.4B(ii) and 2.4B(iii).  Each Lender's  Revolving
     Loan Commitment  shall expire on the Revolving Loan Commitment  Termination
     Date and all  Revolving  Loans and all other  amounts owed  hereunder  with
     respect to the Revolving Loans and the Revolving Loan Commitments  shall be
     paid  in full  no  later  than  that  date.  Amounts  borrowed  under  this
     subsection  2.1A(ii)  may be repaid and  reborrowed  to but  excluding  the
     Revolving Loan Commitment Termination Date. For the avoidance of doubt, all
     Revolving Loans made and Letters of Credit issued under the Existing Credit
     Agreement shall continue under this Agreement.

     Anything contained in this Agreement to the contrary notwithstanding, in no
     event shall the Total Utilization of Revolving Loan Commitments at any time
     exceed the Revolving Loan Commitments then in effect.

     (iii)  Tranche  B Term  Loans.  Each  Lender  having a  Tranche B Term Loan
     Commitment severally agrees to lend to Borrowers in one disbursement on the
     Restatement  Closing Date an amount not exceeding its Pro Rata Share of the
     aggregate amount of the Tranche B Term Loan Commitments, to be used for the
     purposes  identified  in subsection  2.5A(ii).  The amount of each Lender's
     Tranche B Term Loan  Commitment is set forth  opposite its name on Schedule
     2.1  annexed  hereto and the  aggregate  amount of the  Tranche B Term Loan
     Commitments as of the  Restatement  Closing Date is  $50,000,000;  provided
     that the Tranche B Term Loan  Commitments  of Lenders  shall be adjusted to
     give  effect to any  assignments  of the  Tranche  B Term Loan  Commitments
     pursuant to subsection  10.1B;  and provided further that the amount of the
     Tranche B Term Loan  Commitments  shall be reduced from time to time by the
     amount of any reductions thereto made pursuant to subsections  2.4B(ii) and
     2.4B(iii).  Each  Lender's  Tranche B Term  Loan  Commitment  shall  expire
     immediately  and without  further  action when the Tranche B Term Loans are
     made  on  the  Restatement   Closing  Date.  Amounts  borrowed  under  this
     subsection  2.1A(iii)  and  subsequently  repaid  or  prepaid  may  not  be
     reborrowed.

     B. Borrowing  Mechanics.  Term Loans or Revolving Loans made on any Funding
Date (other  than  Revolving  Loans made  pursuant  to  subsection  3.3B for the
purpose of  reimbursing  any Issuing  Lender for the amount of a drawing under a
Letter of Credit issued by it),  shall be in an aggregate  minimum amount of (y)
$3,000,000 and integral  multiples of $1,000,000 in excess of that amount in the
case of Term Loans and (z) $1,000,000 and integral  multiples of $500,000 in the
case of Revolving Loans; provided that the Tranche B Term Loans shall be made at
one time and in full on the Restatement Closing Date.

<PAGE>

     Whenever  Borrowers  desire that Lenders make Revolving  Loans or Tranche B
Term Loans they shall deliver to  Administrative  Agent a Notice of Borrowing no
later than  10:00 A.M.  (New York City  time) at least  three  Business  Days in
advance of the proposed  Funding Date (in the case of a Eurodollar Rate Loan) or
at least one Business  Day in advance of the proposed  Funding Date (in the case
of a Base Rate Loan).  The Notice of  Borrowing  shall  specify (i) the proposed
Funding Date (which shall be a Business Day), (ii) the amount of Revolving Loans
or Tranche B Term Loans requested, (iii) whether such Revolving Loans or Tranche
B Term Loans shall be Base Rate Loans or Eurodollar Rate Loans,  and (iv) in the
case of any Loans  requested to be made as  Eurodollar  Rate Loans,  the initial
Interest Period requested therefor.  Borrowers shall notify Administrative Agent
and Disbursement  Agent prior to the funding of any Revolving Loans in the event
that any of the  matters  to which  Borrowers  are  required  to  certify in the
applicable  Notice  of  Borrowing  is no  longer  true  and  correct  as of  the
applicable  Funding Date, and the acceptance by Borrowers of the proceeds of any
Revolving  Loans shall  constitute a  re-certification  by Borrowers,  as of the
applicable  Funding Date,  as to the matters to which  Borrowers are required to
certify in the applicable Notice of Borrowing.

     Except as otherwise  provided in subsections  2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar  Rate Loan shall be  irrevocable  on and after the
related Interest Rate Determination Date, and Borrowers shall be bound to make a
borrowing in accordance therewith.

     C.  Disbursement of Funds.  All Loans under this Agreement shall be made by
Lenders  simultaneously and proportionately to their respective Pro Rata Shares,
it being  understood  that no Lender shall be responsible for any default by any
other  Lender  in  that  other  Lender's  obligation  to  make a Loan  requested
hereunder nor shall the Commitment of any Lender to make the particular  type of
Loan  requested  be increased or decreased as a result of a default by any other
Lender in that other  Lender's  obligation to make a Loan  requested  hereunder.
Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to  subsection  2.1B,  Administrative  Agent  shall  notify  each  Lender of the
proposed  borrowing.  Each Lender shall make the amount of its Loan available to
Administrative  Agent  not later  than  12:00  Noon (New York City  time) on the
applicable  Funding  Date,  in same day funds in  Dollars,  at the  Funding  and
Payment Office.  Except as provided in subsection 3.3B with respect to Revolving
Loans used to reimburse  any Issuing  Lender for the amount of a drawing under a
Letter of Credit  issued by it, upon  satisfaction  or waiver of the  conditions
precedent specified in subsections 4.1 (in the case of Tranche B Term Loans made
on  the  Restatement  Closing  Date)  and  4.2  (in  the  case  of  all  Loans),
Administrative  Agent shall make the aggregate  amount of the Loans  received by
Administrative  Agent  from  Lenders  available  by  crediting  the  account  of
Borrowers at the Funding and Payment Office in the amount of such Loans.

     Unless Administrative Agent shall have been notified by any Lender prior to
the  Funding  Date for any  Loans  that  such  Lender  does not  intend  to make
available to Administrative  Agent the amount of such Lender's Loan requested on
such  Funding  Date,  Administrative  Agent may assume that such Lender has made
such  amount  available  to  Administrative  Agent  on  such  Funding  Date  and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrowers a corresponding amount on such Funding Date. If such
corresponding  amount is not in fact made available to  Administrative  Agent by
such   Lender,   Administrative   Agent  shall  be  entitled  to  recover   such
corresponding  amount on demand from such Lender together with interest thereon,
for each day from  such  Funding  Date  until  the date  such  amount is paid to
Administrative  Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three  Business Days and  thereafter at the
Base Rate. If such Lender does not pay such corresponding  amount forthwith upon
Administrative  Agent's  demand  therefor,  Administrative  Agent shall promptly
notify Borrowers and Borrowers shall immediately pay such  corresponding  amount
to Administrative  Agent together with interest thereon,  for each day from such
Funding Date until the date such amount is paid to Administrative  Agent, at the
rate  payable  under  this  Agreement  for  Base  Rate  Loans.  Nothing  in this
subsection  2.1C shall be deemed to relieve  any Lender from its  obligation  to
fulfill its Commitments  hereunder or to prejudice any rights that Borrowers may
have against any Lender as a result of any default by such Lender hereunder.

     D. The Register.

          (i) Administrative Agent shall maintain, at its address referred to in
          subsection  10.9,  a  register  for the  recordation  of the names and
          addresses of Lenders and the Commitments and Loans of each Lender from
          time to time (the  "Register").  The Register  shall be available  for
          inspection by Borrowers or any Lender at any reasonable  time and from
          time to time upon reasonable prior notice.

          (ii) Administrative  Agent shall record in the Register the Commitment
          and the Loans from time to time of each Lender,  and each repayment or
          prepayment  in  respect of the  principal  amount of the Loans of each
          Lender.  Any such  recordation  shall be  conclusive  and  binding  on
          Borrowers  and each  Lender,  absent  manifest  error;  provided  that
          failure  to  make  any  such   recordation,   or  any  error  in  such
          recordation,  shall not affect any Lender's  Commitments or Borrowers'
          Obligations in respect of any applicable Loans.

<PAGE>

          (iii) Each Lender shall record on its internal records  (including the
          Notes held by such Lender) the amount of each Loan made by it and each
          payment in respect thereof.  Any such recordation  shall be conclusive
          and binding on Borrowers, absent manifest error; provided that failure
          to make any such recordation, or any error in such recordation,  shall
          not affect any Lender's  Commitments  or Obligations in respect of any
          applicable  Loans;  and  provided,  further  that in the  event of any
          inconsistency  between the  Register  and any  Lender's  records,  the
          recordations in the Register shall govern.

          (iv) Administrative Agent and Lenders shall deem and treat the Persons
          listed as Lenders in the  Register  as the  holders  and owners of the
          corresponding  Commitments  and Loans listed  therein for all purposes
          hereof,  and no assignment or transfer of any such  Commitment or Loan
          shall be  effective,  in each  case  unless  and  until an  Assignment
          Agreement effecting the assignment or transfer thereof shall have been
          accepted  by  Administrative  Agent and  recorded  in the  Register as
          provided  in  subsection  10.1B(ii).  Prior to such  recordation,  all
          amounts owed with respect to the  applicable  Commitment or Loan shall
          be owed to the Lender listed in the Register as the owner thereof, and
          any  request,  authority  or consent of any Person who, at the time of
          making such request or giving such authority or consent,  is listed in
          the  Register  as a Lender  shall be  conclusive  and  binding  on any
          subsequent  holder,   assignee  or  transferee  of  the  corresponding
          Commitments or Loans.

     E. Notes.  Borrowers  have  executed and  delivered on the Closing Date (or
thereafter in the case of an  assignment)  to each Lender (or to  Administrative
Agent for that  Lender) (i) a Tranche A Term Note  substantially  in the form of
Exhibit III-A annexed hereto to evidence that Lender's  Tranche A Term Loans, in
the  principal  amount of that  Lender's  Term Loan  Commitment  and with  other
appropriate  insertions and (ii) a Revolving Note  substantially  in the form of
Exhibit III-B annexed hereto to evidence that Lender's  Revolving  Loans, in the
principal  amount of that  Lender's  Revolving  Loan  Commitment  and with other
appropriate  insertions.  Borrowers shall execute and deliver on the Restatement
Closing  Date to each  Lender  having a Tranche B Term  Loan  Commitment  (or to
Administrative Agent for that Lender) a Tranche B Term Note substantially in the
form of Exhibit  III-C annexed  hereto to evidence that Lender's  Tranche B Term
Loan, in the principal  amount of that Lender's  Tranche B Term Loan  Commitment
and with other appropriate insertions.

     Administrative  Agent may deem and treat the payee of any Note as the owner
thereof  for all  purposes  hereof  unless  and  until an  Assignment  Agreement
effecting  the  assignment  or  transfer  thereof  shall have been  accepted  by
Administrative Agent as provided in subsection 10.1B(ii). Any request, authority
or consent of any person or entity who,  at the time of making  such  request or
giving such authority or consent,  is the holder of any Note shall be conclusive
and binding on any subsequent holder,  assignee or transferee of that Note or of
any Note or Notes issued in exchange therefor.

2.2    Interest on the Loans.
       ----------------------
     A. Rate of Interest.  Subject to the provisions of subsections 2.6 and 2.7,
each Loan shall bear interest on the unpaid  principal  amount  thereof from the
date made through  maturity  (whether by  acceleration  or  otherwise) at a rate
determined by reference to the Base Rate or the Adjusted  Eurodollar  Rate.  The
applicable  basis for  determining the rate of interest with respect to any Loan
shall be selected by  Borrowers  initially  at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection  2.1B,  and the basis for
determining  the interest rate with respect to any Loan may be changed from time
to time pursuant to subsection  2.2D. If on any day a Loan is  outstanding  with
respect  to which  notice  has not been  delivered  to  Administrative  Agent in
accordance with the terms of this Agreement  specifying the applicable basis for
determining  the rate of  interest,  then for that  day  that  Loan  shall  bear
interest determined by reference to the Base Rate.

     (i) Revolving Loans. Subject to the provisions of subsections 2.2E and 2.7,
      the Revolving Loans shall bear interest through maturity as follows:

               (a) if a Base Rate  Loan,  then (x) from the date of  funding  of
          such Loan until the  Restatement  Closing Date, at the sum of the Base
          Rate plus the  Applicable  Margin (as defined in the  Existing  Credit
          Agreement),  and (y) from and after the  Restatement  Closing Date, at
          the sum of the Base Rate plus 2.00%; or

               (b) if a Eurodollar  Rate Loan, then (x) from the date of funding
          of such Loan until the  Restatement  Closing  Date,  at the sum of the
          Adjusted Eurodollar Rate plus the Applicable Margin (as defined in the
          Existing  Credit  Agreement),  and (y) from and after the  Restatement
          Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.00%.

     (ii) Tranche A Term Loans.  Subject to the provisions of  subsections  2.2E
     and 2.7, the Tranche A Term Loans shall bear interest  through  maturity as
     follows:

<PAGE>

               (a) if a Base Rate  Loan,  then (x) from the date of  funding  of
          such Loan until the  Restatement  Closing Date, at the sum of the Base
          Rate plus the  Applicable  Margin (as defined in the  Existing  Credit
          Agreement),  and (y) from and after the  Restatement  Closing Date, at
          the sum of the Base Rate plus 2.00%; or

               (b) if a Eurodollar  Rate Loan, then (x) from the date of funding
          of such Loan until the  Restatement  Closing  Date,  at the sum of the
          Adjusted Eurodollar Rate plus the Applicable Margin (as defined in the
          Existing  Credit  Agreement),  and (y) from and after the  Restatement
          Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.00%.

     (iii) Tranche B Term Loans.  Subject to the  provisions of subsection  2.2E
     and 2.7, the Tranche B Term Loans shall bear interest  through  maturity as
     follows:

               (a) if a Base  Rate  Loan,  then at the sum of the Base Rate plus
          2.50%; or

               (b) if a  Eurodollar  Rate Loan,  then at the sum of the Adjusted
          Eurodollar Rate plus 3.50%.

     B.  Interest  Periods.  In  connection  with  each  Eurodollar  Rate  Loan,
Borrowers may, pursuant to the applicable  Notice of Funding Request,  Notice of
Borrowing or Notice of  Conversion/Continuation,  as the case may be,  select an
interest period (each an "Interest Period") to be applicable to such Loan, which
Interest Period shall be, at Borrowers' option,  either a one, two, three or six
month period; provided that:

     (i) the initial Interest Period for any Eurodollar Rate Loan shall commence
     on the  Funding  Date  in  respect  of  such  Loan,  in the  case of a Loan
     initially  made as a Eurodollar  Rate Loan, or on the date specified in the
     applicable  Notice  of  Conversion/Continuation,  in  the  case  of a  Loan
     converted to a Eurodollar Rate Loan;

     (ii) in the case of immediately successive Interest Periods applicable to a
     Eurodollar   Rate  Loan   continued  as  such   pursuant  to  a  Notice  of
     Conversion/Continuation,  each successive Interest Period shall commence on
     the day on which the next preceding Interest Period expires;

     (iii) if an Interest Period would  otherwise  expire on a day that is not a
     Business  Day,  such  Interest  Period shall expire on the next  succeeding
     Business Day;  provided that, if any Interest Period would otherwise expire
     on a day that is not a Business  Day but is a day of the month  after which
     no further  Business Day occurs in such month,  such Interest  Period shall
     expire on the next preceding Business Day;

     (iv) any Interest Period that begins on the last Business Day of a calendar
     month (or on a day for which there is no numerically  corresponding  day in
     the calendar month at the end of such Interest  Period)  shall,  subject to
     clause  (v) of this  subsection  2.2B,  end on the last  Business  Day of a
     calendar month;

     (v) no  Interest  Period  with  respect to any  portion of the Loans  shall
     extend beyond the sixth anniversary of the Closing Date or, with respect to
     the Tranche B Term Loans, June 30, 2004.

     (vi) no Interest  Period shall extend beyond a date on which  Borrowers are
     required  to make a  scheduled  payment  of  principal  of the  Loans  or a
     permanent reduction of the Revolving Loan Commitments is scheduled to occur
     unless the sum of (a) the aggregate principal amount of Loans that are Base
     Rate  Loans  plus (b) the  aggregate  principal  amount  of Loans  that are
     Eurodollar Rate Loans with Interest Periods expiring on or before such date
     plus (c) the excess of the  Commitments  then in effect over the  aggregate
     principal  amount of the Loans  then  outstanding  equals  or  exceeds  the
     principal  amount  required  to be  paid  on the  Loans  or  the  permanent
     reduction of the Commitments that is scheduled to occur, on such date;

     (vii) there  shall be no more than 8 Interest  Periods  outstanding  at any
     time; and

     (viii) in the event  Borrowers  fail to specify an Interest  Period for any
     Eurodollar Rate Loan in the applicable Notice of Funding Request, Notice of
     Borrowing or Notice of  Conversion/Continuation,  Borrowers shall be deemed
     to have selected an Interest Period of one month.

     For the avoidance of doubt, any Loan made prior to the Restatement  Closing
Date shall  continue with the Interest  Period it had under the Existing  Credit
Agreement subject to the provisions of subsection 2.2D below.

     C.  Interest  Payments.  Subject  to the  provisions  of  subsection  2.2E,
interest  on each Loan  shall be  payable  in  arrears  on and to each  Interest
Payment Date  applicable to that Loan,  upon any prepayment of that Loan (to the
extent  accrued on the amount being  prepaid) and at maturity  (including  final
maturity).

<PAGE>

     D. Conversion or Continuation. Subject to the provisions of subsection 2.6,
Borrowers  shall  have the  option (i) to convert at any time all or any part of
its outstanding  Loans equal to $3,000,000 and integral  multiples of $1,000,000
in excess of that amount from Loans  bearing  interest at a rate  determined  by
reference  to one  basis to  Loans  bearing  interest  at a rate  determined  by
reference to an  alternative  basis or (ii) upon the  expiration of any Interest
Period  applicable to a Eurodollar  Rate Loan, to continue all or any portion of
such Loan equal to $3,000,000 and integral  multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted  into a Base Rate Loan on the  expiration  date of an
Interest Period applicable thereto.

     Borrowers   shall   deliver   a  Notice   of   Conversion/Continuation   to
Administrative  Agent no later than 10:00 A.M. (New York City time) at least one
Business  Day in  advance  of the  proposed  conversion  date  (in the case of a
conversion  to a Base Rate Loan) and at least three  Business Days in advance of
the proposed  conversion/continuation date (in the case of a conversion to, or a
continuation  of, a Eurodollar  Rate Loan). A Notice of  Conversion/Continuation
shall  specify (i) the proposed  conversion/continuation  date (which shall be a
Business Day),  (ii) the amount and type of the Loan to be  converted/continued,
(iii) the nature of the proposed conversion/continuation,  (iv) in the case of a
conversion  to, or a  continuation  of, a Eurodollar  Rate Loan,  the  requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing.  In lieu of delivering the above-described Notice of
Conversion/Continuation,  Borrowers  may give  Administrative  Agent  telephonic
notice by the required time of any proposed  conversion/continuation  under this
subsection  2.2D;  provided  that such  notice  shall be promptly  confirmed  in
writing by delivery  of a Notice of  Conversion/Continuation  to  Administrative
Agent on or before the proposed  conversion/continuation  date.  Upon receipt of
written or telephonic notice of any proposed  conversion/continuation under this
subsection  2.2D,  Administrative  Agent shall promptly  transmit such notice by
telefacsimile or telephone to each Lender.

     Neither  Administrative  Agent nor any Lender shall incur any  liability to
Borrowers  in  acting  upon  any  telephonic   notice  referred  to  above  that
Administrative  Agent  believes  in good  faith  to have  been  given  by a duly
authorized  officer or other person  authorized to act on behalf of Borrowers or
for  otherwise  acting  in good  faith  under  this  subsection  2.2D,  and upon
conversion or continuation of the applicable  basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to any
such   telephonic   notice   Borrowers  shall  have  effected  a  conversion  or
continuation, as the case may be, hereunder.

     Except as otherwise  provided in subsections  2.6B, 2.6C and 2.6G, a Notice
of  Conversion/Continuation  for conversion to, or continuation of, a Eurodollar
Rate Loan (or  telephonic  notice in lieu thereof)  shall be  irrevocable on and
after the related Interest Rate Determination Date, and Borrowers shall be bound
to effect a conversion or continuation in accordance therewith.

     E. Default Rate.  Upon the  occurrence and during the  continuation  of any
Event of  Default,  the  outstanding  principal  amount of all Loans and, to the
extent permitted by applicable law, any interest  payments thereon not paid when
due and any  fees  and  other  amounts  then due and  payable  hereunder,  shall
thereafter  bear interest  (including  post-petition  interest in any proceeding
under the  Bankruptcy  Code or other  applicable  bankruptcy  laws) payable upon
demand at a rate that is 2% per annum in excess of the interest  rate  otherwise
payable under this Agreement  with respect to the  applicable  Loans (or, in the
case of any such  fees and  other  amounts,  at a rate  which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest  Period in effect at the time any such increase in interest rate
is effective such Eurodollar  Rate Loans shall thereupon  become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise  payable under this Agreement for
Base Rate  Loans.  Payment or  acceptance  of the  increased  rates of  interest
provided for in this  subsection  2.2E is not a permitted  alternative to timely
payment and shall not  constitute  a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.

     F. Computation of Interest.  Interest on the Loans shall be computed on the
basis of (i) a 360-day  year,  in the case of  Eurodollar  Rate Loans and (ii) a
365-day year, in respect of Base Rate Loans,  in each case for the actual number
of days elapsed in the period during which it accrues.  In computing interest on
any Loan,  the date of the  making of such Loan or the first day of an  Interest
Period  applicable  to such Loan or,  with  respect  to a Base  Rate Loan  being
converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar
Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the
date of  payment  of such  Loan or the  expiration  date of an  Interest  Period
applicable to such Loan or, with respect to a Base Rate Loan being  converted to
a Eurodollar  Rate Loan,  the date of  conversion of such Base Rate Loan to such
Eurodollar Rate Loan, as the case may be, shall be excluded;  provided that if a
Loan is repaid on the same day on which it is made,  one day's interest shall be
paid on that Loan.

<PAGE>

2.3    Fees.
       ----

     A. Commitment  Fees.  Borrowers agree to pay to  Administrative  Agent, for
distribution  to each  Lender in  proportion  to that  Lender's  Pro Rata Share,
commitment fees for the period from and including the  Restatement  Closing Date
to and excluding the Revolving  Loan  Commitment  Termination  Date equal to the
average of the daily excess of the Revolving  Loan  Commitments  over the sum of
(i) the aggregate  principal  amount of outstanding  Revolving Loans but not the
Letter of Credit Usage plus (ii) the Letter of Credit Usage  multiplied  by half
of 1% per annum, such commitment fees to be calculated on the basis of a 360-day
year and the  actual  number of days  elapsed  and to be  payable  quarterly  in
arrears  on March  31,  June 30,  September  30 and  December  31 of each  year,
commencing  on the first such date to occur after the Closing  Date,  and on the
Revolving Loan Commitment Termination Date.

     B. Annual  Administrative  Fee.  Borrowers  agree to pay to  Administrative
Agent an annual  administrative  fee in the amount  and at the times  separately
agreed to by the Administrative Agent and the Borrower.

     C. Other Fees.  Borrowers agree to pay to Syndication Agent,  Arrangers and
Administrative  Agent such other fees in the amounts and at the times separately
agreed  upon  between   Borrowers   and   Syndication   Agent,   Arrangers   and
Administrative Agent.

2.4    Repayments, Prepayments and Reductions in Commitments; General Provisions
       Regarding Payments.
       -------------------------------------------------------------------------

     A. Scheduled Payments of Term Loans.

          (i) Tranche A Term Loans.

After giving  effect to the  prepayment  of the Tranche A Term Loans made on the
Restatement Closing Date in the aggregate principal amount of $30,000,000,  made
with a portion of the proceeds of the Tranche B Term Loans, Borrowers shall make
principal  payments on the Tranche A Term Loans in  installments  on each of the
following  dates in the  aggregate  amount set forth  opposite  such date in the
table set forth below:

<TABLE>
<CAPTION>

======================================================= ========================
                                                        Scheduled
                                    Date                Repayment
                                                        of Tranche A
                                                        Term Loans
======================================================= ========================
<S>                                                     <C>
June 30, 2001                                              5,625,000
September 30, 2001                                        11,250,000
December 31, 2001                                         11,250,000
March 31, 2002                                            11,250,000
June 30, 2002                                             11,250,000
September 30, 2002                                        13,125,000
December 31. 2002                                         13,125,000
March 31, 2003                                            13,125,000
June 30, 2003                                             13,125,000
------------------------------------------------------- ------------------------
Total                                                   $103,125,000
======================================================= ========================
</TABLE>

; provided  that the scheduled  installments  of principal of the Tranche A Term
Loans set forth  above  shall be reduced in  connection  with any  voluntary  or
mandatory  prepayments of the Tranche A Term Loans in accordance with subsection
2.4B(iv),  and the final  installment  payable  by  Borrowers  in respect of the
Tranche  A Term  Loans on such date  shall be in an  amount,  if such  amount is
different  from that specified  above,  sufficient to repay all amounts owing by
Borrowers under this Agreement with respect to the Tranche A Term Loans.
<PAGE>

     (ii) Tranche B Term Loans.

Borrowers  shall  make  principal  payments  on  the  Tranche  B Term  Loans  in
installments  on each of the following  dates in the aggregate  amount set forth
opposite such date in the table set forth below:

<TABLE>
<CAPTION>

============================ ==================================
                             Scheduled

Date                         Repayment
                             of Tranche B
                             Term Loans

============================ ==================================
<S>                          <C>
September 30, 2000              $125,000
December 31, 2000                125,000
March 31, 2001                   125,000
June 30, 2001                    125,000
September 30, 2001               125,000
December 31, 2001                125,000
March 31, 2002                   125,000
June 30, 2002                    125,000
September 30, 2002               125,000
December 31, 2002                125,000
March 31, 2003                   125,000
June 30, 2003                    125,000
September 30, 2003               125,000
December 31, 2003                125,000
March 31, 2004                24,125,000
June 30, 2004                 24,125,000
---------------------------- ----------------------------------
Total                        $50,000,000
============================ ==================================

</TABLE>

; provided  that the scheduled  installments  of principal of the Tranche B Term
Loans set forth  above  shall be reduced in  connection  with any  voluntary  or
mandatory  prepayments of the Tranche B Term Loans in accordance with subsection
2.4B(iv),  and the final  installment  payable  by  Borrowers  in respect of the
Tranche  B Term  Loans on such date  shall be in an  amount,  if such  amount is
different  from that specified  above,  sufficient to repay all amounts owing by
Borrowers under this Agreement with respect to the Tranche B Term Loans.

     B. Prepayments and Unscheduled Reductions in Commitments.

     (i) Voluntary  Prepayments.  Borrowers may, upon not less than one Business
     Day's prior written or telephonic  notice,  in the case of Base Rate Loans,
     and three Business Days' prior written or telephonic notice, in the case of
     Eurodollar Rate Loans, in each case given to Administrative  Agent by 12:00
     Noon (New York City time) on the date  required and, if given by telephone,
     promptly  confirmed  in writing to  Administrative  Agent  (which  original
     written or telephonic notice Administrative Agent will promptly transmit by
     telefacsimile  or telephone to each  Lender),  at any time and from time to
     time  prepay  any  Loans  on any  Business  Day in  whole  or in part in an
     aggregate  minimum amount of $1,000,000 and integral  multiples of $500,000
     in excess of that  amount  provided,  however,  that  with  respect  to any
     Eurodollar  Rate Loan not prepaid on the expiration of the Interest  Period
     applicable  thereto  Borrowers  shall pay any amount  payable  pursuant  to
     subsection 2.6D. Notice of prepayment  having been given as aforesaid,  the
     principal amount of the Loans specified in such notice shall become due and
     payable  on the  prepayment  date  specified  therein.  Any such  voluntary
     prepayment shall be applied as specified in subsection 2.4B(iv).

     (ii) Voluntary Reductions of Commitments. Borrowers may, upon not less than
     three  Business  Days' prior  written or  telephonic  notice  confirmed  in
     writing to  Administrative  Agent  (which  original  written or  telephonic
     notice  Administrative  Agent will promptly  transmit by  telefacsimile  or
     telephone to each Lender),  at any time and from time to time  terminate in
     whole or  permanently  reduce in part,  without  premium  or  penalty,  the
     Revolving  Loan  Commitments  in an  amount  up to the  amount by which the
     Revolving Loan Commitments  exceed the Total  Utilization of Revolving Loan
     Commitments at the time of such proposed termination or reduction; provided
     that any such partial  reduction of the Revolving Loan Commitments shall be
     in an aggregate  minimum  amount of  $1,000,000  and integral  multiples of
     $500,000  in excess of that  amount.  Borrowers'  notice to  Administrative
     Agent  shall  designate  the date (which  shall be a Business  Day) of such
     termination or reduction and the amount of any partial reduction,  and such
     termination  or  reduction  of the  Revolving  Loan  Commitments  shall  be
     effective on the date  specified in Borrowers'  notice and shall reduce the
     Revolving Loan  Commitment of each Lender  proportionately  to its Pro Rata
     Share. Any such voluntary reduction of the Revolving Loan Commitments shall
     be applied as specified in subsection 2.4B(iv).

<PAGE>

     (iii) Mandatory  Prepayments and Mandatory  Reductions of Commitments.  The
     Loans shall be prepaid and/or the Commitments shall be permanently  reduced
     in the  amounts  and under the  circumstances  set  forth  below,  all such
     prepayments  and/or  reductions to be applied as set forth below or as more
     specifically provided in subsection 2.4B(iv):

               (a) Prepayments  and Reductions From Net Asset Sale Proceeds.  No
          later than the first  Business  Day  following  the date of receipt by
          Borrowers or any of their  Subsidiaries of any Net Asset Sale Proceeds
          in respect of any Asset Sale  (other  than Net Asset Sale  Proceeds in
          respect  of the sale of any  obsolete  worn out or  surplus  assets or
          assets no longer  used or useful in the  business of the Project or of
          construction  equipment  having a fair  market  value not in excess of
          $4,000,000  prior to  Completion  or during the first  year  following
          Completion,  but only in each  case to the  extent  reinvested  in the
          business of Borrowers or such Subsidiary  within 180 days of receipt),
          Borrowers  shall  prepay  the Loans  and/or the  Commitments  shall be
          permanently  reduced in an  aggregate  amount  equal to such Net Asset
          Sale Proceeds.

               (b)  Prepayments  and  Reductions  from  Net  Loss  Proceeds  and
          Liquidated  Damages.  No later than the second  Business  Day on which
          Loss  Proceeds or  Liquidated  Damages  are  required to be applied to
          prepayment  of  Loans  under   subsection  5.20  of  the  Disbursement
          Agreement  (if  applicable)  or Article X,  Sections  5, 12(d) and 13,
          Article XI, Section 1 or Article XII,  sections 8-9 of the Cooperation
          Agreement  (as  applicable),  Borrowers  shall  prepay  the Term Loans
          and/or the Commitments shall be permanently reduced in an amount equal
          to the Loss Proceeds or Liquidated Damages,  as applicable,  available
          for  such  application  under  subsection  5.20  of  the  Disbursement
          Agreement,  Article X, Sections 5, 12(d) and 13,  Article XI Section 1
          and  Article  XII,  Sections  8-9 of  the  Cooperation  Agreement  (as
          applicable)  but not exceeding that portion  thereof  determined to be
          payable to Lenders in accordance with Section 4.5 of the Intercreditor
          Agreement.

               (c) Prepayments and Reductions Due to Reversion of Surplus Assets
          of Pension  Plans.  On the first  Business Day  following  the date of
          return to Borrowers or any of their Subsidiaries of any surplus assets
          of any  pension  plan  of  Borrowers  or any for  their  Subsidiaries,
          Borrowers  shall  prepay  the Loans  and/or the  Commitments  shall be
          permanently reduced in an aggregate amount (such amount being the "Net
          Pension  Proceeds") equal to 100% of such returned surplus assets, net
          of transaction  costs and expenses  incurred in obtaining such return,
          including incremental taxes payable as a result thereof.

               (d) Prepayments and Reductions Due to Issuance of Debt or Equity.
          On the first  Business Day  following the date of receipt by Borrowers
          or any of their  Subsidiaries,  of the proceeds  (including Cash, real
          property or other  property) (any such proceeds,  net of  underwriting
          discounts  and  commissions  and other  reasonable  costs and expenses
          associated  therewith,  including  reasonable legal fees and expenses,
          being  "Net  Proceeds")  from the  issuance  of any debt or  equity of
          Borrowers or any of their Subsidiaries  (other than any debt expressly
          permitted under  subsection 7.1 and any equity  issuances to employees
          of Borrowers  upon exercise of options  issued  pursuant to employment
          agreements  and  option  plans  as in  effect  on the  Closing  Date),
          Borrowers  shall  prepay  the Loans  and/or the  Commitments  shall be
          permanently reduced in an aggregate amount equal to (i) in the case of
          any equity issuance,  75% of such Net Proceeds and (ii) in the case of
          any debt,  100% of such Net Proceeds.  Notwithstanding  the foregoing,
          (y) Borrowers  shall not be required to prepay the Loans and/or reduce
          Commitments from any proceeds  (including Cash, real property or other
          property),  of equity  contributions  from,  or equity  issuances  to,
          Adelson or any of his Affiliates (other than the Subsidiaries) to LVSI
          or Venetian  that are used for the  expansion  or  improvement  of the
          Project  or to pay  operating  costs with  respect  thereto or to make
          contributions to Excluded  Subsidiaries and (z) any portion of the Net
          Proceeds of equity  issuances not required to be applied to prepay the
          Loans and/or to reduce the Commitments shall, in any event, be used to
          make contributions to Excluded  Subsidiaries or used for the expansion
          or improvement  of the Project or to pay operating  costs with respect
          thereto.

               (e)  Prepayments  and Reductions  from  Consolidated  Excess Cash
          Flow. In the event that there shall be  Consolidated  Excess Cash Flow
          for any Fiscal Year, beginning with the Fiscal Year ended December 31,
          2001 (or December 31, 2000 if any Excess Cash Flow for the Fiscal Year
          ended  December 31 2000 is  distributed to any Person other than LVSI,
          its  Subsidiaries or its Excluded  Subsidiaries),  Borrowers shall, no
          later than 90 days after the end of such Fiscal Year,  prepay the Term
          Loans  and/or  the  Commitments  shall be  permanently  reduced  in an
          aggregate  amount equal to (1) if the Leverage  Ratio as at the end of
          such  period or Fiscal  Year is  greater  than  2.5:1.00,  75% of such
          Consolidated Excess Cash Flow, and (2) if the Leverage Ratio as at the
          end of such period or Fiscal  Year is less than or equal to  2.5:1.00,
          50% of such Consolidated Excess Cash Flow.
<PAGE>
               (f) [Intentionally omitted].

               (g) Prepayments from Certain  Distributions from Mall Subsidiary.
          On the date of receipt by  Borrowers or any of their  Subsidiaries  of
          any dividends or  distributions  in Cash or Cash  Equivalents from New
          Mall  Subsidiary,  Mall  Subsidiary,  Mall Direct  Holdings,  New Mall
          Manager or Mall Manager following the sale or other disposition of all
          or any  portion of the Mall or any  interest  therein  (including  any
          equity interest in Mall Direct  Holdings,  Mall  Subsidiary,  New Mall
          Subsidiary, Mall Manager or New Mall Manager),  Borrowers shall prepay
          the Loans and/or the  Commitments  shall be permanently  reduced in an
          amount   equal   to   100%  of  such   dividends   or   distributions.
          Notwithstanding the foregoing, any dividends or distributions from New
          Mall  Subsidiary,  Mall  Subsidiary,  Mall Direct  Holdings,  New Mall
          Manager or Mall Manager which are applied by Borrowers  within 15 days
          of receipt to fund Permitted  Quarterly Tax Distributions  need not be
          applied  to  prepay  the  Loans  or to  reduce  Commitments,  but such
          exclusion  shall not  reduce  the  amounts  otherwise  required  to be
          applied to prepay Loans and/or reduce Commitments as provided above.

               (h) Prepayments From Funds Returned to  Administrative  Agent. To
          the  extent no other  provision  of this  subsection  2.4B(iii)  would
          otherwise  apply, no later than the Business Day following the date on
          which  funds  representing  the  proceeds  of Loans  are  returned  or
          distributed to Administrative Agent on behalf of Lenders under Section
          2.11 or 2.12 of the Disbursement Agreement, Administrative Agent shall
          apply such funds to prepay the Loans  and/or the  Commitment  shall be
          permanently  reduced  in an  amount  equal to the  amount  of funds so
          returned or distributed.

               (i) Other  Prepayments.  To the extent no other provision of this
          subsection 2.4B(iii) would apply, if any funds would be required to be
          used  to  redeem   and/or   prepay  the  Mortgage   Notes  and/or  the
          Subordinated  Notes (other than funds from the Mortgage Notes Proceeds
          Account) if not otherwise used to repay the Loans,  then no later than
          one Business Day prior to the date on which  Borrowers would otherwise
          be required to use such funds to effect such  prepayment or redemption
          of the  Mortgage  Notes and/or  Subordinated  Notes,  Borrowers  shall
          prepay the Loans and/or the Commitments  shall be permanently  reduced
          in an amount  equal to the amount of funds  which would  otherwise  be
          used to redeem and/or prepay Mortgage Notes and/or Subordinated Notes.

               (j) Calculations of Net Proceeds Amounts;  Additional Prepayments
          and Reductions Based on Subsequent Calculations. Concurrently with any
          prepayment  of  the  Loans  and/or  if  applicable  the  reduction  of
          Commitments pursuant to subsections 2.4B(iii)(a)-(i),  Borrowers shall
          deliver to Administrative Agent an Officers' Certificate demonstrating
          the  calculation  of the amount  (the "Net  Proceeds  Amount")  of the
          applicable  Net Asset Sale  Proceeds or Loss  Proceeds  or  Liquidated
          Damages,  the applicable Net Pension  Proceeds,  Net Proceeds (as such
          terms are defined in subsections 2.4B(iii)(c) and (d)), the applicable
          Consolidated  Excess  Cash  Flow,  or the  amount  of  the  subsidiary
          distribution  or other amounts,  as the case may be, that gave rise to
          such prepayment  and/or  reduction.  In the event that Borrowers shall
          subsequently determine that the actual Net Proceeds Amount was greater
          than the amount  set forth in such  Officers'  Certificate,  Borrowers
          shall  promptly  make  an  additional  prepayment  of the  Term  Loans
          (and/or, if applicable,  the Commitments shall be permanently reduced)
          in an amount equal to the amount of such excess,  and Borrowers  shall
          concurrently  therewith deliver to  Administrative  Agent an Officers'
          Certificate   demonstrating  the  derivation  of  the  additional  Net
          Proceeds Amount resulting in such excess.

               (k)  Prepayments  Due to Reductions or  Restrictions of Revolving
          Loan  Commitments.  Borrowers  shall  from  time  to time  prepay  the
          Revolving Loans to the extent necessary so that the Total  Utilization
          of  Revolving  Loan  Commitments  shall  not at any  time  exceed  the
          Revolving Loan Commitments then in effect.

               (l) [Intentionally omitted].

               (m)  Reduction of Revolving  Loans from FF&E  Facility  Proceeds.
          Borrowers  shall from time to time repay  Revolving Loans the proceeds
          of which were used to fund deposits  for, or to acquire,  equipment to
          the extent required under subsection 6.14.
<PAGE>
               (n) Drawings on  Conforming  Adelson  L/Cs. In the event that any
          Conforming Adelson L/C Draw Event shall have occurred,  Administrative
          Agent may direct the Conforming Adelson L/C Drawing Agent to draw down
          on each outstanding  Conforming  Adelson L/C in its entirety and shall
          apply the proceeds  received from the  Conforming  Adelson L/C Drawing
          Agent:  first to prepay  outstanding  amounts under (i) the Term Loans
          and (ii) Revolving Loans,  each on a pro rata basis to the full extent
          thereof and to permanently  reduce the Revolving  Loan  Commitments by
          the amount of such  prepayment  of  Revolving  Loans and second to the
          extent of any remaining  amount of proceeds drawn by Drawing Agent, to
          further  permanently  reduce the Revolving Loan  Commitments.  For the
          avoidance of doubt,  a  Conforming  Adelson L/C Draw Event shall be in
          addition to an Event of Default  described in Section 8 hereof and (i)
          the Administrative  Agent shall not be required to exercise any rights
          or remedy  under  Section 8 hereof in order to draw on the  Conforming
          Adelson  L/Cs and (ii) any drawing on a  Conforming  Adelson L/C shall
          not be deemed to be a waiver of any Event of Default.

     (iv)  Application of Prepayments  and  Unscheduled  Reductions of Revolving
           Loan Commitments.
           ---------------------------------------------------------------------

               (a)  Application  of  Voluntary  Prepayments  by Type of Loan and
          Order of Maturity.  Any voluntary  prepayments  pursuant to subsection
          2.4B(i)  shall be applied as specified by Borrowers in the  applicable
          notice of  prepayment,  provided that in the event  Borrowers  fail to
          specify the Loans to which any such prepayment shall be applied,  such
          prepayment shall be applied first to repay outstanding Revolving Loans
          to the full  extent  thereof  on a pro  rata  basis,  second  to repay
          outstanding  Term Loans on a pro rata  basis and third to  permanently
          reduce the Revolving Loan Commitments to the full extent thereof.

               (b)  Application of Mandatory  Prepayments by Type of Loans.  Any
          amount (the  "Applied  Amount")  required to be applied as a mandatory
          prepayment of the Term Loans and/or a reduction of the Revolving  Loan
          Commitments pursuant to subsections  2.4B(iii)(a)-(j) shall be applied
          to first  prepay  the  Term  Loans on a pro  rata  basis  (subject  to
          subsection 2.4B (iv)(e)),  to the full extent thereof,  second, to the
          extent of any remaining  portion of the Applied Amount,  to prepay the
          Revolving Loans to the full extent thereof and to further  permanently
          reduce  the  Revolving   Loan   Commitments  by  the  amount  of  such
          prepayment,  and third, to the extent of any remaining  portion of the
          Applied  Amount,  to further  permanently  reduce the  Revolving  Loan
          Commitments  to the full  extent  thereof.  Any amount  required to be
          applied as a  mandatory  repayment  of  Revolving  Loans  pursuant  to
          subsection  2.4B(iii)(m)  shall be applied to prepay  Revolving Loans.
          Any amount required to be applied as a mandatory  prepayment  pursuant
          to subsection  2.4B(iii)(n)  shall be applied in accordance with terms
          of such subsection.

               (c)  Application  of Mandatory  Prepayments  of Term Loans to the
          Scheduled Installments of Principal Thereof. Any mandatory prepayments
          of the Term Loans pursuant to subsection  2.4B(iii)(a)-(d),  (f), (g),
          (h), (i) or (j) shall be applied to reduce the scheduled  installments
          of principal of the Term Loans set forth in subsection  2.4A, on a pro
          rata basis (except as provided in  subsection  2.5A(ii) and subject to
          2.4B(iv)(e)), and any mandatory prepayments of the Term Loans pursuant
          to  subsection  2.4B(iii)(e)  or (n) shall be  applied  to reduce  the
          scheduled  installments  of  principal  of the Term Loans set forth in
          subsection 2.4A subject to subsection 2.4B(iv)(e), in inverse order of
          maturity.

               (d)  Application of Prepayments to Base Rate Loans and Eurodollar
          Rate Loans. Considering Loans being prepaid separately, any prepayment
          thereof  shall be applied  first to Base Rate Loans to the full extent
          thereof before application to Eurodollar Rate Loans, in each case in a
          manner which minimizes the amount of any payments  required to be made
          by Borrowers pursuant to subsection 2.6D.

               (e) Any Lender holding  Tranche B Term Loans may elect, by notice
          to  Administrative  Agent in  writing  (or by  telephone  or  telecopy
          promptly  confirmed  writing) at least two Business  Days prior to any
          prepayment  of Tranche B Term Loans  required to be made by  Borrowers
          for the account of such Lender  pursuant to subsection  2.4B(iii),  to
          have all or a portion of such  prepayment  to be allocated  instead to
          the  Tranche  A Term  Loans to the  extent of the  outstanding  unpaid
          principal amount thereof.

<PAGE>
         C.       General Provisions Regarding Payments.

          (i)  Manner  and  Time  of  Payment.  All  payments  by  Borrowers  of
          principal,  interest,  fees and other Obligations  hereunder and under
          the Notes shall be made in Dollars in same day funds, without defense,
          setoff or  counterclaim,  free of any  restriction  or condition,  and
          delivered to Administrative  Agent not later than 12:00 Noon (New York
          City time) on the date due at the Funding  and Payment  Office for the
          account of Lenders;  funds received by Administrative Agent after that
          time on such due date  shall be deemed to have been paid by  Borrowers
          on the  next  succeeding  Business  Day.  Borrowers  hereby  authorize
          Administrative  Agent to charge  their  accounts  with  Administrative
          Agent in order to cause  timely  payment to be made to  Administrative
          Agent of all  principal,  interest,  fees and expenses  due  hereunder
          (subject to sufficient  funds being available in its accounts for that
          purpose).

          (ii)  Application of Payments to Principal and Interest.  All payments
          in respect of the principal  amount of any Loan shall include  payment
          of accrued  interest on the principal  amount being repaid or prepaid,
          and all such  payments  shall be  applied to the  payment of  interest
          before application to principal.

          (iii)  Apportionment  of Payments.  Aggregate  principal  and interest
          payments  in  respect  of  Loans  shall  be   apportioned   among  all
          outstanding  Loans  proportionately  to Lenders'  respective  Pro Rata
          Shares. Administrative Agent shall promptly distribute to each Lender,
          at its primary  address  set forth  below its name on the  appropriate
          signature  page  hereof or at such other  address  as such  Lender may
          request,  its  Pro  Rata  Share  of  all  such  payments  received  by
          Administrative  Agent  and the  commitment  fees of such  Lender  when
          received  by   Administrative   Agent  pursuant  to  subsection   2.3.
          Notwithstanding the foregoing provisions of this subsection 2.4C(iii),
          if,  pursuant to the  provisions  of  subsection  2.6C,  any Notice of
          Conversion/Continuation  is withdrawn as to any Affected  Lender or if
          any  Affected  Lender  makes  Base Rate  Loans in lieu of its Pro Rata
          Share of any Eurodollar  Rate Loans,  Administrative  Agent shall give
          effect thereto in apportioning payments received thereafter.

                  (iv)  Payments on Business  Days.  Whenever  any payment to be
                  made hereunder  shall be stated to be due on a day that is not
                  a  Business  Day,  such  payment  shall  be made  on the  next
                  succeeding  Business  Day and such  extension of time shall be
                  included  in  the  computation  of  the  payment  of  interest
                  hereunder or of the commitment fees hereunder, as the case may
                  be.

                  (v)  Notation  of  Payment.  Each  Lender  agrees  that before
                  disposing of any Note held by it, or any part  thereof  (other
                  than by  granting  participations  therein),  that Lender will
                  make a notation  thereon of all Loans  evidenced  by that Note
                  and all principal payments  previously made thereon and of the
                  date to which  interest  thereon has been paid;  provided that
                  the failure to make (or any error in the making of) a notation
                  of any Loan made under such Note shall not limit or  otherwise
                  affect the  obligations  of Borrowers  hereunder or under such
                  Note with  respect to any Loan or any payments of principal or
                  interest on such Note.

2.5    Use of Proceeds.
       ---------------

     A. Term  Loans.  (i) The  proceeds  of the  Tranche A Term  Loans  shall be
applied by Borrowers to pay Project  Costs in accordance  with the  Disbursement
Agreement (including costs and expenses incurred by Borrowers in connection with
the transactions  contemplated  hereby), all in accordance with the Disbursement
Agreement  and (ii) the  proceeds  of the  Tranche B Term Loans shall be used to
prepay the  principal  amount of the  Tranche A Term  Loans in forward  order of
maturity to the extent of $30,000,000,  and to prepay the Revolving Loans to the
extent of the remaining proceeds (net of fees and expenses), it being understood
that such prepayments shall not reduce the Revolving Loan Commitments.

     B. Revolving Loans. The proceeds of the Revolving Loans shall be applied by
Borrowers for working capital and general corporate purposes.

     C. Margin  Regulations.  No portion of the proceeds of any borrowing  under
this Agreement  shall be used by Borrowers or any of their  Subsidiaries  in any
manner that might cause the  borrowing or the  application  of such  proceeds to
violate  Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal  Reserve System or any other  regulation of such Board or to violate
the  Exchange  Act,  in each  case as in  effect  on the  date or  dates of such
borrowing and such use of proceeds.
<PAGE>

2.6    Special Provisions Governing Eurodollar Rate Loans.
       ---------------------------------------------------

     Notwithstanding any other provision of this Agreement to the contrary,  the
following  provisions  shall govern with respect to Eurodollar  Rate Loans as to
the matters covered:

     A. Determination of Applicable  Interest Rate. As soon as practicable after
10:00  A.M.  (New York City  time) on each  Interest  Rate  Determination  Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall  apply to the  Eurodollar  Rate Loans for which an  interest  rate is then
being  determined  for the  applicable  Interest  Period and shall promptly give
notice  thereof (in writing or by  telephone  confirmed in writing) to Borrowers
and each Lender.

     B.  Inability  to Determine  Applicable  Interest  Rate.  In the event that
Administrative  Agent shall have determined (which  determination shall be final
and  conclusive  and binding  upon all parties  hereto),  on any  Interest  Rate
Determination  Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances  affecting the interbank Eurodollar market adequate and fair means
do not exist for  ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Borrowers and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to,  Eurodollar Rate Loans until such time as
Administrative  Agent  notifies  Borrowers  and Lenders  that the  circumstances
giving rise to such notice no longer  exist and (ii) any Notice of  Borrowing or
Notice of  Conversion/Continuation  given by Borrowers with respect to the Loans
in respect of which such  determination was made shall be deemed to be made with
respect to Base Rate Loans.

     C.  Illegality or  Impracticability  of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which  determination shall be
final and  conclusive and binding upon all parties hereto but shall be made only
after  consultation  with Borrowers and  Administrative  Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of  compliance  by such  Lender in good faith with any law,  treaty,
governmental rule, regulation, guideline or order not in effect on the date such
Person  became a Lender (or would  conflict  with any such treaty,  governmental
rule, regulation, guideline or order not having the force of law even though the
failure to comply  therewith  would not be  unlawful),  or (ii) would cause such
Lender material financial hardship as a result of contingencies  occurring after
the date of this Agreement which  materially and adversely  affect the interbank
Eurodollar  market or the position of such Lender in that market,  then,  and in
any such event,  such Lender shall be an "Affected  Lender" and it shall on that
day give  notice (by  telefacsimile  or by  telephone  confirmed  in writing) to
Borrowers  and  Administrative   Agent  of  such  determination   (which  notice
Administrative  Agent shall promptly transmit to each other Lender).  Thereafter
(a) the obligation of the Affected  Lender to make Loans as, or to convert Loans
to,  Eurodollar  Rate  Loans  shall be  suspended  until  such  notice  shall be
withdrawn by the Affected  Lender  (which such  Affected  Lender shall do at the
earliest practicable date), (b) to the extent such determination by the Affected
Lender  relates to a  Eurodollar  Rate Loan then being  requested  by  Borrowers
pursuant to a Notice of  Borrowing or a Notice of  Conversion/Continuation,  the
Affected  Lender  shall make such Loan as (or convert  such Loan to, as the case
may be) a Base Rate Loan, (c) the Affected  Lender's  obligation to maintain its
outstanding  Eurodollar Rate Loans (the "Affected Loans") shall be terminated at
the earlier to occur of the  expiration  of the  Interest  Period then in effect
with respect to the Affected Loans or when required by law, and (d) the Affected
Loans  shall  automatically  convert  into Base  Rate  Loans on the date of such
termination.  Except as provided in the immediately preceding sentence,  nothing
in this  subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.

     D.  Compensation  For  Breakage or  Non-Commencement  of Interest  Periods.
Borrowers  shall  compensate  each Lender,  upon written  request by that Lender
(which request shall set forth the basis for requesting  such amounts),  for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its  Eurodollar  Rate
Loans and any loss, expense or liability  sustained by that Lender in connection
with the  liquidation  or  re-employment  of such  funds)  which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar  Rate Loan does not occur on a date  specified  therefor in an
Advance  Confirmation  Notice,  Notice of Borrowing or a telephonic  request for
borrowing,  as applicable,  or a conversion to or continuation of any Eurodollar
Rate  Loan  does  not  occur  on  a  date  specified  therefor  in a  Notice  of
Conversion/Continuation  or a telephonic request for conversion or continuation,
(ii) if any prepayment (including any prepayment pursuant to subsection 2.4B(i))
or other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period  applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date  specified in a notice of prepayment  given by Borrowers,  or (iv) as a
consequence of any other default by Borrowers in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.

<PAGE>

     E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.

     F. Assumptions Concerning Funding of Eurodollar Rate Loans.  Calculation of
all amounts payable to a Lender under this  subsection 2.6 and under  subsection
2.7A  shall be made as  though  that  Lender  had  actually  funded  each of its
relevant  Eurodollar  Rate Loans  through the purchase of a  Eurodollar  deposit
bearing  interest at the rate obtained  pursuant to clause (i) of the definition
of Adjusted  Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity  comparable to the relevant  Interest Period and
through the transfer of such Eurodollar  deposit from an offshore office of that
Lender to a  domestic  office of that  Lender in the United  States of  America;
provided,  however,  that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing  assumptions  shall be utilized only
for the purposes of calculating  amounts  payable under this  subsection 2.6 and
under subsection 2.7A.

     G. Eurodollar Rate Loans After Default.  After the occurrence of and during
the  continuation  of a Potential  Event of Default or an Event of Default,  (i)
Borrowers  may not elect to have a Loan be made or  maintained  as, or converted
to, a Eurodollar  Rate Loan after the expiration of any Interest  Period then in
effect for that Loan and (ii) subject to the provisions of subsection  2.6D, any
Advance    Confirmation    Notice,    Notice   of   Borrowing   or   Notice   of
Conversion/Continuation given by Borrowers with respect to a requested borrowing
or  conversion/continuation  that has not yet occurred shall be deemed made with
respect to Base Rate Loans.

2.7    Increased Costs; Taxes; Capital Adequacy.
       -----------------------------------------

     A. Compensation for Increased Costs and Taxes. Subject to the provisions of
subsection 2.7B (which shall be controlling  with respect to the matters covered
thereby),  in the event that any Lender  shall  determine  (which  determination
shall,  absent  manifest  error,  be final and  conclusive  and binding upon all
parties hereto) that any law, treaty or governmental rule,  regulation or order,
or any change therein or in the  interpretation,  administration  or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any  guideline,  request or directive  issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):

     (i)  subjects  such  Lender  (or  its  applicable  lending  office)  to any
     additional  Tax  (other  than any Tax on the  overall  net  income  of such
     Lender) with respect to this Agreement or any of its obligations  hereunder
     or any  payments  to such  Lender  (or its  applicable  lending  office) of
     principal, interest, fees or any other amount payable hereunder;

     (ii)  imposes,  modifies or holds  applicable  any reserve  (including  any
     marginal,  emergency,  supplemental,  special  or other  reserve),  special
     deposit,  compulsory  loan, FDIC insurance or similar  requirement  against
     assets held by, or deposits or other  liabilities in or for the account of,
     or  advances  or loans  by,  or other  credit  extended  by,  or any  other
     acquisition  of funds by, any office of such  Lender  (other  than any such
     reserve or other  requirements  with respect to Eurodollar  Rate Loans that
     are reflected in the definition of Adjusted Eurodollar Rate); or

     (iii) imposes any other condition (other than with respect to a Tax matter)
     on or  affecting  such  Lender (or its  applicable  lending  office) or its
     obligations hereunder or the interbank Eurodollar market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make,  making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its  applicable  lending  office) with
respect  thereto;  then, in any such case,  Borrowers shall promptly pay to such
Lender,  upon receipt of the statement  referred to in the next  sentence,  such
additional  amount  or  amounts  (in the  form of an  increased  rate  of,  or a
different  method of  calculating,  interest or  otherwise as such Lender in its
sole discretion  shall  determine) as may be necessary to compensate such Lender
for any such  increased  cost or  reduction  in amounts  received or  receivable
hereunder. Such Lender shall deliver to Borrowers (with a copy to Administrative
Agent) a written  statement,  setting forth in  reasonable  detail the basis for
calculating  the  additional  amounts owed to such Lender under this  subsection
2.7A,  which  statement  shall be conclusive and binding upon all parties hereto
absent manifest error.

<PAGE>

     B. Withholding of Taxes.

     (i) Payments to Be Free and Clear. All sums payable by Borrowers under this
     Agreement and the other Loan Documents shall (except to the extent required
     by law) be paid free and clear of, and without any deduction or withholding
     on account  of, any Tax (other  than a Tax on the overall net income of any
     Lender) imposed, levied,  collected,  withheld or assessed by or within the
     United States of America or any political  subdivision  in or of the United
     States of America or any other  jurisdiction  from or to which a payment is
     made by or on behalf of Borrowers or by any federation or  organization  of
     which the United States of America or any such  jurisdiction is a member at
     the  time  of  payment,  all  such  non-excluded  Taxes  being  hereinafter
     collectively referred to as "Included Taxes".

     (ii) Grossing-up of Payments.  If Borrowers or any other Person is required
     by law to make any deduction or withholding on account of any such Included
     Tax from any sum paid or payable by  Borrowers to  Administrative  Agent or
     any Lender under any of the Loan Documents:

          (a)  Borrowers   shall  notify   Administrative   Agent  of  any  such
     requirement  or any  change in any such  requirement  as soon as  Borrowers
     become aware of it;

          (b) Borrowers shall pay any such Included Tax before the date on which
     penalties attach thereto,  such payment to be made (if the liability to pay
     is imposed on  Borrowers)  for its own  account  or (if that  liability  is
     imposed  on  Administrative  Agent or such  Lender,  as the case may be) on
     behalf of and in the name of Administrative Agent or such Lender;

          (c) the sum  payable by  Borrowers  in  respect of which the  relevant
     deduction,  withholding  or payment is required  shall be  increased to the
     extent  necessary  to  ensure  that,  after the  making of that  deduction,
     withholding or payment,  Administrative  Agent or such Lender,  as the case
     may be,  receives  on the due date a net sum  equal  to what it would  have
     received had no such  deduction,  withholding  or payment been  required or
     made; and

          (d) within 30 days after  paying any sum from which it is  required by
     law to make any deduction or withholding,  and within 30 days after the due
     date of  payment of any  Included  Tax which it is  required  by clause (b)
     above to pay,  Borrowers  shall deliver to  Administrative  Agent  evidence
     satisfactory to the other affected  parties of such deduction,  withholding
     or payment and of the  remittance  thereof to the relevant  taxing or other
     authority;

provided  that no such  additional  amount  shall be  required to be paid to any
Lender  under  clause (c) above  except to the extent that any change  after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment  Agreement pursuant to which such Lender became
a Lender  (in the case of each  other  Lender)  in any  such  requirement  for a
deduction,  withholding  or payment as is mentioned  therein  shall result in an
increase  in the rate of such  deduction,  withholding  or payment  from that in
effect  at the  date  of  this  Agreement  or at the  date  of  such  Assignment
Agreement, as the case may be, in respect of payments to such Lender.

     (iii)    Evidence of Exemption from U.S.Withholding Tax.
              -----------------------------------------------

          (a) Each Lender that is organized  under the laws of any  jurisdiction
     other than the United  States or any state or other  political  subdivision
     thereof (for  purposes of this  subsection  2.7B(iii),  a "Non-US  Lender")
     shall deliver to Administrative Agent for transmission to Borrowers,  on or
     prior  to the  Closing  Date  (in the  case of each  Lender  listed  on the
     signature  pages  hereof)  or on or  prior  to the  date of the  Assignment
     Agreement  pursuant to which it becomes a Lender (in the case of each other
     Lender),  and at such other times as may be necessary in the  determination
     of Borrowers or  Administrative  Agent (each in the reasonable  exercise of
     its  discretion),  (1) two original copies of Internal Revenue Service Form
     1001 or 4224 (or any successor forms), properly completed and duly executed
     by such  Lender,  together  with any  other  certificate  or  statement  of
     exemption  required under the Code or the regulations  issued thereunder to
     establish  that such Lender is not subject to deduction or  withholding  of
     United  States  federal  income tax with  respect to any  payments  to such
     Lender of principal,  interest,  fees or other amounts payable under any of
     the Loan  Documents  or (2) if such Lender is not a "bank" or other  Person
     described  in  Section  881(c)(3)  of the Code and  cannot  deliver  either
     Internal  Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a
     Certificate  re  Non-Bank  Status  together  with two  original  copies  of
     Internal  Revenue  Service  Form  W-8 (or  any  successor  form),  properly
     completed  and duly  executed  by such  Lender,  together  with  any  other
     certificate  or  statement  of  exemption  required  under  the Code or the
     regulations  issued thereunder to establish that such Lender is not subject
     to  deduction  or  withholding  of United  States  federal  income tax with
     respect to any payments to such Lender of interest payable under any of the
     Loan Documents.

<PAGE>

          (b) Each Lender  required to deliver any forms,  certificates or other
     evidence  with  respect to United  States  federal  income tax  withholding
     matters  pursuant to subsection  2.7B(iii)(a)  hereby agrees,  from time to
     time after the initial delivery by such Lender of such forms,  certificates
     or other  evidence,  whenever  a lapse in time or change  in  circumstances
     renders such forms,  certificates or other evidence  obsolete or inaccurate
     in any material  respect,  that such Lender  shall  promptly (1) deliver to
     Administrative  Agent for transmission to Borrowers two new original copies
     of Internal Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank
     Status and two original copies of Internal Revenue Service Form W-8, as the
     case may be, properly completed and duly executed by such Lender,  together
     with any other  certificate or statement of exemption  required in order to
     confirm  or  establish  that such  Lender is not  subject to  deduction  or
     withholding of United States federal income tax with respect to payments to
     such Lender under the Loan Documents or (2) notify Administrative Agent and
     Borrowers of its inability to deliver any such forms, certificates or other
     evidence.

          (c) Borrowers  shall not be required to pay any  additional  amount to
     any Non-US  Lender under clause (c) of  subsection  2.7B(ii) if such Lender
     shall have  failed to satisfy the  requirements  of clause (a) or (b)(1) of
     this  subsection  2.7B(iii);  provided  that  if  such  Lender  shall  have
     satisfied the  requirements of subsection  2.7B(iii)(a) on the Closing Date
     (in the case of each Lender listed on the signature pages hereof) or on the
     date of the Assignment  Agreement  pursuant to which it became a Lender (in
     the case of each other  Lender),  nothing in this  subsection  2.7B(iii)(c)
     shall relieve  Borrowers of their obligation to pay any additional  amounts
     pursuant  to clause (c) of  subsection  2.7B(ii)  in the event  that,  as a
     result of any change in any applicable law,  treaty or  governmental  rule,
     regulation or order, or any change in the interpretation, administration or
     application thereof,  such Lender is no longer properly entitled to deliver
     forms, certificates or other evidence at a subsequent date establishing the
     fact that  such  Lender is not  subject  to  withholding  as  described  in
     subsection 2.7B(iii)(a).

     C. Capital  Adequacy  Adjustment.  If any Lender shall have determined that
the adoption, effectiveness,  phase-in or applicability after the date hereof of
any  law,  rule or  regulation  (or any  provision  thereof)  regarding  capital
adequacy,  or any change  therein  or in the  interpretation  or  administration
thereof  after the date hereof by any  governmental  authority,  central bank or
comparable agency charged with the interpretation or administration  thereof, or
compliance by any Lender (or its applicable  lending office) with any guideline,
request or directive regarding capital adequacy (whether or not having the force
of law) of any such governmental  authority,  central bank or comparable agency,
has or would have the effect of  reducing  the rate of return on the  capital of
such Lender or any corporation  controlling  such Lender as a consequence of, or
with  reference to, such Lender's  Loans or  Commitments or Letters of Credit or
participations  therein or other obligations hereunder with respect to the Loans
or the  Letters  of Credit  to a level  below  that  which  such  Lender or such
controlling   corporation   could   have   achieved   but  for  such   adoption,
effectiveness,  phase-in,  applicability,  change  or  compliance  (taking  into
consideration  the policies of such Lender or such controlling  corporation with
regard to capital  adequacy),  then from time to time, within five Business Days
after receipt by Borrowers from such Lender of the statement  referred to in the
next  sentence,  Borrowers  shall pay to such Lender such  additional  amount or
amounts as will  compensate  such Lender or such  controlling  corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Borrowers (with
a copy to Administrative Agent) a written statement, setting forth in reasonable
detail the basis of the calculation of such additional amounts,  which statement
shall be conclusive and binding upon all parties hereto absent manifest error.

2.8    Obligation of Lenders to Mitigate.
       ----------------------------------

     Each Lender and Issuing  Lender  agrees  that,  as promptly as  practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be,  becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender or Issuing  Lender to become an Affected  Lender or
that would  entitle  such  Lender or Issuing  Lender to receive  payments  under
subsection  2.7 or subsection 3.6 it will, to the extent not  inconsistent  with
the internal  policies of such Lender or Issuing Lender and any applicable legal
or regulatory  restrictions,  use reasonable efforts (i) to make, issue, fund or
maintain the  Commitments of such Lender or Issuing Lender or the affected Loans
or Letters of Credit of such Lender or Issuing Lender through another lending or
Letters  of Credit  office of such  Lender or  Issuing  Lender or (ii) take such
other  measures as such Lender or Issuing  Lender may deem  reasonable,  if as a
result thereof the circumstances which would cause such Lender or Issuing Lender
to be an Affected  Lender would cease to exist or the  additional  amounts which
would otherwise be required to be paid to such Lender or Issuing Lender pursuant

<PAGE>

to  subsection  2.7 would be  materially  reduced and if, as  determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or Letters of Credit office or in accordance  with such other  measures,
as the case  may be,  would  not  otherwise  materially  adversely  affect  such
Commitments  or Loans or Letters of Credit or the  interests  of such  Lender or
Issuing  Lender;  provided  that  such  Lender  or  Issuing  Lender  will not be
obligated to utilize such other  lending or lending or Letters of Credit  office
pursuant to this  subsection  2.8 if such Lender or Issuing  Lender  would incur
incremental  expenses  as a result of  utilizing  such other  lending  office as
described  in clause  (i)  above.  A  certificate  as to the  amount of any such
expenses payable by Borrowers  pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
or Issuing Lender to Borrowers  (with a copy to  Administrative  Agent) shall be
conclusive  absent manifest error. Each Lender and Issuing Lender agrees that it
will not request compensation under subsection 2.7 unless such Lender or Issuing
Lender requests  compensation  from borrowers  under other lending  arrangements
with such Lender or Issuing Lender who are similarly situated.

2.9    Obligations Joint and Several.
       ------------------------------

     Anything  herein to the  contrary  notwithstanding,  each  Borrower  hereby
agrees and acknowledges  that the obligation of each Borrower for payment of the
Obligations  shall be  joint  and  several  with the  obligations  of the  other
Borrower  hereunder  regardless of which Borrower actually receives the proceeds
or  benefits  of any  borrowing  hereunder.  Each  Borrower  hereby  agrees  and
acknowledges that it will receive substantial benefits from the Loans and credit
facilities made available under this Agreement.

     Each  Borrower  agrees  that its joint and  several  obligation  to pay all
Obligations  hereunder is irrevocable,  absolute,  independent and unconditional
and shall not be  affected  by any  circumstance  which  constitutes  a legal or
equitable discharge of a guarantor or surety other than the indefeasible payment
in full of the  Obligations,  and the liability of each Borrower with respect to
the Obligations shall not be affected,  reduced or impaired by (i) consideration
of the amount of proceeds of the Loans received by any Borrower  relative to the
aggregate  amount of the Loans,  (ii) the  dissolution  or termination of or any
increase,  decrease or change in personnel of, Borrower, (iii) the insolvency or
business  failure of, or any  assignment for the benefit of creditors by, or the
commencement of any bankruptcy, reorganization, arrangement, moratorium or other
debtor  relief  proceedings  by or  against  the  other  Borrower  or  (iv)  the
appointment  of a receiver  for, or the  attachment,  restraint  of or making or
levying of any order of court or legal  process  affecting,  the property of the
other  Borrower.  Each Borrower  agrees that a separate action or actions may be
brought and  prosecuted  against such Borrower  whether or not action is brought
against the other  Borrower  and whether or not the other  Borrower is joined in
any such action or actions. Either Borrower's payment of a portion, but not all,
of the  Obligations  shall in no way  limit,  affect,  modify  or  abridge  such
Borrower's liability for that portion of the Obligations which is not paid.

     Each Borrower hereby waives any right to require the  Administrative  Agent
or any Lender,  as a condition of payment or performance  of the  Obligations by
such Borrower,  to proceed  against the other  Borrower or any other Person,  to
exhaust any security held from any  Borrower,  or pursue any other remedy in the
power of the Administrative Agent or any Lender. Each Borrower hereby waives any
defense arising by reason of incapacity,  lack of authority or any disability or
other  defense that may be  available to the other  Borrower and any defenses or
benefits  that may be derived or afforded by law which would limit the liability
of or exonerate  any  guarantor or surety with  respect to the  obligations,  or
which may conflict with the terms and provisions of this  Agreement,  other than
the indefeasible payment in full of the Obligations.

     Any  indebtedness of a Borrower now or hereafter held by the other Borrower
is hereby  subordinated  in right of  payment to the  Obligations,  and any such
indebtedness  of a Borrower to the other Borrower  collected or received by such
other Borrower after an Event of Default has occurred and is continuing shall be
held in trust for the  Administrative  Agent on behalf of the  Lenders and shall
forthwith  be paid  over to the  Administrative  Agent  for the  benefit  of the
Lenders  to  be  credited  and  applied  against  the  Obligations  but  without
affecting,  impairing  or  limiting  in any manner the  liability  of such other
Borrower under any other provision of this Agreement.

<PAGE>

Section 3.        LETTERS OF CREDIT

3.1    Issuance of Letters of Credit and Lenders' Purchase of Participations
       Therein.
       -------------------------------------------------------------------------

     A. Letters of Credit. In addition to Borrowers requesting that Lenders make
Revolving  Loans  pursuant to subsection  2.1A(ii),  Borrowers  may request,  in
accordance  with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan  Commitment
Termination  Date,  that one or more  Lenders  issue  Letters  of Credit for the
account of Borrowers for the purposes specified in the definitions of Commercial
Letters  of Credit  and  Standby  Letters  of  Credit.  Subject to the terms and
conditions  of this  Agreement  and in  reliance  upon the  representations  and
warranties  of  Borrowers  herein set forth,  any one or more  Lenders  may, but
(except as provided in  subsection  3.1B(ii))  shall not be obligated  to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that  Borrowers  shall not request that any Lender issue (and no Lender
shall issue):

     (i) any Letter of Credit if,  after  giving  effect to such  issuance,  the
     Total  Utilization of Revolving Loan Commitments would exceed the Revolving
     Loan Commitments then in effect;

     (ii) any Letter of Credit if, after  giving  effect to such  issuance,  the
     Letter of Credit Usage would exceed $15,000,000;

     (iii) any Standby Letter of Credit having an expiration date later than the
     earlier of (a) the Revolving Loan Commitment  Termination  Date and (b) the
     date which is one year from the date of issuance of such Standby  Letter of
     Credit;  provided  that the  immediately  preceding  clause  (b)  shall not
     prevent any Issuing  Lender from agreeing  that a Standby  Letter of Credit
     will  automatically  be extended for one or more successive  periods not to
     exceed one year each unless such  Issuing  Lender  elects not to extend for
     any such additional period; and provided,  further that such Issuing Lender
     shall elect not to extend such Standby Letter of Credit if it has knowledge
     that an Event of Default has occurred and is  continuing  (and has not been
     waived in accordance with subsection  10.6) at the time such Issuing Lender
     must elect whether or not to allow such extension;

     (iv) any  Commercial  Letter of Credit having an expiration  date (a) later
     than the  earlier of (X) the date  which is 30 days prior to the  Revolving
     Loan  Commitment  Termination  Date and (Y) the date which is 180 days from
     the date of  issuance  of such  Commercial  Letter of Credit or (b) that is
     otherwise  unacceptable to the applicable  Issuing Lender in its reasonable
     discretion; or

     (v) any Letter of Credit denominated in a currency other than Dollars.

     B. Mechanics of Issuance.

          (i) Notice of Issuance.  Whenever  Borrowers  desire the issuance of a
          Letter of Credit, they shall deliver to Administrative  Agent a Notice
          of Issuance of Letter of Credit  substantially  in the form of Exhibit
          XV  annexed  hereto no later  than  12:00 Noon (New York City time) at
          least three  Business Days (in the case of Standby  Letters of Credit)
          or five Business  Days (in the case of Commercial  Letters of Credit),
          or in each case such shorter period as may be agreed to by the Issuing
          Lender in any particular instance,  in advance of the proposed date of
          issuance. The Notice of Issuance of Letter of Credit shall specify (a)
          the proposed  date of issuance  (which shall be a Business  Day),  (b)
          whether the Letter of Credit is to be a Standby  Letter of Credit or a
          Commercial  Letter of  Credit,  (c) the face  amount of the  Letter of
          Credit,  (d) the expiration date of the Letter of Credit, (e) the name
          and address of the  beneficiary,  and (f) either the verbatim  text of
          the  proposed  Letter of Credit or the proposed  terms and  conditions
          thereof,  including  a  precise  description  of any  documents  to be
          presented by the  beneficiary  which,  if presented by the beneficiary
          prior to the  expiration  date of the Letter of Credit,  would require
          the  Issuing  Lender  to make  payment  under the  Letter  of  Credit;
          provided that the Issuing Lender,  in its reasonable  discretion,  may
          require  changes in the text of the  proposed  Letter of Credit or any
          such documents;  and provided,  further that no Letter of Credit shall
          require  payment  against a conforming  draft to be made thereunder on
          the same business day (under the laws of the jurisdiction in which the
          office of the  Issuing  Lender to which such draft is  required  to be
          presented   is  located)   that  such  draft  is   presented  if  such
          presentation is made after 10:00 A.M. (in the time zone of such office
          of the Issuing Lender) on such business day.

          Borrowers   shall   notify  the   applicable   Issuing   Lender   (and
          Administrative  Agent,  if  Administrative  Agent is not such  Issuing
          Lender)  prior to the  issuance  of any  Letter of Credit in the event
          that any of the matters to which  Borrowers are required to certify in
          the  applicable  Notice of  Issuance  of Letter of Credit is no longer
          true and correct as of the proposed date of issuance of such Letter of

<PAGE>

          Credit,  and upon the issuance of any Letter of Credit Borrowers shall
          be deemed to have re-certified, as of the date of such issuance, as to
          the  matters  to  which  Borrowers  are  required  to  certify  in the
          applicable Notice of Issuance of Letter of Credit.

          (ii)  Determination of Issuing Lender.  Upon receipt by Administrative
          Agent  of a Notice  of  Issuance  of  Letter  of  Credit  pursuant  to
          subsection  3.1B(i)  requesting the issuance of a Letter of Credit, in
          the event  Administrative Agent elects to issue such Letter of Credit,
          Administrative   Agent  shall  promptly  so  notify   Borrowers,   and
          Administrative Agent shall be the Issuing Lender with respect thereto.
          In the event that Administrative Agent, in its sole discretion, elects
          not to  issue  such  Letter  of  Credit,  Administrative  Agent  shall
          promptly  so notify  Borrowers,  whereupon  Borrowers  may request any
          other  Lender to issue  such  Letter of Credit by  delivering  to such
          Lender a copy of the  applicable  Notice  of  Issuance  of  Letter  of
          Credit.  Any Lender so  requested to issue such Letter of Credit shall
          promptly notify Borrowers and Administrative  Agent whether or not, in
          its sole  discretion,  it has  elected to issue such Letter of Credit,
          and any such  Lender  which so elects to issue  such  Letter of Credit
          shall be the Issuing  Lender with respect  thereto.  In the event that
          all other  Lenders shall have declined to issue such Letter of Credit,
          notwithstanding  the prior  election  of  Administrative  Agent not to
          issue such Letter of Credit,  Administrative  Agent shall be obligated
          to issue such  Letter of Credit and shall be the  Issuing  Lender with
          respect  thereto,  notwithstanding  the fact that the Letter of Credit
          Usage with  respect to such  Letter of Credit and with  respect to all
          other  Letters  of  Credit  issued  by   Administrative   Agent,  when
          aggregated with Administrative  Agent's  outstanding  Revolving Loans,
          may exceed  Administrative  Agent's  Revolving Loan Commitment then in
          effect.

          (iii) Issuance of Letter of Credit.  Upon  satisfaction  or waiver (in
          accordance  with  subsection  10.6)  of the  conditions  set  forth in
          subsection 4.3, the Issuing Lender shall issue the requested Letter of
          Credit in  accordance  with the Issuing  Lender's  standard  operating
          procedures.

          (iv)  Notification  to  Lenders.  Upon the  issuance  of any Letter of
          Credit  the   applicable   Issuing   Lender  shall   promptly   notify
          Administrative  Agent and each other  Lender of such  issuance,  which
          notice  shall  be  accompanied  by a copy of such  Letter  of  Credit.
          Promptly after receipt of such notice (or, if Administrative  Agent is
          the Issuing Lender,  together with such notice),  Administrative Agent
          shall  notify  each Lender of the amount of such  Lender's  respective
          participation in such Letter of Credit,  determined in accordance with
          subsection 3.1C.

          (v) Reports to Lenders.  Within 15 days after the end of each calendar
          quarter ending after the Closing Date, so long as any Letter of Credit
          shall have been outstanding during such calendar quarter, each Issuing
          Lender shall  deliver to each other Lender a report  setting forth for
          such calendar quarter the daily aggregate amount available to be drawn
          under the Letters of Credit  issued by such  Issuing  Lender that were
          outstanding during such calendar quarter.

     C. Lenders' Purchase of  Participations  in Letters of Credit.  Immediately
upon the issuance of each Letter of Credit,  each Lender shall be deemed to, and
hereby  agrees  to,  have  irrevocably  purchased  from  the  Issuing  Lender  a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such  Lender's Pro Rata Share of the maximum  amount which is or
at any time may become available to be drawn thereunder.

3.2      Letter of Credit Fees.
         ----------------------

     Borrowers  agree to pay the  following  amounts  with respect to Letters of
Credit issued hereunder:

     (i) with  respect to each  Standby  Letter of Credit,  (a) a fronting  fee,
     payable  directly to the  applicable  Issuing  Lender for its own  account,
     equal to the  greater  of (X)  $5,000  and (Y) 0.25% per annum of the daily
     amount  available to be drawn under such Standby Letter of Credit and (b) a
     letter of credit fee,  payable to  Administrative  Agent for the account of
     Lenders,  equal to the  product  of (y) (A) until the  Restatement  Closing
     Date,  a  percentage  equal to the  Applicable  Margin  (as  defined in the
     Existing  Credit  Agreement)  for Eurodollar  Rate Loans,  and (B) from and
     after the  Restatement  Closing  Date,  3.00%  times (z) the daily  maximum
     amount available to be drawn under such Standby Letter of Credit, each such
     fronting  fee or letter of credit  fee to be  payable  in arrears on and to
     (but  excluding)  each March 31, June 30,  September  30 and December 31 of
     each year and computed on the basis of a 360-day year for the actual number
     of days elapsed;

<PAGE>

     (ii) with respect to each Commercial Letter of Credit,  (a) a fronting fee,
     payable  directly to the  applicable  Issuing  Lender for its own  account,
     equal to 0.25% per annum of the daily  amount  available  to be drawn under
     such Commercial Letter of Credit and (b) a letter of credit fee, payable to
     Administrative  Agent for the account of  Lenders,  equal to the product of
     (y) (A) until the  Restatement  Closing  Date,  a  percentage  equal to the
     Applicable  Margin  (as  defined  in the  Existing  Credit  Agreement)  for
     Eurodollar Rate Loans, and (B) from and after the Restatement Closing Date,
     3.00% times (z) the daily maximum  amount  available to be drawn under such
     Commercial Letter of Credit, each such fronting fee or letter of credit fee
     to be payable in arrears on and to (but  excluding) each March 31, June 30,
     September  30 and  December 31 of each year and  computed on the basis of a
     360-day year for the actual number of days elapsed; and

     (iii) with respect to the issuance, amendment or transfer of each Letter of
     Credit and each payment of a drawing made thereunder  (without  duplication
     of the fees  payable  under  clauses (i) and (ii) above),  documentary  and
     processing  charges payable  directly to the applicable  Issuing Lender for
     its own account in accordance with such Issuing Lender's  standard schedule
     for  such  charges  in  effect  at the  time of such  issuance,  amendment,
     transfer or payment, as the case may be.

For purposes of calculating  any fees payable under clauses (i) and (ii) of this
subsection  3.2,  the daily  amount  available  to be drawn  under any Letter of
Credit  shall  be  determined  as of  the  close  of  business  on any  date  of
determination.  Promptly  upon  receipt  by  Administrative  Agent of any amount
described in clause  (i)(b) or (ii)(b) of this  subsection  3.2,  Administrative
Agent shall distribute to each Lender its Pro Rata Share of such amount.

3.3    Drawings and Reimbursement of Amounts Paid Under Letters of Credit.
       ------------------------------------------------------------------

     A.   Responsibility  of  Issuing  Lender  With  Respect  to  Drawings.   In
determining  whether  to honor any  drawing  under  any  Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents  delivered  under such Letter of Credit with  reasonable care so as to
ascertain  whether they appear on their face to be in accordance  with the terms
and conditions of such Letter of Credit.

     B.  Reimbursement by Borrowers of Amounts Paid Under Letters of Credit.  In
the event an Issuing  Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately  notify Borrowers and
Administrative  Agent,  and Borrowers  shall reimburse such Issuing Lender on or
before the Business Day immediately  following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars and in same day funds
equal to the amount of such honored drawing;  provided that,  anything contained
in this Agreement to the contrary  notwithstanding,  unless Borrowers shall have
notified  Administrative  Agent and such Issuing Lender prior to 10:00 A.M. (New
York City time) on the date such  drawing is honored  that  Borrowers  intend to
reimburse such Issuing Lender for the amount of such honored  drawing with funds
other than the proceeds of Revolving  Loans,  Borrowers  shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Lenders to
make Revolving  Loans that are Base Rate Loans on the  Reimbursement  Date in an
amount in Dollars equal to the amount of such honored drawing and Lenders shall,
on the Reimbursement  Date, make Revolving Loans that are Base Rate Loans in the
amount of such honored drawing,  the proceeds of which shall be applied directly
by Agent to  reimburse  such  Issuing  Lender  for the  amount  of such  honored
drawing;  and  provided,  further  that if for any reason  proceeds of Revolving
Loans are not received by such Issuing  Lender on the  Reimbursement  Date in an
amount equal to the amount of such honored  drawing,  Borrowers  shall reimburse
such  Issuing  Lender,  on demand,  in an amount in same day funds  equal to the
excess of the amount of such honored  drawing over the aggregate  amount of such
Revolving Loans, if any, which are so received.  Nothing in this subsection 3.3B
shall be deemed to relieve  any Lender  from its  obligation  to make  Revolving
Loans on the terms and  conditions  set forth in this  Agreement,  and Borrowers
shall  retain any and all rights it may have against any Lender  resulting  from
the failure of such Lender to make such  Revolving  Loans under this  subsection
3.3B.

     C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit.

          (i) Payment by Lenders. In the event that Borrowers shall fail for any
          reason to reimburse any Issuing Lender as provided in subsection  3.3B
          in an  amount  equal to the  amount  of any  drawing  honored  by such
          Issuing  Lender  under a Letter of Credit  issued by it, such  Issuing
          Lender shall  promptly  notify each other  Lender of the  unreimbursed
          amount of such honored  drawing and of such other Lender's  respective
          participation  therein  based on such  Lender's  Pro Rata Share.  Each
          Lender shall make  available to such Issuing Lender an amount equal to
          its respective participation, in Dollars and in same day funds, at the
          office of such Issuing Lender specified in such notice, not later than
          12:00 Noon (New York City time) on the first  business  day (under the
          laws of the  jurisdiction  in which such office of such Issuing Lender
          is located)  after the date  notified by such Issuing  Lender.  In the
          event that any Lender fails to make  available to such Issuing  Lender
          on such business day the amount of such Lender's participation in such
          Letter of Credit as provided in this  subsection  3.3C,  such  Issuing

<PAGE>

          Lender  shall be entitled  to recover  such amount on demand from such
          Lender together with interest  thereon at the rate customarily used by
          such Issuing Lender for the correction of errors among banks for three
          Business  Days  and  thereafter  at the  Base  Rate.  Nothing  in this
          subsection  3.3C shall be deemed to prejudice  the right of any Lender
          to recover from any Issuing  Lender any amounts made available by such
          Lender to such Issuing Lender  pursuant to this subsection 3.3C in the
          event  that it is  determined  by the  final  judgment  of a court  of
          competent  jurisdiction  that the payment  with respect to a Letter of
          Credit by such Issuing  Lender in respect of which payment was made by
          such Lender  constituted gross negligence or willful misconduct on the
          part of such Issuing Lender.

          (ii)   Distribution  to  Lenders  of   Reimbursements   Received  From
          Borrowers.  In the event any Issuing Lender shall have been reimbursed
          by other Lenders pursuant to subsection 3.3C(i) for all or any portion
          of any drawing honored by such Issuing Lender under a Letter of Credit
          issued by it,  such  Issuing  Lender  shall  distribute  to each other
          Lender  which  has paid all  amounts  payable  by it under  subsection
          3.3C(i) with respect to such honored  drawing such other  Lender's Pro
          Rata  Share of all  payments  subsequently  received  by such  Issuing
          Lender from Borrowers in  reimbursement  of such honored  drawing when
          such payments are received.  Any such distribution  shall be made to a
          Lender  at its  primary  address  set  forth  below  its  name  on the
          appropriate  signature  page  hereof or at such other  address as such
          Lender may request.

     D. Interest on Amounts Paid Under Letters of Credit.

          (i) Payment of Interest by Borrowers.  Borrowers  agree to pay to each
          Issuing Lender,  with respect to drawings honored under any Letters of
          Credit  issued by it,  interest  on the  amount  paid by such  Issuing
          Lender in  respect  of each such  honored  drawing  from the date such
          drawing is honored to but excluding the date such amount is reimbursed
          by Borrowers  (including any such reimbursement out of the proceeds of
          Revolving  Loans  pursuant to subsection  3.3B) at a rate equal to (a)
          for the period from the date such drawing is honored to but  excluding
          the  Reimbursement  Date, the rate then in effect under this Agreement
          with  respect  to  Revolving  Loans  that are Base Rate  Loans and (b)
          thereafter,  a rate  which is 2% per  annum in  excess  of the rate of
          interest  otherwise  payable  under  this  Agreement  with  respect to
          Revolving Loans that are Base Rate Loans. Interest payable pursuant to
          this  subsection  3.3D(i)  shall be computed on the basis of a 365-day
          year for the actual  number of days elapsed in the period during which
          it accrues and shall be payable on demand or, if no demand is made, on
          the date on which  the  related  drawing  under a Letter  of Credit is
          reimbursed in full.

          (ii)  Distribution of Interest  Payments by Issuing  Lender.  Promptly
          upon receipt by any Issuing Lender of any payment of interest pursuant
          to subsection 3.3D(i) with respect to a drawing honored under a Letter
          of Credit  issued by it, (a) such Issuing  Lender shall  distribute to
          each other Lender, out of the interest received by such Issuing Lender
          in respect of the period from the date such  drawing is honored to but
          excluding the date on which such Issuing  Lender is reimbursed for the
          amount of such drawing  (including any such  reimbursement  out of the
          proceeds of Revolving Loans pursuant to subsection  3.3B),  the amount
          that such other Lender would have been  entitled to receive in respect
          of the letter of credit fee that would have been payable in respect of
          such Letter of Credit for such period pursuant to subsection 3.2 if no
          drawing had been honored  under such Letter of Credit,  and (b) in the
          event such Issuing Lender shall have been  reimbursed by other Lenders
          pursuant to subsection  3.3C(i) for all or any portion of such honored
          drawing,  such Issuing  Lender shall  distribute  to each other Lender
          which has paid all amounts payable by it under subsection 3.3C(i) with
          respect to such honored  drawing such other Lender's Pro Rata Share of
          any  interest  received  by such  Issuing  Lender in  respect  of that
          portion of such honored drawing so reimbursed by other Lenders for the
          period from the date on which such Issuing Lender was so reimbursed by
          other  Lenders to but excluding the date on which such portion of such
          honored  drawing is  reimbursed by  Borrowers.  Any such  distribution
          shall be made to a Lender at its  primary  address set forth below its
          name on the appropriate signature page hereof or at such other address
          as such Lender may request.

3.4    Obligations Absolute.
       ---------------------

     The  obligation of Borrowers to reimburse  each Issuing Lender for drawings
honored  under the  Letters  of Credit  issued by it and to repay any  Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under  subsection  3.3C(i) shall be  unconditional  and irrevocable and shall be
paid  strictly  in  accordance  with  the  terms  of this  Agreement  under  all
circumstances including, without limitation, any of the following circumstances:

     (i) any lack of validity or enforceability of any Letter of Credit;

<PAGE>

     (ii) the  existence  of any claim,  set-off,  defense or other  right which
     Borrower or any Lender may have at any time  against a  beneficiary  or any
     transferee  of any  Letter  of  Credit  (or any  Persons  for whom any such
     transferee may be acting),  any Issuing Lender or other Lender or any other
     Person  or,  in  the  case  of a  Lender,  against  Borrowers,  whether  in
     connection with this Agreement, the transactions contemplated herein or any
     unrelated  transaction   (including  any  underlying   transaction  between
     Borrowers  or one of its  Subsidiaries  and the  beneficiary  for which any
     Letter of Credit was procured);

     (iii)  any draft or other  document  presented  under any  Letter of Credit
     proving to be forged, fraudulent, invalid or insufficient in any respect or
     any statement therein being untrue or inaccurate in any respect;

     (iv) payment by the  applicable  Issuing  Lender under any Letter of Credit
     against   presentation  of  a  draft  or  other  document  which  does  not
     substantially comply with the terms of such Letter of Credit;

     (v) any adverse  change in the business,  operations,  properties,  assets,
     condition (financial or otherwise) or prospects of Borrowers;

     (vi) any breach of this  Agreement or any other Loan  Document by any party
     thereto;

     (vii)  any other  circumstance  or  happening  whatsoever,  whether  or not
     similar to any of the foregoing; or

     (viii) the fact that an Event of Default  or a  Potential  Event of Default
     shall have occurred and be continuing;

provided,  in each case, that payment by the applicable Issuing Lender under the
applicable  Letter of Credit  shall not have  constituted  gross  negligence  or
willful  misconduct of such Issuing Lender under the  circumstances  in question
(as determined by a final judgment of a court of competent jurisdiction).

3.5    Indemnification; Nature of Issuing Lenders' Duties.
       ---------------------------------------------------

     A.  Indemnification.   In  addition  to  amounts  payable  as  provided  in
subsection  3.6,  Borrowers  hereby  agree to protect,  indemnify,  pay and save
harmless  each  Issuing  Lender from and  against  any and all claims,  demands,
liabilities,  damages, losses, costs, charges and expenses (including reasonable
fees,  expenses and  disbursements  of counsel and  allocated  costs of internal
counsel)  which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect,  of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful  dishonor
by such Issuing  Lender of a proper  demand for payment made under any Letter of
Credit  issued  by it or (ii) the  failure  of such  Issuing  Lender  to honor a
drawing  under any such  Letter  of  Credit as a result of any act or  omission,
whether  rightful  or  wrongful,  of any  present  or future de jure or de facto
government or governmental  authority (all such acts or omissions  herein called
"Governmental Acts").

     B. Nature of Issuing Lenders' Duties.  As between Borrowers and any Issuing
Lender,  Borrowers  assume all risks of the acts and  omissions of, or misuse of
the  Letters  of  Credit  issued  by such  Issuing  Lender  by,  the  respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing,  such Issuing Lender shall not be responsible  for: (i) the form,
validity,  sufficiency,  accuracy,  genuineness  or legal effect of any document
submitted by any party in connection  with the  application  for and issuance of
any such  Letter of Credit,  even if it should in fact prove to be in any or all
respects  invalid,  insufficient,  inaccurate,  fraudulent  or forged;  (ii) the
validity  or  sufficiency  of  any  instrument   transferring  or  assigning  or
purporting  to  transfer  or assign  any such  Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective  for any reason;  (iii) failure of the  beneficiary of
any such Letter of Credit to comply fully with any conditions  required in order
to draw upon such Letter of Credit;  (iv) errors,  omissions,  interruptions  or
delays in transmission or delivery of any messages,  by mail, cable,  telegraph,
telex  or  otherwise,   whether  or  not  they  be  in  cipher;  (v)  errors  in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise  of any  document  required in order to make a drawing  under any such
Letter of Credit or of the proceeds  thereof;  (vii) the  misapplication  by the
beneficiary  of any such Letter of Credit of the  proceeds of any drawing  under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender,  including  without  limitation any Governmental
Acts,  and none of the above shall affect or impair,  or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.

     In  furtherance  and  extension  and  not in  limitation  of  the  specific
provisions set forth in the first paragraph of this subsection  3.5B, any action
taken or omitted by any Issuing  Lender under or in connection  with the Letters
of Credit issued by it or any documents and certificates  delivered  thereunder,
if taken or omitted in good faith,  shall not put such Issuing  Lender under any
resulting liability to Borrowers.

<PAGE>

     Notwithstanding  anything to the contrary contained in this subsection 3.5,
Borrowers shall retain any and all rights it may have against any Issuing Lender
for  any  liability  arising  solely  out of the  gross  negligence  or  willful
misconduct of such Issuing Lender,  as determined by a final judgment of a court
of competent jurisdiction.

3.6    Increased Costs and Taxes Relating to Letters of Credit.
       -------------------------------------------------------

     Subject to the  provisions of subsection  2.7B (which shall be  controlling
with  respect to the  matters  covered  thereby),  in the event that any Issuing
Lender or Lender shall determine  (which  determination  shall,  absent manifest
error,  be final and  conclusive  and binding upon all parties  hereto) that any
law, treaty or governmental rule,  regulation or order, or any change therein or
in the  interpretation,  administration  or application  thereof  (including the
introduction of any new law, treaty or governmental rule,  regulation or order),
or any  determination  of a court or governmental  authority,  in each case that
becomes  effective after the date hereof, or compliance by any Issuing Lender or
Lender with any  guideline,  request or directive  issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):

     (i) subjects such Issuing  Lender or Lender (or its  applicable  lending or
     letter of credit  office) to any  additional Tax (other than any Tax on the
     overall net income of such  Issuing  Lender or Lender)  with respect to the
     issuing  or  maintaining  of any  Letters  of Credit or the  purchasing  or
     maintaining of any  participations  therein or any other  obligations under
     this Section 3, whether directly or by such being imposed on or suffered by
     any particular Issuing Lender;

     (ii) imposes,  modifies or holds applicable any reserve  (including without
     limitation  any  marginal,  emergency,   supplemental,   special  or  other
     reserve),  special  deposit,  compulsory  loan,  FDIC  insurance or similar
     requirement  in respect  of any  Letters  of Credit  issued by any  Issuing
     Lender or participations therein purchased by any Lender; or

     (iii) imposes any other condition (other than with respect to a Tax matter)
     on or affecting such Issuing Lender or Lender (or its applicable lending or
     letter of credit  office)  regarding this Section 3 or any Letter of Credit
     or any participation therein;

and the result of any of the  foregoing  is to increase the cost to such Issuing
Lender or Lender of  agreeing  to issue,  issuing or  maintaining  any Letter of
Credit or agreeing to purchase,  purchasing  or  maintaining  any  participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its  applicable  lending  or letter of credit  office)  with  respect
thereto;  then, in any case, Borrowers shall promptly pay to such Issuing Lender
or Lender, upon receipt of the statement referred to in the next sentence,  such
additional  amount or amounts as may be  necessary  to  compensate  such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Borrowers a
written statement,  setting forth in reasonable detail the basis for calculating
the  additional  amounts  owed to such  Issuing  Lender  or  Lender  under  this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.

Section 4.        CONDITIONS TO LOANS AND LETTERS OF CREDIT

     The  obligations  of  Lenders to make Loans  hereunder  are  subject to the
satisfaction  of the  following  conditions.  The  conditions  applicable to the
funding of Tranche A Term Loans and any Revolving Loans made and the issuance of
any Letters of Credit issued,  prior to the Restatement  Closing Date are as set
forth in the Existing Credit Agreement and have been satisfied or waived.

4.1    Conditions to Tranche B Term Loans on Restatement Closing Date.
       --------------------------------------------------------------

     The  conditions  to the  obligations  of Lenders to make the Tranche B Term
Loans, in addition to the conditions precedent specified in subsection 4.2 are:

     A.  Borrowers'  Documents.  On or  before  the  Restatement  Closing  Date,
Borrowers  shall,  have  delivered  to Lenders (or to  Administrative  Agent for
Lenders with sufficient originally executed copies, where appropriate,  for each
Lender and its counsel) the following  with respect to Borrowers,  each,  unless
otherwise noted, dated the Restatement Closing Date:

     (i) Copies of the Organizational Documents of such Person, certified by the
     Secretary  of  State  of  its   jurisdiction   of   organization   if  such
     certification  is  generally  available  dated a recent  date  prior to the
     Restatement Closing Date and in each other case, by such Person's secretary
     or assistant secretary;

     (ii) To the extent generally  available,  a good standing  certificate from
     the  Secretary  of  State  of  its   jurisdiction  of  organization  and  a
     certificate  or  other  evidence  of good  standing  as to  payment  of any
     applicable franchise or similar taxes from the appropriate taxing authority
     of such  jurisdiction,  each dated a recent  date prior to the  Restatement
     Closing Date;

<PAGE>

     (iii)  Resolutions  of the Board of Directors of such Person  approving and
     authorizing  the execution,  delivery and performance of the Loan Documents
     being  executed  on the  Restatement  Closing  Date to which it is a party,
     certified as of the Restatement  Closing Date by the corporate secretary or
     an  assistant  secretary  of such  Person as being in full force and effect
     without modification or amendment;

     (iv) Signature and incumbency  certificates  of the officers of such Person
     executing the Loan Documents being executed on the Restatement Closing Date
     to which it is a party;

     (v) Such other documents as Administrative Agent may reasonably request.

     B. Notes. Delivery to Administrative Agent of all promissory notes or other
instruments  duly  endorsed,  where  appropriate,  in a manner  satisfactory  to
Administrative  Agent) evidencing  Borrowers'  obligation to repay the Tranche B
Term Loans

     C. No Material Adverse Effect. Since December 31, 1999, no Material Adverse
Effect shall have occurred.

     D. Use of Proceeds.  On or before the Restatement  Closing Date,  Borrowers
shall   have   disbursement   instructions   reasonably   satisfactory   to  the
Administrative Agent directing that $30,000,000 of the proceeds of the Tranche B
Term  Loans  will be  applied  to the  existing  Term  Loans (as  defined in the
Existing Credit Agreement) in forward order of maturity, and the balance of such
proceeds (net of fees and expenses)  will be applied to the principal  amount of
the Revolving Loans.

     E.  Fourth  Amendment  to Deed of Trust.  Administrative  Agent  shall have
received from Borrowers (i) a fully executed and notarized  fourth  amendment to
the  Deed  of  Trust,   in  form  and  substance   reasonably   satisfactory  to
Administrative Agent duly recorded in the appropriate filing or recording office
in the jurisdiction in which the Mortgaged Property is located, or evidence that
such fourth amendment to the Deed of Trust has been irrevocably delivered to the
Title Company for such recordation,  and (ii) such title insurance  endorsements
to the  Mortgage  Policy  (as  such  term  is  defined  in the  Existing  Credit
Agreement)  insuring the interest of the Lenders in the real  property  securing
the Facilities has been obtained,  as of the Restatement  Closing Date,  subject
only to Permitted Liens, and increasing the amount of the Mortgage Policy by $20
million (minus any permanent  reductions in the Tranche A Loan Facility prior to
the  Restatement  Closing  Date)  in  form  and  substance  satisfactory  to the
Arrangers and the Administrative Agent.

     F. Security Interests in Personal and Mixed Property.  Administrative Agent
shall have received evidence reasonably  satisfactory to it that Borrowers shall
have taken or caused to be taken all actions,  executed and  delivered or caused
to be executed and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings and recordings  that may be necessary
or in the  reasonable  opinion of  Administrative  Agent,  desirable in order to
maintain in favor of Administrative  Agent, for the benefit of Lenders,  a valid
and perfected First Priority security interest in the First Priority  Collateral
securing all of the Obligations (including,  without limitation,  Obligations in
respect of the Tranche B Term Loans).

     G. Opinions of Counsel to Borrowers.  Lenders and their respective  counsel
shall have  received (i)  originally  executed  copies of one or more  favorable
written  opinions  of Paul,  Weiss,  Rifkind,  Wharton &  Garrison,  counsel for
Borrowers and their Subsidiaries,  and (ii) originally executed copies of one or
more favorable  written opinions of Lionel Sawyer & Collins,  Nevada counsel for
Borrowers  and  their  Subsidiaries,  each  in  form  and  substance  reasonably
satisfactory  to  Administrative  Agent  and  its  counsel,   dated  as  of  the
Restatement  Closing  Date and setting  forth  substantially  the matters in the
opinions designated in Exhibits V-A and V-B annexed hereto, respectively, and as
to such other  matters as  Administrative  Agent acting on behalf of Lenders may
reasonably  request.  Borrowers  hereby  acknowledge  and confirm that they have
requested such counsel to deliver such opinions to Lenders.

     H. Fees.  Borrowers  shall have paid to  Syndication  Agent,  Arrangers and
Administrative  Agent,  for distribution (as appropriate) to Agents and Lenders,
the fees payable on the Restatement Closing Date referred to in subsection 2.3.

     I. Amendment to FF&E Facility  Agreement.  Administrative  Agent shall have
received from Borrowers a duly executed amendment to the FF&E Facility Agreement
permitting,  among other things,  Borrowers to incur the Tranch B Term Loans, in
form and substance reasonably satisfactory to Administrative Agent.

     J. Conforming  Adelson L/C Drawing  Agreement.  Administrative  Agent shall
have received from Borrowers the Conforming  Adelson L/C Drawing  Agreement duly
executed  by all  parties  thereto  and in form and  substance  satisfactory  to
Administrative Agent.

<PAGE>

     K. Completion of Proceedings.  All corporate and other proceedings taken or
to be taken in  connection  with the  transactions  contemplated  hereby and all
documents  incidental  thereto not  previously  found  reasonably  acceptable by
Administrative  Agent,  acting on behalf of Lenders,  and its  counsel  shall be
reasonably  satisfactory in form and substance to Administrative  Agent and such
counsel,  and Administrative Agent and such counsel shall have received all such
counterpart  originals or certified  copies of such documents as  Administrative
Agent may reasonably request.

     Each Lender by  execution  and  delivery of a signature  page hereto on the
Restatement  Closing  Date  confirms  that  it is  satisfied  that  each  of the
conditions set forth above in this  subsection  4.1 has been satisfied  provided
that neither such  confirmation  nor any  extension  of credit  hereunder  shall
preclude any Agent or Lender from later asserting that (and enforcing any rights
or remedies it may have if), any representation,  warranty or certification made
or deemed made by Borrowers or any of their  Affiliates in connection  therewith
was not true and accurate when made.

4.2     Conditions to all Loans on or after the Restatement Closing Date.
        ----------------------------------------------------------------

     The  obligations  of  Lenders  to make  Loans on or after  the  Restatement
Closing Date on any Funding Date are subject to the following further conditions
precedent:

     A.  Administrative  Agent shall have received  before that Funding Date, in
     accordance with the provisions of subsection  2.1B, an originally  executed
     Notice of Borrowing,  in each case signed by the chief  executive  officer,
     the chief  financial  officer or the  treasurer of each  Borrower or of the
     managing  member  of such  Borrower  or by any  executive  officer  of such
     Borrower  or  managing  member  designated  by any  of the  above-described
     officers on behalf of  Borrowers in a writing  delivered to  Administrative
     Agent.

     B. As of that Funding Date:

          (i) [Intentionally omitted];

          (ii) The  representations  and warranties  contained herein and in the
     other Loan  Documents  shall be true,  correct and complete in all material
     respects on and as of that  Funding  Date to the same extent as though made
     on and as of that  date,  except to the  extent  such  representations  and
     warranties  specifically  relate to an  earlier  date,  in which  case such
     representations  and warranties shall have been true,  correct and complete
     in all material respects on and as of such earlier date;

          (iii) No event shall have  occurred and be  continuing or would result
     from the  consummation  of the  borrowing  contemplated  by such  Notice of
     Borrowing that would constitute an Event of Default or a Potential Event of
     Default (except as set forth in Schedule 5.18 annexed hereto);

          (iv) Each Loan Party shall have performed in all material respects all
     agreements and satisfied all conditions which this Agreement provides shall
     be performed or satisfied by it on or before that Funding Date;

          (v)  No  order,  judgment  or  decree  of  any  court,  arbitrator  or
     governmental  authority shall purport to enjoin or restrain any Lender from
     making the Loans to be made by it on that Funding Date;

          (vi) The making of the Loans  requested on such Funding Date shall not
     violate any law  including,  Regulation T,  Regulation U or Regulation X of
     the Board of Governors of the Federal Reserve System; and

          (vii) There shall not be pending or, to the  knowledge  of  Borrowers,
     threatened,  any action, suit,  proceeding,  governmental  investigation or
     arbitration  against or affecting Borrowers or any of their Subsidiaries or
     any property of Borrowers or any of their  Subsidiaries that is required to
     be  disclosed  under,  and has not been  disclosed  by Borrowers in writing
     pursuant  to,  subsection  5.6 or  6.1(x)  prior to the  making of the last
     preceding Loans (or, in the case of the initial  Revolving Loans,  prior to
     the  execution  of this  Agreement),  and  there  shall  have  occurred  no
     development  not  so  disclosed  in  any  such  action,  suit,  proceeding,
     governmental  investigation  or arbitration  so disclosed,  that, in either
     event, in the reasonable  opinion of  Administrative  Agent or of Requisite
     Lenders, would have a Material Adverse Effect.

4.3    Conditions to Letters of Credit.
       --------------------------------

     The  issuance  of any  Letter  of  Credit  hereunder  (whether  or not  the
applicable  Issuing  Lender is  obligated  to issue such Letter of Credit) on or
after the  Restatement  Closing  Date is  subject  to the  following  conditions
precedent:

     A. On or  before  the date of  issuance  of the  initial  Letter  of Credit
     pursuant to this Agreement, the Tranche B Term Loans shall have been made.

<PAGE>

     B.  On  or  before  the  date  of   issuance  of  such  Letter  of  Credit,
     Administrative Agent shall have received, in accordance with the provisions
     of subsection  3.1B(i), an originally executed Notice of Issuance of Letter
     of Credit,  in each case signed by the chief executive  officer,  the chief
     financial officer or the treasurer of each of the Borrowers or the managing
     member  of  such  Borrower  or by any  executive  officer  of  each  of the
     Borrowers  or  managing  member  designated  by any of the  above-described
     officers  on behalf of each of the  Borrowers  in a  writing  delivered  to
     Administrative  Agent,  together  with all other  information  specified in
     subsection   3.1B(i)  and  such  other  documents  or  information  as  the
     applicable  Issuing  Lender may reasonably  require in connection  with the
     issuance of such Letter of Credit.

     C. On the  date of  issuance  of such  Letter  of  Credit,  all  conditions
     precedent  described  in  subsection  4.2B shall be  satisfied  to the same
     extent as if the  issuance  of such  Letter of Credit  were the making of a
     Loan and the date of issuance of such Letter of Credit were a Funding Date.

Section 5.        BORROWERS' REPRESENTATIONS AND WARRANTIES

     In order to induce  Lenders  to enter  into this  Agreement  and to make or
continue the Loans,  as applicable,  and to induce  Issuing  Lenders to issue or
continue Letters of Credit,  as applicable,  Borrowers  represent and warrant to
each Lender that,  on the  Restatement  Closing  Date,  on each Funding Date for
Revolving Loans on or after the Revolving Loan Availability Date and on the date
of issuance of each Letter of Credit on or after the Revolving Loan Availability
Date, the following statements are true, correct and complete

5.1    Organization, Powers, Qualification, Good Standing, Business and
       Subsidiaries.
       -------------------------------------------------------------------------

     A.  Organization  and Powers.  Each Loan Party is a corporation  or limited
liability  company duly organized,  validly  existing and in good standing under
the laws of its  jurisdiction  of  organization  as specified  in Schedule  5.1A
annexed hereto. Each Loan Party has all requisite corporate or limited liability
company power and authority to own and operate its  properties,  to carry on its
business as now  conducted  and as proposed to be  conducted,  to enter into the
Loan Documents and Project Documents to which it is a party and to carry out the
transactions contemplated thereby.

     B.  Qualification  and Good  Standing.  Each Loan Party is  qualified to do
business and in good standing in every jurisdiction where its assets are located
and  wherever  necessary to carry out its  business  and  operations,  except in
jurisdictions  where the failure to be so qualified or in good  standing has not
had and will not have a Material Adverse Effect.

     C. Ownership of Borrowers. The equity interests in each of the Borrowers is
duly authorized, validly issued and (if applicable) fully paid and nonassessable
and, as of the Closing Date,  none of such equity  interests  constitute  Margin
Stock.  Schedule 5.1C, as it may be  supplemented  from time to time,  correctly
sets forth the ownership of each Borrower.

     D.  Subsidiaries.  All of the  Subsidiaries  of Borrowers are identified in
Schedule 5.1D annexed  hereto,  as said Schedule 5.1D may be  supplemented  from
time to time  pursuant to the  provisions of  subsection  6.1(xvii).  The equity
interests of each of the  Subsidiaries of Borrowers  identified in Schedule 5.1D
annexed hereto (as so supplemented)  is duly authorized,  validly issued and (if
applicable),  fully paid and  nonassessable  and none of such  equity  interests
constitutes  Margin Stock.  Each of the Subsidiaries of Borrowers  identified in
Schedule 5.1D annexed  hereto (as so  supplemented)  is a corporation or limited
liability  company duly organized,  validly  existing and in good standing under
the laws of its respective  jurisdiction of organization set forth therein,  has
all requisite  corporate or limited liability company power and authority to own
and operate its  properties and to carry on its business as now conducted and as
proposed to be  conducted,  and is qualified to do business and in good standing
in every  jurisdiction  where its assets are located and  wherever  necessary to
carry out its business and  operations,  in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material  Adverse Effect.  Schedule 5.1D annexed
hereto (as so  supplemented)  correctly  sets forth the  ownership  interest  of
Borrowers and each of its  Subsidiaries in each of the Subsidiaries of Borrowers
identified therein.

     E. Rights to Acquire Equity.  There are no options,  warrants,  convertible
securities  or other  rights to acquire any equity  interests in any Borrower or
any of their  Subsidiaries  (other  than the New Mall  Subsidiary  and  Phase II
Subsidiary) except as set forth as Schedule 5.1E.

     F. Conduct of Business.  Borrowers and their  Subsidiaries  (other than the
New  Mall  Subsidiary  and the  Phase II  Subsidiary)  are  engaged  only in the
businesses permitted to be engaged in pursuant to subsections 7.12.

<PAGE>

5.2    Authorization of Borrowing, etc.
       -------------------------------

     A. Authorization of Borrowing.  The execution,  delivery and performance of
the Loan Documents and the Project  Documents  have been duly  authorized by all
necessary  corporate  action  on the  part of each  Loan  Party  that is a party
thereto.

     B. No Conflict. The execution,  delivery and performance by Loan Parties of
the Loan  Documents and the Project  Documents to which they are parties and the
consummation  of the  transactions  contemplated  by the Loan Documents and such
Project  Documents do not and will not (i) violate any  provision of (a) any law
or any governmental rule or regulation  applicable to any of their Subsidiaries,
Borrowers  or any of their  Subsidiaries,  (b) the  Certificate  or  Articles of
Incorporation,  Bylaws or  operating  agreements  of  Borrowers  or any of their
Subsidiaries  or (c) any order,  judgment or decree of any court or other agency
of government binding on Borrowers or any of their  Subsidiaries,  (ii) conflict
with,  result in a breach of or constitute  (with due notice or lapse of time or
both) a default  under any  Contractual  Obligation of Borrowers or any of their
Subsidiaries,  (iii) result in or require the creation or imposition of any Lien
upon any of the  properties or assets of Borrowers or any of their  Subsidiaries
(other  than any  Liens  created  under  any of the Loan  Documents  in favor of
Administrative  Agent on behalf of  Lenders),  or (iv)  require any  approval of
stockholders  or any  approval  or consent of any Person  under any  Contractual
Obligation of Borrowers or any of their  Subsidiaries  except for such approvals
or consents  which will be obtained on or before the Closing Date and  disclosed
in writing to Lenders and except for such violations,  conflicts,  approvals and
consents the failure of which to obtain could  reasonably  be expected to have a
Material Adverse Effect.

     C. Governmental Consents.  The execution,  delivery and performance by Loan
Parties of the Loan Documents to which they are parties and the  consummation of
the transactions  contemplated by the Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal,  state or other  governmental  authority or  regulatory
body.

     D. Binding Obligation. Each of the Loan Documents and Project Documents has
been duly  executed and  delivered  by Loan  Parties that are parties  hereto or
thereto, as applicable,  and is the legally valid and binding obligation of Loan
Parties,  enforceable  against such Loan Party in accordance with its respective
terms,  except as may be  limited  by  bankruptcy,  insolvency,  reorganization,
moratorium or similar laws relating to or limiting  creditors'  rights generally
or by equitable  principles  relating to  enforceability,  whether  brought in a
proceeding in equity or at law.

     E. Valid Issuance of Mortgage Notes and Subordinated Notes.  Borrowers have
the  corporate or limited  liability  company  power and  authority to issue the
Mortgage  Notes  and  the  Subordinated   Notes.  The  Mortgage  Notes  and  the
Subordinated  Notes are legally  valid and  binding  obligations  of  Borrowers,
enforceable  against Borrowers in accordance with their respective terms, except
as may be limited  by  bankruptcy,  insolvency,  reorganization,  moratorium  or
similar laws relating to or limiting creditors' rights generally or by equitable
principles  relating to enforceability.  The issuance and sale of Mortgage Notes
and the Subordinated  Notes,  either (a) have been registered or qualified under
applicable  federal and state securities laws or (b) are exempt  therefrom.  The
Loans and all other  monetary  Obligations  hereunder are and will be within the
definition  of  "Senior  Debt" and  "Permitted  Indebtedness"  included  in such
provisions.

5.3    Financial Condition.
       --------------------
     Borrowers have heretofore  delivered to Lenders,  at Lenders' request,  the
following financial statements and information: (i) the audited consolidated and
consolidating  balance  sheets of LVSI and its  Subsidiaries  as at December 31,
1999 and the  related  consolidated  and  consolidating  statements  of  income,
stockholders'  equity and cash flows of Borrowers and their Subsidiaries for the
Fiscal Year then ended and (ii) the  unaudited  consolidated  and  consolidating
balance sheets of LVSI and its Subsidiaries as at March 31, 2000 and the related
unaudited  consolidated and  consolidating  statements of income,  stockholders'
equity and cash flows of LVSI and its  Subsidiaries  for the three  months  then
ended.  All such  statements  were prepared in  conformity  with GAAP and fairly
present,  in all material  respects,  the financial  position (on a consolidated
and, where applicable,  consolidating  basis) of the entities  described in such
financial  statements  as at the  respective  dates  thereof  and the results of
operations   and  cash  flows  (on  a  consolidated   and,   where   applicable,
consolidating  basis) of the entities  described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements,  to
changes  resulting  from  audit and  normal  year-end  adjustments.  Except  for
obligations  under  the  Operative  Documents,  Borrowers  do not (and  will not
following  the funding of the initial  Loans)  have any  Contingent  Obligation,
contingent  liability  or  liability  for taxes,  long-term  lease or forward or
long-term commitment that is not reflected in the foregoing financial statements
or the notes  thereto  and which in any such case is material in relation to the
business,  operations,  properties,  assets, financial condition or prospects of
Borrowers and their Subsidiaries taken as a whole.

<PAGE>

5.4    No Material Adverse Change; No Restricted Junior Payments.
       ---------------------------------------------------------

     Since December 31, 1999, no event or change has occurred that has caused or
evidences,  either in any case or in the aggregate,  a Material  Adverse Effect.
Except as set forth on  Schedule  5.4,  neither  of  Borrowers  nor any of their
Subsidiaries have directly or indirectly declared, ordered, paid or made, or set
apart any sum or property for, any Restricted  Junior Payment or agreed to do so
except as permitted by subsection 7.5.

5.5    Title to Properties; Liens; Real Property.
       ------------------------------------------

     A. Title to Properties;  Liens.  Borrowers and their  Subsidiaries have (i)
good  marketable and insurable fee simple title to (in the case of fee interests
in real property),  (ii) valid leasehold  interests in (in the case of leasehold
interests in real or personal property),  or (iii) good title to (in the case of
all other personal  property),  all of their respective  material properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial  statements  delivered  pursuant to subsection 6.1, in
each  case  except  for  assets  disposed  of since  the date of such  financial
statements in the ordinary  course of business or as otherwise  permitted  under
subsection 7.7.  Except as permitted by this Agreement,  all such properties and
assets are held free and clear of Liens.

     B. Real Property.  As of the Restatement Closing Date, Schedule 5.5 annexed
hereto  contains  a  true,  accurate  and  complete  list  of (i)  all  material
properties owned by Borrowers or any of their Subsidiaries and (ii) all material
leases,  subleases  or  assignments  of leases  (together  with all  amendments,
modifications,  supplements,  renewals or extensions  of any thereof)  affecting
real  estate  of  properties  owned by  Borrowers  or any of their  Subsidiaries
(exclusive  of any  retail  and  restaurant  leases in the Mall)  regardless  of
whether a  Borrower  or such  Subsidiary  is the  landlord  or  tenant  (whether
directly or as an assignee or successor in interest) under such lease,  sublease
or  assignment.  Except as  specified  in  Schedule  5.5  annexed  hereto,  each
agreement listed in clause (ii) of the immediately preceding sentence is in full
force and effect and  Borrowers  do not have  knowledge  of any default that has
occurred and is continuing  thereunder,  and each such agreement constitutes the
legally valid and binding  obligation of each applicable  Borrower,  enforceable
against such Borrower in accordance with its terms, except as enforcement may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
relating to or limiting  creditors' rights generally or by equitable  principles
except to the extent that the failure of such  agreement to be in full force and
effect could not reasonably be expected to have a Material Adverse Effect.

5.6    Litigation; Adverse Facts.
       --------------------------

     Except as set forth in Schedule 5.6 and Schedule 5.17 annexed hereto, there
are no actions, suits, proceedings,  arbitrations or governmental investigations
(whether or not purportedly on behalf of Borrowers or any of their Subsidiaries)
at law or in equity,  or before or by any  federal,  state,  municipal  or other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Borrowers,  threatened against or affecting Borrowers or any of
their Subsidiaries or any property of Borrowers or any of their Subsidiaries and
that,  individually or in the aggregate,  could reasonably be expected to result
in a Material Adverse Effect.  Neither  Borrowers nor any of their  Subsidiaries
(i) is in violation of any applicable laws (including  Environmental Laws) that,
individually  or in the aggregate,  could  reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions,  decrees, rules or regulations of any court
or any federal, state, municipal or other governmental  department,  commission,
board,   bureau,   agency  or  instrumentality,   domestic  or  foreign,   that,
individually  or in the aggregate,  could  reasonably be expected to result in a
Material Adverse Effect.

5.7    Payment of Taxes.
       ----------------

     Except to the extent  permitted  by  subsection  6.3,  all tax  returns and
reports of Borrowers  required to be filed by them have been timely  filed,  and
all taxes  shown on such tax  returns  to be due and  payable  and all  material
assessments,  fees and other governmental  charges upon Borrowers and upon their
respective properties,  assets, income,  businesses and franchises which are due
and payable have been paid when due and payable.  Borrowers  know of no proposed
tax assessment against Borrowers or any of their Subsidiaries which is not being
actively  contested  by  Borrowers  or  such  Subsidiary  in good  faith  and by
appropriate  proceedings;  provided  that  such  reserves  or other  appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

<PAGE>

5.8    Performance of Agreements; Materially Adverse Agreements; Material
       Contracts.
       -------------------------------------------------------------------------

     A. Neither  Borrowers  nor any of their  Subsidiaries  is in default in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions  contained in any of its  Contractual  Obligations,  and no condition
exists  that,  with the  giving of  notice  or the lapse of time or both,  would
constitute  such a default,  except  where the  consequences  of such default or
defaults, if any, would not have a Material Adverse Effect.

     B.  Schedule  5.8  contains a true,  correct and  complete  list of all the
Material  Contracts  in  effect  on the  Restatement  Closing  Date.  Except  as
described on Schedule 5.8, all such Material  Contracts are, to the knowledge of
Borrowers,  in full force and effect and no material  defaults  currently  exist
thereunder.

5.9    Governmental Regulation.
       ------------------------

     Neither  Borrowers nor any of their  Subsidiaries  is subject to regulation
under the Public Utility  Holding Company Act of 1935, the Federal Power Act, or
the Interstate  Commerce Act or registration under the Investment Company Act of
1940 or under any other federal or state  statute or regulation  which may limit
its ability to incur Indebtedness other than the Nevada Gaming Laws or which may
otherwise render all or any portion of the Obligations unenforceable. Incurrence
of the  Obligations  under  the Loan  Documents  complies  with  all  applicable
provisions of the Nevada Gaming Laws.

5.10   Securities Activities.
       ----------------------

     A. Neither Borrowers nor any of their Subsidiaries is engaged  principally,
or as one of its important  activities,  in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.

     B. Following application of the proceeds of each Loan, not more than 25% of
the value of the assets  (either of  Borrowers  only or of  Borrowers  and their
Subsidiaries  on a  consolidated  basis) subject to the provisions of subsection
7.2  or  7.7 or  subject  to any  restriction  contained  in  any  agreement  or
instrument,  between  Borrowers  and any Lender or any  Affiliate of any Lender,
relating to Indebtedness  and within the scope of subsection 8.2, will be Margin
Stock.

5.11  Employee Benefit Plans.
      -----------------------

     A. Borrowers, each of their Subsidiaries and each of their respective ERISA
Affiliates  are in  material  compliance  with  all  applicable  provisions  and
requirements  of ERISA  and the  regulations  thereunder  with  respect  to each
Employee  Benefit  Plan,  and have  performed all their  obligations  under each
Employee  Benefit Plan. Each Employee  Benefit Plan which is intended to qualify
under Section 401(a) of the Code is so qualified.

     B. No ERISA Event has occurred or is reasonably expected to occur which has
resulted or would be reasonably likely to result in a liability in the aggregate
amount of $1,000,000 or more.

     C. Except to the extent  required under Section 4980B of the Code or except
as set forth in Schedule 5.11 annexed hereto,  no Employee Benefit Plan provides
health or welfare benefits  (through the purchase of insurance or otherwise) for
any retired or former employee of Borrowers, any of their Subsidiaries or any of
their respective ERISA Affiliates.

     D. As of the most recent valuation date for any Pension Plan, the amount of
unfunded  benefit  liabilities  (as  defined in Section  4001(a)(18)  of ERISA),
individually  or in the aggregate for all Pension Plans  (excluding for purposes
of such  computation  any  Pension  Plans with  respect to which  assets  exceed
benefit liabilities), does not exceed $1,000,000.

     E. As of the most recent  valuation  date for each  Multiemployer  Plan for
which the actuarial report is available,  the potential  liability of Borrowers,
their  Subsidiaries  and  their  respective  ERISA  Affiliates  for  a  complete
withdrawal from such  Multiemployer  Plan (within the meaning of Section 4203 of
ERISA),  when aggregated with such potential liability for a complete withdrawal
from all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA, does not exceed $1,000,000.

<PAGE>

5.12   Certain Fees.
       -------------

     No broker's or finder's fee or  commission  will be payable with respect to
this  Agreement or any of the  transactions  contemplated  hereby  except as set
forth on  Schedule  5.12 (other  than fees  payable to Agents and Lenders  under
subsection  2.3), and each Borrower  hereby  indemnifies  Lenders  against,  and
agrees that it will hold Lenders  harmless from, any claim,  demand or liability
for any such  broker's  or  finder's  fees  alleged  to have  been  incurred  in
connection  herewith or therewith and any expenses  (including  reasonable fees,
expenses  and  disbursements  of counsel)  arising in  connection  with any such
claim, demand or liability.

5.13   Environmental Protection.
       -------------------------

       Except as set forth in Schedule 5.13 annexed hereto:

          (i) neither  Borrowers nor any of their  Subsidiaries nor any of their
          respective  Facilities  or  operations  relating  to the  Site  or the
          Project are subject to any outstanding  written order,  consent decree
          or  settlement   agreement  with  any  Person   relating  to  (a)  any
          Environmental  Law, (b) any Environmental  Claim, or (c) any Hazardous
          Materials Activity;

          (ii) neither Borrowers nor any of their  Subsidiaries has received any
          letter  or  request  for   information   under   Section  104  of  the
          Comprehensive Environmental Response,  Compensation, and Liability Act
          (42 U.S.C.ss. 9604) or any comparable state law;

          (iii) there are and, to Borrowers' knowledge, have been no conditions,
          occurrences,  or  Hazardous  Materials  Activities  on the Site or any
          other  Facility  relating to the Project  which  could  reasonably  be
          expected to form the basis of an Environmental Claim against Borrowers
          or any of their Subsidiaries;

          (iv)  neither  Borrowers  nor  any  of  their   Subsidiaries  nor,  to
          Borrowers'  knowledge,  any  predecessor  of Borrowers or any of their
          Subsidiaries  has  filed  any  notice  under  any   Environmental  Law
          indicating  past or present  treatment of  Hazardous  Materials at any
          Facility,  and  none  of  Borrowers'  or  any of  their  Subsidiaries'
          operations involves the generation, transportation, treatment, storage
          or disposal  of  hazardous  waste,  as defined  under 40 C.F.R.  Parts
          260-270 or any state equivalent;

          (v)  compliance  with all  current or  reasonably  foreseeable  future
          requirements  pursuant  to  or  under  Environmental  Laws  will  not,
          individually  or in the  aggregate,  have a reasonable  possibility of
          giving rise to a Material Adverse Effect.

     Notwithstanding  anything in this subsection 5.13 to the contrary, no event
or condition  has  occurred or is occurring  with respect to Borrowers or any of
their  Subsidiaries  relating to any Environmental Law, any Release of Hazardous
Materials,  or any Hazardous Materials Activity,  including any matter disclosed
on Schedule 5.13 annexed hereto,  which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.

5.14   Employee Matters.
       -----------------

     There is no strike or work  stoppage in existence or  threatened  involving
Borrowers that could reasonably be expected to have a Material Adverse Effect.

5.15   Solvency.
       ---------

     Each  Borrower  is and,  upon the  incurrence  of any  Obligations  by such
Borrower on any date on which this representation is made, will be, Solvent.

5.16   Matters Relating to Collateral.
       -------------------------------

     A. Creation,  Perfection and Priority of Liens.  The execution and delivery
of the Collateral  Documents by Borrowers and their Subsidiaries,  together with
the  actions  taken on or prior to the  Restatement  Closing  Date  pursuant  to
subsection 4.1 are effective to create in favor of Administrative  Agent for the
benefit of Lenders,  as security  for the  respective  Secured  Obligations  (as
defined in the applicable  Collateral Document in respect of any Collateral),  a
valid and perfected First Priority Lien on all of the First Priority Collateral,
and all  filings  and other  actions  necessary  to  perfect  and  maintain  the
perfection  and  priority  status of such Liens have been duly made or taken and
remain in full force and  effect,  other  than the  filing of any UCC  financing
statements  delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC  continuation  statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.

<PAGE>

     B. Permits. No authorization, approval or other action by, and no notice to
or filing with, any  governmental  authority or regulatory  body is required for
either (i) the pledge or grant by Borrowers and their  Subsidiaries of the Liens
purported to be created in favor of Administrative  Agent pursuant to any of the
Collateral  Documents or (ii) the exercise by Administrative Agent of any rights
or  remedies  in  respect of any  Collateral  (whether  specifically  granted or
created  pursuant to any of the Collateral  Documents or created or provided for
by applicable law), except for filings or recordings  contemplated by subsection
5.16A or as set forth in Schedule 5.16B.

     C. Absence of  Third-Party  Filings.  Except such as may have been filed in
favor of  Administrative  Agent as contemplated by subsection  5.16A or filed to
perfect a Lien  permitted  under  subsection  7.2, no  effective  UCC  financing
statement,  fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office.

     D.  Information   Regarding   Collateral.   All  information   supplied  to
Administrative  Agent by or on behalf of  Borrowers  with  respect to any of the
Collateral  (in  each  case  taken as a whole  with  respect  to any  particular
Collateral) is accurate and complete in all material respects.

5.17   Construction Litigation.
       ------------------------

     A. The litigation arising out of the lawsuit filed by Borrowers against the
Construction  Manager in United States District Court for the District of Nevada
and the countersuit filed by the Construction  Manager against the Borrowers and
any other outstanding lawsuit,  action, claim or Lien arising out of or relating
to the construction of the Mall or the Project (the "Construction  Litigation"),
including any claim made or Lien filed by Construction Manager or any contractor
or subcontractor or to the bonding company insuring over any Lien relating to or
binding upon the Mall or the Project or to  Venetian,  LVSI,  Mall  Construction
Subsidiary or any of their Affiliates in connection therewith,  and any judgment
or settlement  amount owed by the Borrowers to the  Construction  Manager or any
contractor or  subcontractor  or to the bonding  company  insuring over any such
Lien as a result of the Construction  Litigation  (such amount,  the "Additional
Contingent  Claims")  cannot  reasonably be expected to have,  when taken in the
aggregate, a Material Adverse Effect;

     B. The status summary of the  Construction  Litigation  attached  hereto as
Schedule 5.17 annexed hereto is true and correct in all material  respects as of
the date hereof.

     C. Borrowers have sufficient Available Funds such that Available Funds will
equal or exceed Remaining Costs after giving effect to the Additional Contingent
Claims  as a  Remaining  Cost (as such  capitalized  terms  are  defined  in the
Disbursement Agreement).

5.18   No Event of Default.
       --------------------

     No Event of Default or Potential  Event of Default  exists or is continuing
(other than those Events of Default and Potential Events of Default set forth on
Schedule 5.18 annexed hereto).

5.19   Adelson Subordination Agreement.
       --------------------------------

     Adelson  has  complied  with  the  terms  and  conditions  of that  certain
Subordination  and  Intercreditor  Agreement (Trade Claims) dated as of November
12,  1999  by and  among  Scotiabank,  as  bank  agent,  the  Company  and  Mall
Construction Subsidiary and Adelson (the "Adelson Subordination Agreement").

Section 6.        BORROWERS' AFFIRMATIVE COVENANTS

     Borrowers  covenant  and  agree  that,  so long  as any of the  Commitments
hereunder  shall remain in effect and until  payment in full of all of the Loans
and other  Obligations  and the  cancellation  or  expiration  of all Letters of
Credit, unless the Requisite Lenders shall otherwise give prior written consent,
Borrowers shall perform,  and shall cause each of their Subsidiaries to perform,
all covenants  set forth in Article 5 of the  Disbursement  Agreement  (while in
effect), and all covenants set forth in this Section 6.

<PAGE>

6.1    Financial Statements and Other Reports.
       ---------------------------------------

     Borrowers will maintain a system of accounting established and administered
in accordance with sound business  practices to permit  preparation of financial
statements in conformity  with GAAP.  Borrowers  will deliver to  Administrative
Agent and Lenders:

     (i) Monthly  Financials:  as soon as  available  and in any event within 30
     days  after  the end of each  month,  the  consolidated  and  consolidating
     balance sheets of LVSI and its Subsidiaries as at the end of such month and
     the  related   consolidated   and   consolidating   statements  of  income,
     stockholders'  equity and cash flows of LVSI and its  Subsidiaries for such
     month and for the period from the beginning of the then current Fiscal Year
     to the end of such month,  setting forth in each case in  comparative  form
     the  corresponding  figures for the  corresponding  periods of the previous
     Fiscal Year and the  corresponding  figures from the Financial Plan for the
     current  Fiscal Year,  to the extent  prepared on a monthly  basis,  all in
     reasonable  detail and certified by the chief financial officer of LVSI, on
     behalf of LVSI, that they fairly  present,  in all material  respects,  the
     financial  condition of LVSI and its Subsidiaries as at the dates indicated
     and the  results of their  operations  and their cash flows for the periods
     indicated,  subject to  changes  resulting  from audit and normal  year-end
     adjustments;

     (ii) Quarterly Financials:  as soon as available and in any event within 45
     days after the end of each Fiscal Quarter,

          (a) the consolidated and consolidating  balance sheets of LVSI and its
     subsidiaries  (including the Excluded  Subsidiaries)  as at the end of such
     Fiscal Quarter and the related consolidated and consolidating statements of
     income,  stockholders'  equity and cash flows of LVSI and its  subsidiaries
     (including the Excluded  Subsidiaries)  for such Fiscal Quarter and for the
     period from the  beginning  of the then  current  Fiscal Year to the end of
     such Fiscal  Quarter),  setting forth in each case in comparative  form the
     corresponding  figures for the corresponding periods of the previous Fiscal
     Year, all in reasonable detail and certified by the chief financial officer
     of LVSI,  on behalf of LVSI,  that they  fairly  present,  in all  material
     respects,  the financial condition of LVSI and its subsidiaries  (including
     the Excluded  Subsidiaries)  as at the dates  indicated  and the results of
     their operations and their cash flows for the periods indicated, subject to
     changes resulting from audit and normal year-end adjustments;

          (b) the consolidated balance sheets of LVSI and its Subsidiaries as at
     the end of such Fiscal Quarter and the related  consolidated  statements of
     income,  stockholders'  equity and cash flows of LVSI and its  Subsidiaries
     for such Fiscal  Quarter and for the period from the  beginning of the then
     current  Fiscal Year to the end of such Fiscal  Quarter,  setting  forth in
     each  case  in  comparative   form  the   corresponding   figures  for  the
     corresponding  periods of the  previous  Fiscal Year and the  corresponding
     figures  from  the  Financial  Plan for the  current  Fiscal  Year,  all in
     reasonable  detail and certified by the chief financial officer of LVSI, on
     behalf of LVSI, that they fairly  present,  in all material  respects,  the
     financial  condition of LVSI and its Subsidiaries as at the dates indicated
     and the  results of their  operations  and their cash flows for the periods
     indicated,  subject to  changes  resulting  from audit and normal  year-end
     adjustments;

          (c) the  consolidated  balance  sheets of New Mall  Subsidiary and its
     subsidiaries  as at  the  end  of  such  Fiscal  Quarter  and  the  related
     consolidated  statements of income,  stockholders' equity and cash flows of
     New Mall  Subsidiary and its  subsidiaries  for such Fiscal Quarter and for
     the period from the beginning of the then current Fiscal Year to the end of
     such Fiscal  Quarter,  setting forth in each case in  comparative  form the
     corresponding  figures for the corresponding periods of the previous Fiscal
     Year, all in reasonable detail and certified by the chief financial officer
     of LVSI,  on behalf of LVSI,  that they  fairly  present,  in all  material
     respects,   the  financial   condition  of  New  Mall  Subsidiary  and  its
     subsidiaries as at the dates indicated and the results of their  operations
     and  their  cash  flows  for the  periods  indicated,  subject  to  changes
     resulting from audit and normal year-end adjustments; and

          (d) a  narrative  report  describing  the  operations  of LVSI and its
     subsidiaries (including the Excluded Subsidiaries) in the form prepared for
     presentation  to senior  management  for such  Fiscal  Quarter  and for the
     period from the  beginning  of the then  current  Fiscal Year to the end of
     such Fiscal Quarter;

     (iii) Year-End Financials:  as soon as available and in any event within 90
     days after the end of each Fiscal Year,

<PAGE>

          (a) the consolidated and consolidating  balance sheets of LVSI and its
     subsidiaries  (including the Excluded  Subsidiaries)  as at the end of such
     Fiscal Year and the related  consolidated and  consolidating  statements of
     income,  stockholders'  equity and cash flows of LVSI and its  subsidiaries
     (including the Excluded  Subsidiaries) for such Fiscal Year,  setting forth
     in each case in comparative form the corresponding figures for the previous
     Fiscal Year, all in reasonable  detail and certified by the chief financial
     officer  of LVSI,  on behalf  of LVSI,  that they  fairly  present,  in all
     material  respects,  the financial  condition of LVSI and its  subsidiaries
     (including  the Excluded  Subsidiaries)  as at the dates  indicated and the
     results of their operations and their cash flows for the periods indicated;

          (b) the consolidated balance sheets of LVSI and its Subsidiaries as at
     the end of such Fiscal Year and the related  consolidated and consolidating
     statements of income,  stockholders'  equity and cash flows of LVSI and its
     Subsidiaries  for  such  Fiscal  Year,   setting  forth  in  each  case  in
     comparative form the corresponding figures for the previous Fiscal Year and
     the  corresponding  figures  from the  Financial  Plan for the Fiscal  Year
     covered  by  such  financial  statements,  all  in  reasonable  detail  and
     certified by the chief  financial  officer of LVSI, on behalf of LVSI, that
     they fairly present,  in all material respects,  the financial condition of
     LVSI and its  Subsidiaries  as at the dates  indicated  and the  results of
     their operations and their cash flows for the periods indicated;

          (c) the  consolidated  balance  sheets of New Mall  Subsidiary and its
     subsidiaries as at the end of such Fiscal Year and the related consolidated
     statements  of  income,  stockholders'  equity  and cash  flows of New Mall
     Subsidiary and its subsidiaries for such Fiscal Year, setting forth in each
     case in comparative form the corresponding  figures for the previous Fiscal
     Year, all in reasonable detail and certified by the chief financial officer
     of LVSI,  on behalf of LVSI,  that they  fairly  present,  in all  material
     respects,  the financial  condition of Mall Subsidiary and its subsidiaries
     as at the dates  indicated  and the results of their  operations  and their
     cash flows for the periods indicated;

          (d) a  narrative  report  describing  the  operations  of LVSI and its
     subsidiaries (including the Excluded Subsidiaries) in the form prepared for
     presentation to senior management for such Fiscal Year; and

          (e) in the case of such consolidated financial statements specified in
     subdivisions  (a) to (c) above, a report thereon of Price Waterhouse LLP or
     other  independent  certified  public  accountants  of recognized  national
     standing   selected   by   Borrowers   and   reasonably   satisfactory   to
     Administrative  Agent,  which  report shall be  unqualified  as to scope of
     audit,  shall  express no doubts  about the ability of the Persons  covered
     thereby  to  continue  as a  going  concern,  and  shall  state  that  such
     consolidated financial statements fairly present, in all material respects,
     the consolidated financial position of LVSI and its subsidiaries (including
     the Excluded  Subsidiaries),  LVSI and its Subsidiaries and Mall Subsidiary
     and  its  subsidiaries,  respectively  as at the  dates  indicated  and the
     results of their operations and their cash flows for the periods  indicated
     in  conformity  with GAAP  applied on a basis  consistent  with prior years
     (except as otherwise  disclosed in such financial  statements) and that the
     examination  by such  accountants  in  connection  with  such  consolidated
     financial  statements has been made in accordance  with generally  accepted
     auditing standards;

     (iv) Officers' and Compliance Certificates:  together with each delivery of
     financial statements of LVSI and its Subsidiaries  pursuant to subdivisions
     (ii) and (iii) above, (a) an Officers' Certificate of LVSI stating that the
     signers,  on behalf of LVSI,  have reviewed the terms of this Agreement and
     have  made,  or  caused to be made  under  their  supervision,  a review in
     reasonable  detail  of the  transactions  and  condition  of  LVSI  and its
     Subsidiaries  (and, to the extent  applicable,  New Mall  Subsidiary,  Mall
     Subsidiary,  New Mall Manager, Mall Manager, Mall Direct Holdings, Phase II
     Subsidiary, Phase II Manager, Phase II Direct Holdings and their respective
     subsidiaries)  during  the  accounting  period  covered  by such  financial
     statements  and that such review has not disclosed the existence  during or
     at the end of such  accounting  period,  and that the  signers  do not have
     knowledge of the existence as at the date of such Officers' Certificate, of
     any  condition or event that  constitutes  an Event of Default or Potential
     Event of Default,  or, if any such  condition  or event  existed or exists,
     specifying  the nature  and period of  existence  thereof  and what  action
     Borrowers have taken, is taking and proposes to take with respect  thereto;
     and  (b)  a  Compliance  Certificate  demonstrating  in  reasonable  detail
     compliance during and at the end of the applicable  accounting periods with
     the restrictions contained in Section 7;

     (v) Reconciliation  Statements: if, as a result of any change in accounting
     principles  and policies from those used in the  preparation of the audited
     financial  statements  referred  to in  subsection  5.3,  the  consolidated
     financial  statements of LVSI and its  subsidiaries  delivered  pursuant to
     subdivisions  (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ
     in any material  respect from the  consolidated  financial  statements that
     would have been delivered  pursuant to such subdivisions had no such change
     in accounting principles and policies been made, then (a) together with the
     first delivery of financial  statements  pursuant to subdivision (i), (ii),
     (iii) or (xiii) of this subsection 6.1 following such change,  consolidated

<PAGE>

     financial  statements  of LVSI  and its  subsidiaries  for (y) the  current
     Fiscal  Year to the  effective  date of such  change  and (z) the two  full
     Fiscal Years immediately  preceding the Fiscal Year in which such change is
     made, in each case prepared on a pro forma basis as if such change had been
     in effect  during such  periods,  and (b)  together  with each  delivery of
     financial statements for LVSI and its subsidiaries  pursuant to subdivision
     (i), (ii),  (iii) or (xiii) of this subsection 6.1 following such change, a
     written  statement  of the  chief  accounting  officer  or chief  financial
     officer of LVSI setting forth the  differences  (including any  differences
     that would affect any calculations  relating to the financial covenants set
     forth in  subsection  7.6) which  would  have  resulted  if such  financial
     statements had been prepared without giving effect to such change;

     (vi)   Accountants'   Certification:   together   with  each   delivery  of
     consolidated  financial  statements  pursuant to subdivision (iii) above, a
     written statement by the independent  certified public  accountants  giving
     the report thereon (a) stating that their audit  examination has included a
     review of the terms of this  Agreement and the other Loan Documents as they
     relate to accounting matters, (b) stating whether, in connection with their
     audit  examination,  any  condition or event that  constitutes  an Event of
     Default or Potential  Event of Default has come to their  attention and, if
     such a  condition  or event  has come to their  attention,  specifying  the
     nature and period of  existence  thereof;  provided  that such  accountants
     shall not be liable by reason of any  failure  to obtain  knowledge  of any
     such  Event of  Default or  Potential  Event of  Default  that would not be
     disclosed  in the course of their audit  examination,  and (c) stating that
     based on their audit  examination  nothing has come to their attention that
     causes them to believe either or both that the information contained in the
     certificates  delivered therewith pursuant to subdivision (iv) above is not
     correct  or that  the  matters  set  forth in the  Compliance  Certificates
     delivered  therewith  pursuant to clause (b) of subdivision  (iv) above for
     the applicable  Fiscal Year are not stated in accordance  with the terms of
     this Agreement;

     (vii)   Accountants'   Reports:   promptly  upon  receipt  thereof  (unless
     restricted by  applicable  professional  standards),  copies of all reports
     submitted to Borrowers  by  independent  certified  public  accountants  in
     connection  with each  annual,  interim or special  audit of the  financial
     statements of LVSI and its subsidiaries made by such accountants, including
     any  comment  letter   submitted  by  such  accountants  to  management  in
     connection with their annual audit;

     (viii) SEC Filings,  Press Releases and Other Financial  Reports:  promptly
     upon their  becoming  available,  copies of (a) all  financial  statements,
     reports,  notices and proxy statements sent or made available  generally by
     Borrowers or any of their  subsidiaries to their security holders,  (b) all
     regular and periodic reports and all registration statements (other than on
     Form S-8 or a similar form) and prospectuses, if any, filed by Borrowers or
     any of  their  subsidiaries  with  any  securities  exchange  or  with  the
     Securities  and  Exchange   Commission  or  any   governmental  or  private
     regulatory  authority,  (c) all press  releases and other  statements  made
     available  generally  by  Borrowers  and any of their  subsidiaries  to the
     public  concerning  material  developments in the business of Borrowers and
     their subsidiaries and (d) to the extent prepared, any financial statements
     and reports  concerning any subsidiaries of Borrowers  (including  Excluded
     Subsidiaries not delivered pursuant to clauses (i), (ii) or (iii) above);

     (ix)  Events of  Default,  etc.:  promptly  upon any  officer of  Borrowers
     obtaining knowledge (a) of any condition or event that constitutes an Event
     of Default or Potential Event of Default, or becoming aware that any Lender
     has given any  notice  (other  than to  Administrative  Agent) or taken any
     other action with respect to a claimed Event of Default or Potential  Event
     of Default, (b) that any Person has given any notice to Borrowers and their
     Subsidiaries or taken any other action with respect to a claimed default or
     event or condition of the type  referred to in  subsection  8.2, (c) of any
     condition  or event that would be  required  to be  disclosed  in a current
     report filed by Borrowers with the  Securities  and Exchange  Commission on
     Form 8-K  (Items 1, 2, 4, 5 and 6 of such Form as in effect on the  Closing
     Date) if Borrowers  were  required to file such reports  under the Exchange
     Act,  or (d) of the  occurrence  of any event or change  that has caused or
     evidences,  either  in any case or in the  aggregate,  a  Material  Adverse
     Effect,  an  Officers'  Certificate  specifying  the  nature  and period of
     existence of such  condition,  event or change,  or  specifying  the notice
     given or action  taken by any such  Person and the  nature of such  claimed
     Event of Default,  Potential Event of Default, default, event or condition,
     and what action  Borrowers have taken,  are taking and propose to take with
     respect thereto;

     (x)  Litigation  or Other  Proceedings:  (a)  promptly  upon any officer of
     Borrowers obtaining  knowledge of (X) the non-frivolous  institution of, or
     threat of, any action, suit, proceeding (whether  administrative,  judicial
     or  otherwise),   governmental  investigation  or  arbitration  against  or
     affecting  Borrowers and their  Subsidiaries,  or any property of Borrowers
     and  their  Subsidiaries   (collectively,   "Proceedings")  not  previously
     disclosed   in  writing  by  Borrowers  to  Lenders  or  (Y)  any  material
     development in any Proceeding that, in any case:

<PAGE>

          (1) if adversely  determined,  has a reasonable  possibility of giving
     rise to a Material Adverse Effect; or

          (2) seeks to enjoin or otherwise  prevent the  consummation  of, or to
     recover  any  damages or obtain  relief as a result  of,  the  transactions
     contemplated hereby;

written notice thereof together with such other information as may be reasonably
available  to  Borrowers to enable  Lenders and their  counsel to evaluate  such
matters;  and (b) within  twenty  days after the end of each Fiscal  Quarter,  a
schedule of all Proceedings involving an alleged liability of, or claims against
or affecting,  Borrowers or any of their  Subsidiaries  equal to or greater than
$1,000,000,  and  promptly  after  request  by  Administrative  Agent such other
information  as may be reasonably  requested by  Administrative  Agent to enable
Administrative Agent and its counsel to evaluate any of such Proceedings;

     (xi) ERISA Events:  promptly upon  becoming  aware of the  occurrence of or
     forthcoming  occurrence of any ERISA Event, a written notice specifying the
     nature  thereof,  what action  Borrowers or any of their  respective  ERISA
     Affiliates  has taken,  is taking or proposes to take with respect  thereto
     and, when known,  any action taken or  threatened  by the Internal  Revenue
     Service, the Department of Labor or the PBGC with respect thereto;

     (xii)  ERISA  Notices:  with  reasonable  promptness,  copies  of (a)  each
     Schedule B (Actuarial  Information) to the annual report (Form 5500 Series)
     filed by Borrowers,  any of their  Subsidiaries or any of their  respective
     ERISA  Affiliates  with the Internal  Revenue  Service with respect to each
     Pension  Plan;  (b) all  notices  received  by  Borrowers  or any of  their
     respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
     ERISA Event; and (c) copies of such other documents or governmental reports
     or filings  relating to any Employee Benefit Plan as  Administrative  Agent
     shall reasonably request;

     (xiii)  Financial  Plans:  as soon as practicable and in any event no later
     than the Completion  Date and 30 days prior to the beginning of each Fiscal
     Year  thereafter,  a  consolidated  and  consolidating  plan and  financial
     forecast for such Fiscal Year (or portion  thereof from the Completion Date
     through  the end of such  Fiscal  Year)  and each  subsequent  Fiscal  Year
     through the final maturity date of the Term Loans (the "Financial Plan" for
     such Fiscal Years), including (a) forecasted consolidated and consolidating
     balance sheets and forecasted consolidated and consolidating  statements of
     income and cash flows of LVSI and its  Subsidiaries  for such Fiscal Years,
     together with a pro forma Compliance  Certificate for such Fiscal Years and
     an  explanation of the  assumptions on which such forecasts are based,  (b)
     forecasted  consolidated  and  consolidating  statements of income and cash
     flows of LVSI and its  Subsidiaries  for each month of such  Fiscal  Years,
     together with an explanation of the assumptions on which such forecasts are
     based, and (c) such other information and projections for such Fiscal Years
     as any Lender may reasonably request;

     (xiv) Insurance: as soon as practicable and in any event by the last day of
     each Fiscal Year, a report in form and substance reasonably satisfactory to
     Administrative  Agent outlining all material insurance coverage  maintained
     as of the date of such report by Borrowers and their  Subsidiaries  and all
     material insurance coverage planned to be maintained by Borrowers and their
     Subsidiaries in the immediately succeeding Fiscal Year;

     (xv) Board of Directors: with reasonable promptness,  written notice of any
     change  in the  members  of the  Board of  Directors  of LVSI or any of its
     corporate Subsidiaries.

     (xvi) New  Subsidiaries:  promptly upon any Person becoming a Subsidiary of
     either of Borrowers,  a written  notice  setting forth with respect to such
     Person (a) the date on which such Person  became a Subsidiary  of either of
     Borrowers  and (b) all of the data required to be set forth in Schedule 5.1
     annexed hereto with respect to all  Subsidiaries of either of Borrowers (it
     being  understood  that such written  notice shall be deemed to  supplement
     Schedule 5.1 annexed hereto for all purposes of this Agreement);

     (xvii) Material Contracts:  promptly,  and in any event within ten Business
     Days after any Material Contract of Borrowers or any of their  Subsidiaries
     is  terminated  or  amended  in a  manner  that is  materially  adverse  to
     Borrowers  or any of their  Subsidiaries  or any new  Material  Contract is
     entered into, or upon becoming  aware of any material  default by any Party
     under a Material Contract,  a written statement  describing such event with
     copies of such material amendments or new contracts,  and an explanation of
     any actions being taken with respect thereto;

     (xviii) UCC Search  Report:  As promptly as  practicable  after the date of
     delivery to Administrative Agent of any UCC financing statement executed by
     any Loan  Party  pursuant  to  subsection  6.12,  copies of  completed  UCC
     searches  evidencing the proper filing,  recording and indexing of all such
     UCC  financing   statement  and  listing  all  other  effective   financing
     statements that name such Loan Party as debtor, together with copies of all
     such other financing  statements not previously delivered to Administrative
     Agent by or on behalf of such Loan Party;

<PAGE>

     (xix) Notices under Operative Documents:  promptly upon receipt,  copies of
     all notices provided to the Borrowers or their  Affiliates  pursuant to any
     Operative  Documents  relating to material  defaults or material delays and
     promptly upon execution and delivery  thereof,  copies of all amendments to
     any of the Operative Documents; and

     (xx) Other Information:  with reasonable promptness, such other information
     and data with  respect to Borrowers  or any of their  Subsidiaries  as from
     time to time may be reasonably requested by any Lender.

6.2    Corporate Existence, etc.
       -------------------------

     Borrowers will, and will cause each of their  Subsidiaries to, at all times
preserve and keep in full force and effect their corporate or limited  liability
company  existence  and all  rights and  franchises  material  to its  business;
provided, however that Borrowers and their Subsidiaries may merge or consolidate
as permitted pursuant to subsection 7.7 of this Agreement and provided, further,
that no Borrower nor any such Subsidiary  shall be required to preserve any such
right or  franchise  if the Board of  Directors  of the  applicable  Borrower or
Subsidiary (or the managing member thereof,  if applicable) shall determine (and
shall so notify the Administrative  Agent), that the preservation  thereof is no
longer  desirable in the conduct of the business of such Borrower or Subsidiary,
as the case may be,  and that the loss  thereof  is not  disadvantageous  in any
material respect to Borrowers and their Subsidiaries or Lenders.

6.3    Payment of Taxes and Claims; Tax Consolidation.
       ----------------------------------------------

     A. Borrowers  will, and will cause each of their  Subsidiaries  to, pay all
material taxes,  assessments and other  governmental  charges imposed upon it or
any of its  properties or assets or in respect of any of its income,  businesses
or  franchises  before any penalty  accrues  thereon,  and all  material  claims
(including  claims for labor,  services,  materials  and supplies) for sums that
have  become due and  payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine shall be
incurred  with respect  thereto;  provided  that no such charge or claim need be
paid if it is being contested in good faith by appropriate  proceedings promptly
instituted  and  diligently  conducted,  so long as (1)  such  reserve  or other
appropriate  provision,  if any, as shall be required  in  conformity  with GAAP
shall have been made therefor and (2) in the case of a charge or claim which has
or may become a Lien against any of the  Collateral,  such  contest  proceedings
conclusively  operate  to stay  the sale of any  portion  of the  Collateral  to
satisfy such charge or claim.

     B. Borrowers will not, nor will they permit any of their  Subsidiaries  to,
file or  consent to the filing of any  consolidated  income tax return  with any
Person (other than Borrowers or any of their  Subsidiaries)  unless Borrower and
its  Subsidiaries  shall have entered  into, a tax sharing  agreement  with such
Person, in form and substance satisfactory to Administrative Agent.

6.4    Maintenance of Properties; Insurance; Application of Net Loss Proceeds.
       ----------------------------------------------------------------------

     A. Maintenance of Properties.  Borrowers will, and will cause each of their
Subsidiaries  to,  maintain or cause to be  maintained  in good repair,  working
order and condition,  ordinary wear and tear excepted,  all material  properties
used or useful in the business of Borrowers and their Subsidiaries and from time
to time  will make or cause to be made all  appropriate  repairs,  renewals  and
replacements  thereof except to the extent that the Borrowers  determine in good
faith not to maintain,  repair,  renew or replace such property if such property
is no longer desirable in the conduct of their business and the failure to do so
is not  disadvantageous  in any  material  respect  to the  Borrowers  and their
Subsidiaries or the Lenders.

     B.  Insurance.  Borrowers  will  maintain or cause to be  maintained,  with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance,  business  interruption  insurance and casualty
insurance  with  respect  to  liabilities,  losses or damage in  respect  of the
assets,  properties and businesses of Borrowers,  and their  Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established  reputation engaged in similar  businesses,  in each case in such
amounts (giving effect to self-insurance),  with such deductibles, covering such
risks and  otherwise  on such terms and  conditions  as shall be  customary  for
corporations similarly situated in the industry. Without limiting the generality
of the  foregoing,  Borrowers  will  maintain  or  cause  to be  maintained  the
insurance  coverage required to be maintained under the Disbursement  Agreement,
while applicable,  and the Cooperation Agreement,  such insurance coverage to be
provided by such insurance  provider,  in such amounts with such deductibles and
covering  such  risks  as are at  all  times  required  under  the  Disbursement
Agreement,  while applicable,  and the Cooperation  Agreement and to include, if
the Mortgaged Property is located in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards,  flood insurance
in compliance  with any applicable  regulations of the Board of Governors of the
Federal Reserve System.

<PAGE>

     C.  Application  of Net Loss  Proceeds.  Borrowers  shall  (i)  apply  Loss
Proceeds and  Liquidated  Damages to restore,  replace or rebuild the Project in
accordance with the Cooperation  Agreement,  (ii) apply Liquidated  Damages,  to
repay any Completion Guaranty Loan in accordance with Section 7.5 hereof and the
Adelson  Intercreditor   Agreement,  and  (iii)  apply  any  Loss  Proceeds  and
Liquidated Damages not applied as provided in clauses (i) and (ii) to prepay the
Loans in accordance with the Cooperation  Agreement and subsection  2.4B(iii)(b)
hereof.   Administrative   Agent   shall,   and   Borrowers   hereby   authorize
Administrative  Agent to,  apply such Loss  Proceeds and  Liquidated  Damages to
prepay the Loans as provided in subsection 2.4B(iii)(b).

6.5    Inspection; Lender Meeting.
       ---------------------------

     A.  Inspection  Rights.  Borrowers  shall,  and shall  cause  each of their
Subsidiaries to, permit any authorized  representatives designated by any Lender
to visit and inspect any of the properties of Borrowers and their  Subsidiaries,
to inspect,  copy and take extracts from its and their  financial and accounting
records,  and to discuss its and their  affairs,  finances and accounts with its
and  their  officers  and  independent  public  accountants,   if  requested  by
Administrative  Agent  (provided  that any  Borrower  may, if it so chooses,  be
present at or participate in any such  discussion),  all upon reasonable  notice
and at such  reasonable  times during normal  business hours and as often as may
reasonably be requested.

     B. Lender Meeting. Borrowers will, upon the request of Administrative Agent
or  Requisite  Lenders,  participate  in a meeting of  Administrative  Agent and
Lenders once during each Fiscal Year to be held at Borrowers'  corporate offices
(or at such other  location as may be agreed to by Borrowers and  Administrative
Agent) at such time as may be agreed to by Borrowers and Administrative Agent.

6.6    Compliance with Laws, etc.; Permits.
       ------------------------------------

     A. Borrowers shall and shall cause each of their Subsidiaries and all other
Persons on or occupying any Facilities to, comply with the  requirements  of all
applicable laws,  rules,  regulations and orders of any  governmental  authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to cause, individually or in the aggregate, a Material Adverse Effect.

     B. Borrowers  shall,  and shall cause each of their  Subsidiaries  to, from
time to time obtain,  maintain,  retain,  observe, keep in full force and effect
and comply in all material respects with the terms, conditions and provisions of
all Permits as shall now or hereafter be necessary under  applicable laws except
any thereof the  noncompliance  with which could not  reasonably  be expected to
have a Material Adverse Effect.

6.7    Environmental  Review and Investigation,  Disclosure,  Etc.;  Borrowers'
       Actions Regarding  Hazardous Materials  Activities,
       Environmental Claims and Violations of Environmental Laws.
       ------------------------------------------------------------------------

     A.   Environmental   Review  and   Investigation.   Borrowers   agree  that
Administrative  Agent may, from time to time and in its  reasonable  discretion,
(i) retain, at Borrowers'  expense,  an independent  professional  consultant to
review any environmental audits,  investigations,  analyses and reports relating
to Hazardous  Materials in respect of the Site or the Project prepared by or for
Borrowers and (ii) conduct  their own  investigation  of any Facility;  provided
that, in the case of any Facility no longer owned,  leased,  operated or used by
Borrowers or any of their Subsidiaries, Borrowers shall only be obligated to use
their best efforts to obtain permission for Administrative  Agent's professional
consultant  to  conduct an  investigation  of such  Facility.  For  purposes  of
conducting  such a  review  and/or  investigation,  Borrowers  hereby  grant  to
Administrative Agent and its agents, employees,  consultants and contractors the
right to enter into or onto any Facilities currently owned, leased,  operated or
used by Borrowers or any of their Subsidiaries and to perform such tests on such
property   (including   taking  samples  of  soil,   groundwater  and  suspected
asbestos-containing   materials)  as  are  reasonably  necessary  in  connection
therewith.  Any such  investigation  of any Facility shall be conducted,  unless
otherwise  agreed  to by  Borrowers  and  Administrative  Agent,  during  normal
business hours and, to the extent reasonably practicable,  shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such  Facility.  Borrowers and  Administrative
Agent  hereby  acknowledge  and  agree  that  any  report  of any  investigation
conducted at the request of  Administrative  Agent  pursuant to this  subsection
6.7A will be obtained and shall be used by Administrative  Agent and Lenders for
the purposes of Lenders'  internal credit  decisions,  to monitor and police the
Loans and to protect Lenders'  security  interests,  if any, created by the Loan
Documents.  Administrative  Agent agrees to deliver a copy of any such report to
Borrowers with the understanding  that Borrowers  acknowledge and agree that (x)
they will indemnify and hold harmless  Administrative Agent and each Lender from
any costs,  losses or  liabilities  relating to Borrowers' use of or reliance on
such  report,  (y)  neither  Administrative  Agent  nor  any  Lender  makes  any
representation  or warranty  with respect to such report,  and (z) by delivering
such  report  to  Borrowers,  neither  Administrative  Agent  nor any  Lender is
requiring  or   recommending   the   implementation   of  any   suggestions   or
recommendations contained in such report.

<PAGE>

     B. Environmental Disclosure. Borrowers will deliver to Administrative Agent
and Lenders:

     (i)  Environmental  Audits and Reports.  As soon as  practicable  following
     receipt  thereof,  copies  of  all  environmental  audits,  investigations,
     analyses  and  reports  of any  kind  or  character,  whether  prepared  by
     personnel  of  Borrowers  or any of their  Subsidiaries  or by  independent
     consultants, governmental authorities or any other Persons, with respect to
     significant  environmental  matters at any  Facility or with respect to any
     Environmental Claims;

     (ii) Notice of Certain Releases,  Remedial Actions,  Etc. Promptly upon the
     occurrence thereof,  written notice describing in reasonable detail (a) any
     Release required to be reported to any federal, state or local governmental
     or  regulatory  agency under any  applicable  Environmental  Laws,  (b) any
     remedial  action  taken by Borrowers or any other Person in response to (1)
     any Hazardous Materials  Activities the existence of which has a reasonable
     possibility  of  resulting  in one or  more  Environmental  Claims  having,
     individually or in the aggregate,  a Material  Adverse  Effect,  or (2) any
     Environmental  Claims  that,  individually  or in  the  aggregate,  have  a
     reasonable possibility of resulting in a Material Adverse Effect.

     (iii) Written Communications Regarding Environmental Claims, Releases, Etc.
     As  soon as  practicable  following  the  sending  or  receipt  thereof  by
     Borrowers  or any of  their  Subsidiaries,  a copy of any  and all  written
     communications   with  respect  to  (a)  any  Environmental   Claims  that,
     individually or in the aggregate,  have a reasonable  possibility of giving
     rise to a Material Adverse Effect,  (b) any Release required to be reported
     to any federal,  state or local  governmental or regulatory agency, and (c)
     any request for information from any governmental agency that suggests such
     agency is investigating  whether Borrowers or any of their Subsidiaries may
     be potentially responsible for any Hazardous Materials Activity.

     (iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt
     written notice describing in reasonable detail (a) any proposed acquisition
     of stock,  assets,  or property by Borrowers  or any of their  Subsidiaries
     that could  reasonably be expected to (1) expose  Borrowers or any of their
     Subsidiaries to, or result in,  Environmental  Claims that could reasonably
     be expected to have,  individually or in the aggregate,  a Material Adverse
     Effect or (2) affect the ability of Borrowers or any of their  Subsidiaries
     to maintain in full force and effect all material  Permits  required  under
     any Environmental Laws for their respective operations and (b) any proposed
     action  to be taken by  Borrowers  or any of their  Subsidiaries  to modify
     current operations in a manner that could reasonably be expected to subject
     Borrowers  or  any  of  their  Subsidiaries  to  any  material   additional
     obligations  or  requirements  under  any  Environmental  Laws  that  could
     reasonably  be  expected  to  have,  individually  or in the  aggregate,  a
     Material Adverse Effect.

     (v) Other Information. With reasonable promptness, such other documents and
     information   as  from  time  to  time  may  be  reasonably   requested  by
     Administrative  Agent in relation to any matters disclosed pursuant to this
     subsection 6.7.

     C.   Borrowers'   Actions   Regarding   Hazardous   Materials   Activities,
Environmental Claims and Violations of Environmental Laws.

          (i)  Remedial  Actions  Relating to  Hazardous  Materials  Activities.
          Borrowers  shall  promptly  undertake,  and shall  cause each of their
          Subsidiaries  promptly  to  undertake,  any  and  all  investigations,
          studies, sampling, testing, abatement,  cleanup, removal,  remediation
          or other response actions necessary to remove, remediate,  clean up or
          abate any Hazardous Materials Activity on, under or about any Facility
          that is in  violation  of any  Environmental  Laws or that  presents a
          material risk of giving rise to an  Environmental  Claim. In the event
          Borrowers or any of their Subsidiaries  undertake any such action with
          respect to any Hazardous Materials, Borrowers or such Subsidiary shall
          conduct and complete  such action in  compliance  with all  applicable
          Environmental  Laws and in accordance  with the  policies,  orders and
          directives of all federal,  state and local  governmental  authorities
          except  when,  and  only  to  the  extent  that,  Borrowers'  or  such
          Subsidiary's  liability  with  respect  to  such  Hazardous  Materials
          Activity  is  being  contested  in good  faith  by  Borrowers  or such
          Subsidiary.

          (ii) Actions with Respect to  Environmental  Claims and  Violations of
          Environmental  Laws.  Borrowers  shall  promptly take, and shall cause
          each of  their  Subsidiaries  promptly  to take,  any and all  actions
          necessary   to  (i)  cure  any  material   violation   of   applicable
          Environmental Laws by Borrowers or their Subsidiaries and (ii) make an
          appropriate  response to any Environmental  Claim against Borrowers or
          any of their Subsidiaries and discharge any obligations it may have to
          any Person thereunder.

<PAGE>

6.8    Interest Rate Protection.
       -------------------------

     At all times  with  respect  to the  Tranche A Term  Loans and at all times
after the date which is 60 days after the Restatement  Closing Date with respect
to the  Tranche B Term  Loans,  Borrowers  shall  maintain in effect one or more
Interest Rate Agreements with respect to the Term Loans, each such Interest Rate
Agreement to be for a term and in form and substance reasonably  satisfactory to
Administrative Agent, which Interest Rate Agreements shall effectively limit the
Unadjusted  Eurodollar Rate Component (as  hereinafter  defined) of the interest
costs to Borrowers with respect to an aggregate notional principal amount of not
less than 50.0% of the aggregate  principal amount of the Term Loans outstanding
from time to time (based on the assumption that such notional  principal  amount
was a Eurodollar  Rate Loan with an Interest  Period of three  months) to a rate
equal to not more than 9.0% per annum.  For purposes of this subsection 6.8, the
term "Unadjusted Eurodollar Rate Component" means that component of the interest
costs to Borrowers  in respect of a Eurodollar  Rate Loan that is based upon the
rate obtained  pursuant to clause (i) of the  definition of Adjusted  Eurodollar
Rate.

6.9    Compliance with Material Contracts.
       -----------------------------------

     Borrowers  shall,  and shall cause each of their  Subsidiaries  to, comply,
duly and promptly, in all material respects with its respective  obligations and
enforce all of its respective rights under all Material Contracts, including all
Operative  Documents  except where the failure to comply could not reasonably be
expected to have a Material Adverse Effect.

6.10   [Intentionally omitted].
       ------------------------

6.11   Payment of Liens.
       -----------------

     A. Removal by Borrowers.  In the event that,  notwithstanding the covenants
contained in subsection 7.2, a Lien not otherwise permitted under subsection 7.2
may encumber the  Mortgaged  Property or other item of Collateral or any portion
thereof,  the Borrowers  shall  promptly  discharge or cause to be discharged by
payment to the lienor or lien claimant or promptly  secure removal by bonding or
deposit  with the county clerk or otherwise  or, at the  Administrative  Agent's
option, and if obtainable promptly obtain title insurance against, any such Lien
or  mechanics'  or  materialmen's  claims of lien  filed or  otherwise  asserted
against the  Mortgaged  Property or any other item of  Collateral or any portion
thereof  within  60 days  after  the  date of  notice  thereof;  provided  that,
compliance  with the provisions of this  subsection  6.11 shall not be deemed to
constitute a waiver of the  provisions  of subsection  7.2. The Borrowers  shall
exhibit  to  the  Administrative  Agent  upon  request  all  receipts  or  other
satisfactory evidence of payment, bonding, deposit of taxes, assessments,  Liens
or any  other  item  which  may  cause  any such  Lien to be filed  against  the
Mortgaged  Property or other item of  Collateral  of any  Borrower or any of its
Subsidiaries.  Each Borrower and each of its  Subsidiaries  shall fully preserve
the Lien and the priority of each of the Deed of Trust and the other  Collateral
Documents without cost or expense to the Administrative Agent or the Lenders.

     B. Removal by the Agent. If any Borrower or any of its  Subsidiaries  fails
to  promptly  discharge,  remove  or bond off any  such  Lien or  mechanics'  or
materialmen's  claim of lien as described above, which is not being contested by
either  Borrower  or  any of its  Subsidiaries  in  good  faith  by  appropriate
proceedings promptly instituted and diligently  conducted,  within 30 days after
the receipt of notice thereof,  then the Administrative Agent may, but shall not
be required to,  procure the release and  discharge of such Lien,  mechanics' or
materialmen's  claim  of  lien  and  any  judgment  or  decree  thereon,  and in
furtherance  thereof  may,  in its sole  discretion,  effect any  settlement  or
compromise  with the lienor or lien  claimant  or post any bond or  furnish  any
security or indemnity as the Administrative  Agent, in its sole discretion,  may
elect.  In settling,  compromising  or arranging  for the discharge of any Liens
under  this  subsection,  the  Administrative  Agent  shall not be  required  to
establish or confirm the  validity or amount of the Lien.  The  Borrowers  agree
that all costs and  expenses  expended or  otherwise  incurred  pursuant to this
subsection 6.11 (including  reasonable attorneys' fees and disbursements) by the
Administrative Agent shall be paid by the Borrowers in accordance with the terms
hereof.

6.12   Further Assurances.

     A. Assurances.  Without expense or cost to the Administrative  Agent or the
Lenders,  each Borrower shall, and shall cause each of its Subsidiaries to, from
time to time hereafter, execute,  acknowledge,  file, record, do and deliver all
and any further acts, deeds,  conveyances,  mortgages,  deeds of trust, deeds to
secure debt, security agreements, hypothecations, pledges, charges, assignments,
financing   statements  and  continuations   thereof,   notices  of  assignment,
transfers, certificates,  assurances and other instruments as the Administrative
Agent  may from  time to time  reasonably  require  in  order to carry  out more
effectively  the  purposes  of  this  Agreement  or the  other  Loan  Documents,
including  to subject any items of  Collateral,  intended to now or hereafter be
covered,  to the Liens  created by the  Collateral  Documents,  to  perfect  and
maintain such Liens, and to assure,  convey,  assign,  transfer and confirm unto

<PAGE>

the Administrative Agent the property and rights hereby conveyed and assigned or
intended to now or  hereafter  be conveyed or assigned or which any  Borrower or
any such Subsidiary may be or may hereafter  become bound to convey or to assign
to the Administrative Agent or for carrying out the intention of or facilitating
the performance of the terms of this  Agreement,  or any other Loan Documents or
for filing, registering or recording this Agreement or any other Loan Documents.
Promptly upon a reasonable  request each Borrower shall, and shall cause each of
its  Subsidiaries  to, execute and deliver,  and hereby  authorizes the Agent to
execute and file in the name of such Borrower or  Subsidiary,  to the extent the
Administrative  Agent may  lawfully  do so,  one or more  financing  statements,
chattel   mortgages  or  comparable   security   instruments  to  evidence  more
effectively the Liens of the Collateral Documents upon the Collateral.

     B. Filing and  Recording  Obligations.  Borrowers  shall pay or cause to be
paid all filing,  registration  and recording fees and all expenses  incident to
the  execution  and  acknowledgment  of the  Deed of  Trust  or any  other  Loan
Document,  including any instrument of further assurance described in subsection
6.12A, and shall pay or cause to be paid all mortgage recording taxes,  transfer
taxes, general intangibles taxes and governmental stamp and other taxes, duties,
imposts,  assessments  and  charges  arising  out of or in  connection  with the
execution,  delivery,  filing,  recording  or  registration  of  any  Collateral
Document or any other Loan Document,  the Casino Lease and the Billboard  Master
Lease or  memoranda  thereof,  including  any  instrument  of further  assurance
described in subsection  6.12A,  or by reason of its interest in, or measured by
amounts  payable under,  the Notes,  any  Collateral  Document or any other Loan
Document,  including any instrument of further assurance described in subsection
6.12A,  and shall pay all stamp taxes and other taxes required to be paid on the
Notes or any other Loan  Document,  but excluding in the case of each Lender and
the  Administrative  Agent,  Taxes imposed on its income by a jurisdiction under
the laws of which it is organized or in which its principal  executive office is
located or in which its  applicable  lender  office for  funding or booking  its
Loans  hereunder is located.  If any Borrower  fails to make or cause to be made
any of the payments  described in the  preceding  sentence  within 15 days after
notice  thereof  from the  Administrative  Agent (or such  shorter  period as is
necessary to protect the loss of or  diminution  in value of any  Collateral  by
reason of tax  foreclosure  or otherwise,  as  determined by the  Administrative
Agent, in its sole discretion) accompanied by documentation verifying the nature
and  amount of such  payments,  the  Administrative  Agent may (but shall not be
obligated to) pay the amount due and such Borrower  shall  reimburse all amounts
in accordance with the terms hereof.

     C. Costs of Defending and Upholding the Lien. The Administrative Agent may,
upon at least five days' prior notice to the Borrower,  (i) appear in and defend
any action or proceeding,  in the name and on behalf of the Administrative Agent
or the Lenders in which the Administrative Agent or any Lender is named or which
the Administrative Agent in its sole discretion  determines is reasonably likely
to materially adversely affect the Mortgaged Property, any other Collateral, any
Collateral  Document,  the Lien  thereof  or any other  Loan  Document  and (ii)
institute any action or proceeding  which the  Administrative  Agent  reasonably
determines  should  be  instituted  to  protect  the  interest  or rights of the
Administrative  Agent  and  the  Lenders  in the  Mortgaged  Property  or  other
Collateral  or under this  Agreement or any other Loan  Document.  The Borrowers
agree that all  reasonable  costs and expenses  expended or  otherwise  incurred
pursuant  to  this  subsection   (including   reasonable   attorneys'  fees  and
disbursements)  by the  Administrative  Agent shall be paid by the  Borrowers or
reimbursed  to the  Administrative  Agent,  as the case may be,  promptly  after
demand.

     D.  Costs of  Enforcement.  The  Borrowers  agree to bear and  shall pay or
reimburse the Administrative  Agent and the Lenders in accordance with the terms
of subsection 10.2 for all reasonable sums,  costs and expenses  incurred by the
Administrative Agent and the Lenders (including  reasonable  attorneys' fees and
the expenses and fees of any receiver or similar  official) of or  incidental to
the collection of any of the  Obligations,  any foreclosure (or transfer in lieu
of  foreclosure) of this  Agreement,  any Collateral  Document or any other Loan
Document or any sale of all or any portion of the  Mortgaged  Property or all or
any portion of the other Collateral.

6.13   Execution of Subsidiary Guaranty and Personal Property Collateral
       Documents by Certain Subsidiaries and Future Subsidiaries.
       -----------------------------------------------------------------

     A.  Execution  of  Subsidiary  Guaranty and  Personal  Property  Collateral
Documents.  In the event that any Person  becomes a  Subsidiary  on or after the
Closing Date,  Borrowers will promptly notify  Administrative Agent of that fact
and cause such  Subsidiary  to execute  and  deliver to  Administrative  Agent a
counterpart of the Subsidiary  Guaranty and a Subsidiary  Security Agreement and
to take all such  further  actions and execute all such  further  documents  and
instruments as may be necessary or, in the reasonable  opinion of Administrative
Agent,  desirable to create in favor of Administrative Agent, for the benefit of
Lenders,  a valid and perfected  First  Priority Lien on all of the personal and
mixed  property  assets  of such  Subsidiary  which  constitute  First  Priority
Collateral.

<PAGE>

     B.  Subsidiary  Charter  Documents,  Legal Opinions,  Etc.  Borrowers shall
deliver  to  Administrative  Agent,  together  with  such  Loan  Documents,  (i)
certified copies of such  Subsidiary's  Certificate or Articles of Incorporation
or equivalent limited liability company documents, together with a good standing
certificate from the Secretary of State of the jurisdiction of its incorporation
and each other state in which such Person is qualified as a foreign  corporation
to do business and, to the extent  generally  available,  a certificate or other
evidence of good standing as to payment of any  applicable  franchise or similar
taxes from the appropriate taxing authority of each of such jurisdictions,  each
to be dated a recent date prior to their delivery to Administrative  Agent, (ii)
a copy of such Subsidiary's  Bylaws,  certified by its corporate secretary or an
assistant   secretary   as  of  a  recent  date  prior  to  their   delivery  to
Administrative  Agent,  (iii) a  certificate  executed  by the  secretary  or an
assistant  secretary  of such  Subsidiary  as to (a) the fact that the  attached
resolutions  of the Board of  Directors  or managing  member of such  Subsidiary
approving and authorizing  the execution,  delivery and performance of such Loan
Documents are in full force and effect and have not been modified or amended and
(b) the incumbency and signatures of the officers of such  Subsidiary  executing
such Loan Documents, and (iv) a favorable opinion of counsel to such Subsidiary,
in form and substance  reasonably  satisfactory to Administrative  Agent and its
counsel,  as to (a) the due  organization  and good standing of such Subsidiary,
(b) the due  authorization,  execution  and delivery by such  Subsidiary of such
Loan  Documents,  (c) the  enforceability  of such Loan  Documents  against such
Subsidiary,  (d) such other matters  (including matters relating to the creation
and  perfection of Liens in any Collateral  pursuant to such Loan  Documents) as
Administrative  Agent  may  reasonably  request,  all  of  the  foregoing  to be
reasonably  satisfactory in form and substance to  Administrative  Agent and its
counsel.

     C.  Real  Estate   Collateral   Documents.   Borrowers   shall  deliver  to
Administrative  Agent  together  with  such  Loan  Documents  all  such  further
documents and  instruments  and take such further action  necessary to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and perfected
first priority security interest on any real property assets of such Subsidiary,
as Administrative Agent may reasonably request from time to time.

6.14   Contain Obligations in Connection with Specific FF&E.
       ----------------------------------------------------

     Borrowers  agree to make  draws from time to time on the FF&E  Facility  as
soon as possible  thereunder  to purchase  or finance any  Specified  FF&E where
proceeds of Revolving Loans have been used or Letters of Credit have been issued
to purchase or support  deposit  obligations  incurred  in  connection  with the
manufacture or acquisition of such Specified FF&E.  Borrowers further agree that
in  connection  with any such  draws  they  will  repay the  Revolving  Loans or
terminate the Letters of Credit  issued to purchase or provide  deposits for the
Specified  FF&E  acquired  or  financed  with  the  draw on the  FF&E  Facility.
Borrowers shall take all action within their control to maintain the eligibility
of any Specified FF&E financed by Lenders as collateral under the FF&E Facility.

Section 7.        BORROWERS' NEGATIVE COVENANTS

     Borrowers  covenant  and  agree  that,  so long  as any of the  Commitments
hereunder  shall remain in effect and until  payment in full of all of the Loans
and other  Obligations  and the  cancellation  or  expiration  of all Letters of
Credit,  unless  Requisite  Lenders shall otherwise give prior written  consent,
Borrowers shall perform,  and shall cause each of their Subsidiaries to perform,
all of the covenants set forth in Article 6 of the Disbursement Agreement (while
in effect) and all of the covenants set forth in this Section 7.

7.1    Indebtedness.
       -------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly,  create,  incur, assume or guaranty, or otherwise become
or remain  directly  or  indirectly  liable with  respect to, any  Indebtedness,
except:

     (i)  Borrowers  and their  Subsidiaries  may become and remain  liable with
     respect to the Obligations;

     (ii)  Borrowers  and their  Subsidiaries  may become and remain liable with
     respect to Contingent  Obligations  permitted by subsection  7.4 and (other
     than with  respect  to  clauses  (iv) and (v) of  subsection  7.4) upon any
     matured  obligations  actually arising pursuant  thereto,  the Indebtedness
     corresponding to the Contingent Obligations so extinguished;

     (iii) Borrowers may become and remain liable for  Indebtedness  represented
     by the Mortgage Notes in an aggregate principal amount not to exceed at any
     time  $425,000,000,  reduced by any principal  payments required to be made
     thereon;

     (iv) [Intentionally omitted];

     (v) Borrowers may become and remain liable for Indebtedness  represented by
     the  Subordinated  Notes in an aggregate  principal amount not to exceed at
     any time $97,500,000  reduced by any principal payments required to be made
     thereon;

<PAGE>

     (vi) Borrowers may become and remain liable for Indebtedness under the FF&E
     Facility  Agreement in an aggregate  principal  amount not to exceed at any
     time  $97,700,000  (plus any accrued and unpaid  interest  thereon added to
     principal) reduced by any principal payments required to be made thereon;

     (vii) [Intentionally omitted];

     (viii)  Borrowers may become and remain liable for  Non-Recourse  Financing
     used to finance the purchase or lease of personal or real  property for use
     in the business of a Borrower or one of its Subsidiaries  provided that (x)
     such Non-Recourse  Financing  represents at least 75% of the purchase price
     of such personal or real property (y) the Indebtedness incurred pursuant to
     this clause  (viii) shall not exceed  $20,000,000  at any time;  and (z) no
     such  Indebtedness  may be  incurred  under this  clause  (viii)  until the
     Completion  Date has occurred and  Borrowers  have  generated  Consolidated
     EBITDA for one Fiscal Quarter of at least $25,000,000;

     (ix) Borrowers may become and remain liable for  Indebtedness in respect of
     any  Completion  Guaranty  Loan  in  an  aggregate  amount  not  to  exceed
     $25,000,000  (plus  any  accrued  and  unpaid  interest  thereon  added  to
     principal);

     (x)  Borrowers  and their  Subsidiaries  may become  and remain  liable for
     additional  Indebtedness  to the  extent  permitted  under and on the terms
     described in the Intercreditor Agreement;

     (xi) Borrowers may become and remain liable for  Indebtedness  to employees
     of Borrowers ("Employee  Repurchase Notes") incurred in connection with any
     repurchase  of  employee  options  or  stock  upon  death,   disability  or
     termination of such employee in accordance  with  employment  agreements or
     option plans or  agreements  as in effect on the Closing  Date  ("Permitted
     Employee  Repurchases")  provided that such Indebtedness shall be unsecured
     and  subordinated  on terms not less favorable to Borrowers and the Lenders
     than the terms of the Subordinated  Notes and shall expressly  provide that
     payments thereon shall be required only to the extent not restricted by any
     Financing Agreement;

     (xii) Borrowers may become and remain liable for Indebtedness  incurred for
     the purpose of financing all or any part of the purchase or lease of gaming
     equipment to be used in  connection  with the casino  located at the casino
     resort to be owned by Phase II  Subsidiary  or any  casino  to be  operated
     within  Phase II in the  aggregate  amount at any time  outstanding  not to
     exceed  $10,000,000;  provided,  that upon default under such Indebtedness,
     the lender under such Indebtedness may seek recourse or payment against the
     Borrowers  and their  Subsidiaries  only  through the return or sale of the
     property or equipment so purchased or leased and may not otherwise assert a
     valid claim for payment on such  Indebtedness  against  the  Borrowers  and
     their  Subsidiaries  or any  other  property  of the  Borrowers  and  their
     Subsidiaries.

     (xiii)  Borrowers  may  become  and  remain  liable  with  respect to other
     Indebtedness in an aggregate  principal amount not to exceed $10,000,000 at
     any time outstanding;

     (xiv) [Intentionally omitted]; and

     (xv) Borrowers may incur Indebtedness in an aggregate  principal amount not
     to exceed  $15,000,000  (plus any accrued and unpaid interest thereon added
     to principal) at any time outstanding ("Additional Indebtedness"), provided
     that (a) such Additional  Indebtedness shall not be secured by, directly or
     indirectly,  any  Liens  on  any  property  or  assets  owned  directly  or
     indirectly by Venetian or LVSI or any  Subsidiary of Venetian or LVSI or by
     any stock, securities,  membership interest,  partnership interest or other
     direct or indirect  equity  interests in Venetian or LVSI or any Subsidiary
     of Venetian or LVSI; (b) such Additional Indebtedness shall be subordinated
     to all  Obligations  under this  Agreement and all  Indebtedness  under the
     Mortgage Notes  Indenture,  the  Subordinated  Notes Indenture and the FF&E
     Facility  (collectively,  the "Superior  Facilities")  on terms  reasonably
     acceptable to the Administrative Agent and the Arrangers and no payments in
     respect thereof may be made or demanded prior to the payment in full of all
     Obligations (and further the principal of such Additional  Indebtedness may
     not be paid back until all Obligations and all Indebtedness with respect to
     the  Superior  Facilities  has  been  paid in full  and  this  covenant  of
     Borrowers shall survive the earlier  termination of this Credit Agreement),
     other than payment of interest in kind  provided  that any  instruments  or
     documents evidencing such payments contain the same terms and conditions as
     the Additional  Indebtedness  (provided that such  subordination  shall not
     prohibit  the  exchange  of  any  note   evidencing  any  such   Additional

<PAGE>
     Indebtedness  or of the payment of any amounts under any such note in whole
     or in part for  securities  of any  Borrower)  provided  that no Restricted
     Junior  Payment  may be made in  respect of such  securities;  (c) prior to
     incurring  any  Additional   Indebtedness  all  documents  and  instruments
     evidencing such Indebtedness shall be delivered to Administrative Agent and
     Arrangers and such  documents and  instruments  shall (x)  incorporate  the
     terms set forth in the other  clauses of this  proviso and  otherwise be in
     form and substance  reasonably  satisfactory  to  Administrative  Agent and
     Arrangers (y) provide that the Lenders  shall be third party  beneficiaries
     of such documents and  instruments and (z) contain  provisions  prohibiting
     any amendment, modification or waiver thereof binding on Borrowers or their
     Subsidiaries  without the prior written consent of Administrative Agent and
     Arrangers (which consent shall not be unreasonably  withheld);  and (d) the
     Additional  Indebtedness  shall  be  permitted  under  the  other  Superior
     Facilities and all other agreements to which the Borrowers are a party, and
     prior  to the  incurrence  thereof  counsel  to the  Borrowers  shall  have
     delivered  an opinion to the  Lenders to that effect  (with  respect to the
     Superior  Facilities  only) in form and substance  reasonably  satisfactory
     (including reasonably satisfactory assumptions) to the Administrative Agent
     and Arrangers on behalf of the Lenders.

7.2    Liens and Related Matters.
       --------------------------

     A.  Prohibition on Liens.  Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly,  create,  incur, assume or permit
to  exist  any  Lien on or with  respect  to any  property  or asset of any kind
(including   any  document  or  instrument  in  respect  of  goods  or  accounts
receivable)  of such  Borrower or  Subsidiary,  whether  now owned or  hereafter
acquired,  or any income or profits therefrom,  or file or permit the filing of,
or permit to remain in effect,  any financing  statement or other similar notice
of any Lien with respect to any such  property,  asset,  income or profits under
the  Uniform  Commercial  Code of any State or under any  similar  recording  or
notice statute, except:

     (i) Permitted Liens;

     (ii) Liens granted pursuant to the Collateral Documents;

     (iii)  Liens  securing   Indebtedness   permitted  under  clause  (iii)  of
     subsection 7.1, provided that such Liens are junior in priority (other than
     in respect of the Mortgage  Notes  Proceeds  Account) to the Liens securing
     the Obligations;

     (iv) [Intentionally omitted];

     (v) Liens securing  Indebtedness  permitted under clause (vi) of subsection
     7.1,  provided that such Liens attach only to the Specified FF&E and to any
     proceeds of such accounts or Indebtedness and related  collateral  accounts
     in which such proceeds are held;

     (vi)  Liens  securing   Indebtedness   permitted  under  clause  (viii)  of
     subsection  7.1,  provided that such Liens extend only to the real property
     or  personal  property  purchased  or  leased  with  the  proceeds  of such
     Non-Recourse  Financing  and such assets are acquired or leased  within 180
     days of the incurrence of such Indebtedness;

     (vii) Liens in favor of the Mortgage Note Holders or other Persons securing
     Indebtedness  advanced  by any  such  Person  and  permitted  under  (x) of
     subsection  7.1 to the  extent  that  such  Liens are  permitted  under the
     Intercreditor Agreement,  provided that such Liens in favor of the Mortgage
     Note Holders or such other Persons are junior (other than in respect of the
     Mortgage Notes Proceeds Account) to the Liens securing the Obligations;

     (viii)  Liens  securing  Indebtedness   permitted  under  clause  (xii)  of
     subsection 7.1 provided that such Liens attach only to the casino equipment
     purchased or leased with the proceeds of such  Indebtedness and such assets
     are  acquired  or  leased  within  180  days  of  the  incurrence  of  such
     Indebtedness;

     (ix) [Intentionally omitted];

     (x) Liens described in Schedule 7.2 annexed hereto; and

     (xi) Other Liens securing Indebtedness in an aggregate amount not to exceed
     $5,000,000 at any time outstanding.

Notwithstanding  the foregoing,  the Borrowers shall not permit the Intermediate
Holding  Companies  to create,  incur,  assume or permit to exist any Lien on or
with  respect to any property or asset of any kind of the  Intermediate  Holding
Companies,  Mall Direct Holdings and Mall Subsidiary  other than Permitted Liens
which do not secure Indebtedness.

<PAGE>
     B.  Equitable  Lien in  Favor  of  Lenders.  If  Borrowers  or any of their
Subsidiaries,  shall  create or assume  any Lien upon any of its  properties  or
assets,  whether now owned or hereafter  acquired,  other than Liens excepted by
the provisions of subsection 7.2A, they shall make or cause to be made effective
provision  whereby  the  Obligations  will be secured by such Lien  equally  and
ratably with any and all other Indebtedness  secured thereby as long as any such
Indebtedness shall be so secured; provided that,  notwithstanding the foregoing,
this  covenant  shall not be construed as a consent by Requisite  Lenders to the
creation or  assumption  of any such Lien not  permitted  by the  provisions  of
subsection 7.2A.

     C. No Further Negative  Pledges.  Except with respect to specific  property
encumbered to secure payment of particular  Indebtedness or leases or to be sold
pursuant to an executed  agreement  with  respect to an Asset Sale,  none of the
Borrowers  nor  any of  their  Subsidiaries,  shall  enter  into  any  agreement
prohibiting the creation or assumption of any Lien upon any of its properties or
assets,  whether  now owned or  hereafter  acquired  other than (x) as  provided
herein  or in the  other  Loan  Documents,  (y) as set  forth  in the  documents
evidencing  Other  Indebtedness  as in effect on the Closing Date  including any
refinancing thereof permitted  hereunder provided that the provisions  regarding
the creation or  assumption of Liens is not less  favorable to  Borrowers,  such
Subsidiary  or Lenders  than  those set forth in the  documents  evidencing  the
Indebtedness  being  refinanced  or (z) as  required  by  applicable  law or any
applicable rule or order of any Gaming Authority.

     D. No  Restrictions  on  Subsidiary  Distributions  to  Borrowers  or Other
Subsidiaries. Except as provided herein, Borrowers will not, and will not permit
any of their  Subsidiaries  to, create or otherwise  cause or suffer to exist or
become  effective any  consensual  encumbrance or restriction of any kind on the
ability  of any of their  Subsidiaries  to (i) pay  dividends  or make any other
distributions  on any of such  Subsidiary's  capital stock owned by Borrowers or
any other Subsidiary of Borrowers, (ii) repay or prepay any Indebtedness owed by
any such  Subsidiaries to Borrowers,  (iii) make loans or advances to Borrowers,
or (iv)  transfer any of its  property or assets to Borrowers  other than (x) as
provided  herein  or in the  other  Loan  Documents,  (y) as  set  forth  in the
documents  evidencing  Other  Indebtedness  as in  effect  on the  Closing  Date
including  any  refinancing   thereof  permitted  hereunder  provided  that  the
provisions regarding dividends, distributions, repayments of Indebtedness, loans
and advances and transfers of assets are not less  favorable to Borrowers,  such
Subsidiary  or Lenders  than  those set forth in the  documents  evidencing  the
Indebtedness  being  refinanced  or (z) as  required  by  applicable  law or any
applicable rule or order of any Gaming Authority.

7.3    Investments; Joint Ventures; Formation of Subsidiaries.

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly,  make or own any Investment in any Person, including any
Joint Venture or otherwise form or create any Subsidiary, except:

     (i) Borrowers and their  Subsidiaries  may make and own Investments in Cash
     Equivalents;

     (ii)  Borrowers  may  continue  to own their  existing  Investments  in the
     Intermediate  Holding  Companies,   the  Excluded   Subsidiaries  and  Mall
     Construction  Subsidiary described in Schedule 7.3 annexed hereto, provided
     that  Borrowers  and  their   Subsidiaries  may  not  make  any  additional
     Investments in such Persons except as permitted by clauses (iii), (iv), (v)
     and (x) below;

     (iii) [Intentionally omitted];

     (iv)  Borrowers may transfer a 1% managing  membership  interest in each of
     Phase II Subsidiary and Phase II Direct Holdings to Phase II Manager;

     (v) Borrower and their  Subsidiaries  may invest in New Mall  Subsidiary or
     Phase II Subsidiary any cash or other property  contributed to Borrowers by
     Adelson or any of his Affiliates for such purpose;

     (vi) So long as no Event of Default  or  Potential  Event of Default  shall
     have occurred and be continuing  or would result  therefrom,  Borrowers may
     form  and  make  Investments  in new  Subsidiaries  and in  Supplier  Joint
     Ventures;  provided that (a) the aggregate  amount of all such  Investments
     shall  not at any  time  exceed  $10,000,000,  (b) no  such  Subsidiary  or
     Supplier  Joint  Venture  shall own or  operate  or  possess  any  material
     license,  franchise  or right  used in  connection  with the  ownership  or
     operation of the Project or any material Project assets, (c) in the case of
     any Investment in a Supplier  Joint  Venture,  LVSI shall have delivered an
     Officers'  Certificate  which certifies that in the reasonable  judgment of
     such officer the  Investment in such Supplier  Joint Venture will result in
     an economic benefit to Borrowers (taking into account such Investment) as a
     result of a reduction in the cost of the goods or services  being  acquired
     from the Supplier  Joint  Venture over the life of the  Investment  and (d)
     none of the Borrowers, nor any other Subsidiary of the Borrower shall incur
     any liabilities or contingent  obligations in respect of the obligations of
     such Subsidiary or Joint Venture;

     (vii) Borrowers may make  Consolidated  Capital  Expenditures  permitted by
     subsection 7.14;

<PAGE>

     (viii)  Borrowers may make loans or advances to their employees (a) to fund
     the exercise price of options granted under  Borrowers'  stock option plans
     or agreements or employment agreements as in effect on the Closing Date and
     (b) for  other  purposes  in an  amount  not to  exceed  $1,000,000  in the
     aggregate outstanding at any time;

     (ix) Borrowers and their  Subsidiaries may hold  investments  consisting of
     securities received in settlement of debt created in the ordinary course of
     business and owing to the Borrowers or any Subsidiary or in satisfaction of
     judgments;

     (x) [Intentionally omitted]; and

     (xi) Borrowers may make and own other  Investments  in an aggregate  amount
     not to exceed at any time $5,000,000.

7.4    Contingent Obligations.
       -----------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or  indirectly,  create or become or remain  liable with respect to any
Contingent Obligation, except:

     (i)  Borrowers  may become and remain  liable  with  respect to  Contingent
     Obligations  under  Interest Rate  Agreements  which are (a) required under
     subsection 6.8 or under the terms of any other Financing  Agreements or (b)
     entered into to hedge against  interest rate  fluctuations in respect of up
     to 50% of the principal amount of the Indebtedness outstanding under clause
     (vi) of  subsection  7.1 so long as such Interest  Rate  Agreements  are on
     substantially  the same terms as those  entered into to satisfy  subsection
     6.8 hereof  and all  obligations  thereunder  are  secured  solely by Liens
     included in Permitted Liens under clause (xx) of the definition thereof;

     (ii)  Borrowers  and their  Subsidiaries  may become and remain liable with
     respect to Contingent Obligations under the Loan Documents;

     (iii)  Borrowers and their  Subsidiaries  may become and remain liable with
     respect to the Contingent  Obligations for the Indebtedness permitted under
     clauses (iii), (v), (viii), (x) and (xiii) of subsection 7.1, provided that
     any such Contingent  Obligations of the Intermediate  Holding Companies are
     subordinate to the Obligations on terms at least as favorable to the Lender
     as those relating to the subordination of the Intermediate  Holding Company
     guaranties set forth in Section 11.07 of the Mortgage  Notes  Indenture (as
     in effect on the Closing Date);

     (iv) to the extent such  incurrence  does not result in the  incurrence  by
     Borrowers or any of their Subsidiaries of any obligation for the payment of
     borrowed  money,  Borrowers  may become and remain  liable with  respect to
     Contingent  Obligations  incurred  solely in respect of performance  bonds,
     completion   guaranties   and   standby   letters  of  credit  or  bankers'
     acceptances,  provided that such Contingent Obligations are incurred in the
     ordinary  course of business and do not at any time exceed  $10,000,000  in
     the aggregate;

     (v)  Borrowers  and their  Subsidiaries  may become  and remain  liable for
     customary  indemnities  under Project Documents as in effect on the Closing
     Date; and

     (vi)  Borrowers  may  become  and  remain  liable  with  respect  to  other
     Contingent  Obligations,  provided  that the maximum  aggregate  liability,
     contingent  or  otherwise,  of Borrowers in respect of all such  Contingent
     Obligations shall at no time exceed $5,000,000.

7.5    Restricted Junior Payments.
       ---------------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly,  declare,  order, pay, make or set apart any sum for any
Restricted Junior Payment, except:

     (i)  Borrowers  may  make  regularly  scheduled  or  required  payments  of
     principal and interest in respect of any Other Indebtedness of Borrowers in
     accordance  with the  terms  of,  and only to the  extent  required  by the
     agreement  pursuant to which such Other  Indebtedness  was issued  provided
     that  (a)  any  such  payments  shall  be  subject  to  the  terms  of  the
     Intercreditor  Agreement,  the Adelson Intercreditor Agreement, the Adelson
     Subordination  Agreement,  the  Adelson  Completion  Guaranty  and any FF&E
     Intercreditor Agreements,  as applicable,  (b) any such payments in respect
     of any  Completion  Guaranty Note and any Employee  Repurchase  Note may be
     made only to the extent no Event of Default or  Potential  Event of Default

<PAGE>

     shall then exist and be  continuing  or would result  therefrom and (c) any
     such payments in respect of any Employee  Repurchase  Note may be made only
     to the extent that the ratio of Consolidated Adjusted EBITDA without giving
     effect to any  Conforming  Adelson L/C pursuant to the last sentence of the
     definition of Consolidated  Adjusted  EBITDA to Consolidated  Fixed Charges
     for the four Fiscal Quarter period ended on the most recent  Quarterly Date
     preceding such payment or such shorter period tested on such Quarterly Date
     under  subsection  7.6A  (determined  on a pro forma  basis (as though such
     payment on the  Employee  Repurchase  Note had been made  during the period
     tested as of such Quarterly Date under  subsection 7.6A) would have been in
     compliance   with  the   requirements  of  Section  7.6A  as  certified  to
     Administrative Agent by the chief financial officer of Borrowers, on behalf
     of Borrowers, at the time of such payment;

     (ii)  Borrowers  and  Mall  Construction  Subsidiary  may  prepay  the FF&E
     Facility from the portion of any Loss Proceeds required to be so applied in
     accordance  with  the  FF&E  Facility  and  in  accordance  with  the  FF&E
     Intercreditor Agreement;

     (iii) [Intentionally omitted];

     (iv) [Intentionally omitted];

     (v) [Intentionally omitted];

     (vi)  Borrowers  and their  Subsidiaries  may redeem or purchase any equity
     interests in Borrowers or their  Subsidiaries  or any  Indebtedness  to the
     extent  required  by any Nevada  Gaming  Authority  in order to  preserve a
     material  Gaming  License,  provided  that so long as such  efforts  do not
     jeopardize any material  Gaming  License,  Borrowers  shall have diligently
     tried  to  find a  third-party  purchaser  for  such  equity  interests  or
     Indebtedness and no third-party  purchasers acceptable to the Nevada Gaming
     Authority  is willing to purchase  such equity  interests  or  Indebtedness
     within a time period acceptable to the Nevada Gaming Authority;

     (vii) for so long as LVSI is a corporation  under  Subchapter S of the Code
     or a substantially  similarly treated  pass-through entity or Venetian is a
     limited   liability   company  that  is  treated  as  a  partnership  or  a
     substantially  similarly treated pass-through entity for Federal income tax
     purposes  (as  evidenced  by an  opinion  of  counsel  at least  annually),
     Borrowers  may each make cash  distributions  to  shareholders  or members,
     during each  Quarterly  Period,  in an  aggregate  amount not to exceed the
     Permitted  Quarterly Tax Distribution in respect of the related  Estimation
     Period,  and if any portion of the Permitted  Quarterly Tax Distribution is
     not  distributed  during  such  Quarterly  Payment  Period,  the  Permitted
     Quarterly Tax  Distribution  payable during the immediately  following four
     quarter period shall be increased by such undistributed  portion;  provided
     that Borrowers may not make any such distribution to pay taxes attributable
     to income of New Mall  Subsidiary  or Phase II  Subsidiary  or any of their
     subsidiaries  unless  Borrowers have received from the  applicable  holding
     companies of New Mall Subsidiary or Phase II Subsidiary,  as applicable,  a
     cash distribution for such purpose in respect of the applicable  Estimation
     Period in an equal amount;

     (viii) Borrowers and their wholly-owned  Subsidiaries may make intercompany
     payments  between  such  entities  and   intercompany   payments  from  any
     Subsidiary of a Borrower to any wholly-owned Subsidiary of Borrowers or any
     Borrower;

     (ix)  Borrowers may make Permitted  Employee  Repurchases so long as (a) no
     Event  of  Default  or  Potential  Event  of  Default  shall  exist  and be
     continuing  or would  result  therefrom  and (b) the ratio of  Consolidated
     Adjusted  EBITDA  without  giving  effect  to any  Conforming  Adelson  L/C
     pursuant to the last sentence of the  definition of  Consolidated  Adjusted
     EBITDA to  Consolidated  Fixed Changes for the four Fiscal  Quarter  period
     ended as of the most recent Quarterly Date prior to such repurchase or such
     shorter period tested on such  immediately  preceding  Quarterly Date under
     subsection  7.6A  (determined on a pro forma basis as though such Permitted
     Employee  Repurchase  had been made  during  the  period  tested as of such
     Quarterly Date under  subsection  7.6A) would have been in compliance  with
     the requirements of subsection 7.6A as certified to Administrative Agent by
     the chief financial  officer of Borrowers,  on behalf of Borrowers,  at the
     time of such payment;

     (x) Borrowers may make repurchases of capital stock of LVSI deemed to occur
     upon exercise of stock options to the extent such capital stock  represents
     a portion of the exercise price of such options; and

<PAGE>

     (xi) Borrowers may make payments on any Completion  Guaranty Loan (a) prior
     to Final Completion, from amounts permitted to be deposited in the Guaranty
     Deposit Account subject to the terms of the Adelson Completion Guaranty and
     the Disbursement Agreement, (b) on Final Completion Date from amounts which
     are advanced to Borrowers  pursuant to subsection 2.12 of the  Disbursement
     Agreement  for the  purpose  of  making  such  payments,  (c)  after  Final
     Completion Date from Liquidated  Damages and (d) on Final  Completion Date,
     from amounts which are returned to Mall Construction  Subsidiary from funds
     in the Mall Retainage/Punchlist  Account in accordance with the Mall Escrow
     Agreement,  up to the aggregate amount  previously  deposited into the Mall
     Retainage/Punchlist  Account from the Guaranty Deposit Account, provided in
     each case that such payments  shall be permitted only to the extent allowed
     under the Adelson  Intercreditor  Agreement and only so long as no Event of
     Default or Potential Event of Default shall then exist and be continuing or
     would result therefrom.

7.6    Financial Covenants.
       --------------------

     A. Minimum  Fixed Charge  Coverage  Ratio.  Borrowers  shall not permit the
ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for
any four-Fiscal Quarter period (or for any Quarterly Date prior to September 30,
2000,  the period  from  October 1, 1999 to such date ) ending on any  Quarterly
Date set forth below to be less than the correlative ratio indicated:

<TABLE>
<CAPTION>

=============================================   =========================
                                                Minimum

Period                                          Fixed Charge
                                                Coverage Ratio

=============================================   =========================
<S>                                             <C>
Each of the Quarters  ending on December 31,    1.05:1
1999,  March  31,  2000,  June 30,  2000 and
September 30, 2000
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2000,  March  31,  2001,  June 30,  2001 and
September 30, 2001
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2001,  March  31,  2002,  June 30,  2002 and
September 30, 2002
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2002 and March 31, 2003
---------------------------------------------   -------------------------
Each of the  Quarters  ending  on  June  30,    1.10:1
2003 and September 30, 2003
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.15:1
2003 and thereafter
=============================================   =========================
</TABLE>

     B.  Maximum  Leverage  Ratio.  Borrowers  shall not  permit  the ratio (the
"Leverage  Ratio") of (i)  Consolidated  Total Debt as of such Quarterly Date to
(ii)  Consolidated  Adjusted EBITDA for the four Fiscal Quarter period ending on
such  Quarterly Date (or for any Quarterly Date prior to September 30, 2000, the
period  from  October  1, 1999 to such date ) ending on any  Quarterly  Date set
forth  below to  exceed  the  correlative  ratio  indicated;  provided  that for
purposes of calculating Consolidated Adjusted EBITDA pursuant to this subsection
7.6B for any period ending prior to the first anniversary of the Completion Date
which is less than four Fiscal Quarters,  Consolidated  Adjusted EBITDA shall be
calculated on an annualized basis:

<PAGE>
<TABLE>
<CAPTION>

===========================================     ============================
                                                Maximum
Period                                          Leverage Ratio
===========================================     ============================
<S>                                             <C>
Each of the  Quarters  ending on  December      4.75:1
31, 1999,  March 31, 2000,  June 30, 2000,
September 30, 2000,  December 31, 2000 and
March 31, 2001
-------------------------------------------     ----------------------------
Each of the  Quarters  ending  on June 30,      4.50:1
2001 and September 30, 2001
-------------------------------------------     ----------------------------
The Quarter ending on December 31, 2001         4.25:1
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on March 31,      4.00:1
2002 and June 30, 2002
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on September      3.75:1
30, 2002 and December 31, 2002
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on March 31,      3.50:1
2003 and June 30, 2003
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on September      3.25:1
30, 2003,  December 31, 2003 and March 31,
2004

-------------------------------------------     ----------------------------
Each of the  Quarters  ending  on June 30,      3.00:1
2004 and thereafter
===========================================     ============================
</TABLE>

     C.  Minimum  Consolidated  Adjusted  EBITDA.  Borrowers  shall  not  permit
Consolidated  Adjusted  EBITDA for any four  Fiscal  Quarter  period (or for any
Quarterly  Date prior to September 30, 2000,  the period from October 1, 1999 to
such  date)  ending on any  Quarterly  Date set forth  below to be less than the
correlative  amount  indicated,   provided  that  for  purposes  of  Calculating
Consolidated  Adjusted  EBITDA  pursuant to this  subsection 7.6C for the first,
second, third and fourth Quarterly Dates, if the period tested is less than one,
two,  three or four full Fiscal  Quarters  respectively,  Consolidated  Adjusted
EBITDA shall be  multiplied  by a fraction of the numerator of which is 90, 182,
273 and 365,  respectively  and the  denominator  of which is the number of days
elapsed in the relevant test period:

<TABLE>
<CAPTION>

==============================================          =======================
                                                        Minimum Consolidated
Period                                                  Adjusted EBITDA
==============================================          =======================
<S>                                                     <C>
The Quarter ending on December 31, 1999                  $30,000,000
----------------------------------------------          -----------------------
The Quarter ending on March 31, 2000                     $75,000,000
----------------------------------------------          -----------------------
The Quarter ending on June 30, 2000                     $100,000,000
----------------------------------------------          -----------------------
The Quarter ending on September 30, 2000                $150,000,000
----------------------------------------------          -----------------------
The Quarter ending on December 31, 2000                 $155,000,000
----------------------------------------------          -----------------------
Each of the  Quarters  ending  on  March  31,           $160,000,000
2001 and June 30, 2001
----------------------------------------------          -----------------------
Each of the Quarters  ending on September 30,           $165,000,000
2001 and December 31, 2001
----------------------------------------------          -----------------------
Each of the  Quarters  ending  on  March  31,           $170,000,000
2002 and June 30, 2002
----------------------------------------------          -----------------------
Each of the Quarters  ending on September 30,           $175,000,000
2002 and December 31, 2002
----------------------------------------------          ------------------------
Each of the Quarters  ending on March 31,               $180,000,000
2003, June 30, 2003 and September 30, 2003
----------------------------------------------          ------------------------
Each of the  Quarters  ending on December 31,           $185,000,000
2003, and thereafter
==============================================          ========================
</TABLE>

<PAGE>

     D. Minimum Consolidated Net Worth.  Borrowers shall not permit Consolidated
Net  Worth at any  Quarterly  Date to be less than  $120,000,000  plus an amount
equal to the sum of 85% of  Consolidated  Net  Income for all  periods  from the
Closing Date through such  Quarterly  Date (net of all net losses for  Borrowers
and their Subsidiaries on a consolidated basis for the same period).

7.7    Restriction on Fundamental Changes; Asset Sales and Acquisitions.
       ----------------------------------------------------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
alter the corporate,  capital or legal structure (except with respect to changes
in  capital  structure  to the  extent a Change of  Control  does not occur as a
result thereof) of any Borrower,  or any of its Subsidiaries,  or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution),  or convey, sell, lease or sub-lease
(as lessor or sublessor),  transfer or otherwise  dispose of, in one transaction
or a series  of  transactions,  all or any  part of its  business,  property  or
assets,  whether  now owned or  hereafter  acquired,  or acquire by  purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other  evidence of beneficial  ownership of, any Person or any division
or line of business of any Person, except:

     (i) Borrowers may make Consolidated  Capital  Expenditures  permitted under
     subsection 7.14;

     (ii) Borrowers and their Subsidiaries may dispose of obsolete,  worn out or
     surplus  assets  or assets no  longer  used or  useful in the  business  of
     Borrowers  and the  Subsidiaries  in each  case to the  extent  made in the
     ordinary  course of business,  provided  that either (i) such disposal does
     not materially  adversely affect the Mortgaged Property or (ii) prior to or
     promptly  following  such disposal any such property shall be replaced with
     other  property  of  substantially  equal  utility  and a  value  at  least
     substantially  equal to that of the replaced  property when first  acquired
     and free from any  security of any other  Person  subject only to Permitted
     Liens and by such removal and replacement  Borrowers and their Subsidiaries
     shall be deemed to have subjected such replacement  property to the lien of
     the Collateral Documents in favor of Lenders, as applicable;

     (iii)  Borrowers and their  Subsidiaries  may sell or otherwise  dispose of
     assets in transactions  that do not constitute  Asset Sales,  provided that
     the  consideration  received for such assets shall be in an amount at least
     equal  to  the  fair  market  value   thereof   except  under   subsections
     7.7(vii)-(ix) and (xi) below;

     (iv) subject to subsection 7.11,  Borrowers and their Subsidiaries may make
     Asset  Sales of  assets  having a fair  market  value  not in excess of (x)
     $4,000,000  in respect  of the sale or other  disposition  of  construction
     equipment  prior to or during the first year following the Completion  Date
     and (y) $2,000,000 with respect to any other Asset Sales;  provided in each
     case that (1) the  consideration  received  for such assets  shall be in an
     amount  at least  equal  to the fair  market  value  thereof;  (2) the sole
     consideration  received  shall be cash;  and (3) the proceeds of such Asset
     Sales shall be applied as required by subsection 2.4B(iii)(a);

     (v) [Intentionally omitted];

     (vi) [Intentionally omitted];

     (vii)  Borrowers  and their  Subsidiaries  may enter into any  leases  with
     respect to any space on or within the Project;

     (viii) Borrowers may enter into the HVAC Ground Lease.

     (ix) LVSI may lease the casino from Venetian pursuant to the Casino Lease;

     (x) [Intentionally omitted];

     (xi) Either Borrower may be merged with the other Borrower;

     (xii) Either  Borrower  may sell,  lease or  otherwise  transfer  assets to
     another  Borrower or to a  wholly-owned  Subsidiary of such Borrower to the
     extent  permitted by subsection  7.3 and any  wholly-owned  Subsidiary of a
     Borrower  may  sell,  lease  or  otherwise  transfer  assets  to any  other
     wholly-owned  Subsidiary  of such  Borrower  (other  than the  Intermediate
     Holding Companies) or to the other Borrower;

     (xiii) Mall  Construction  Subsidiary may be merged with or liquidated into
     Venetian;

     (xiv)  Borrower may dedicate  space for the purpose of  constructing  (i) a
     mass transit system,  (ii) a pedestrian  bridge over or a pedestrian tunnel
     under Las  Vegas  Boulevard  and Sands  Avenue  or  similar  structures  to
     facilitate  pedestrians  or  traffic  and (iii) a right  turn lane or other
     roadway dedication at or near the Project;  provided in each case that such
     dedication does not materially impair the use or operations of the Project;

     (xv) Borrowers may license trademarks and tradenames in the ordinary course
     of business;

<PAGE>

     (xvi) Mall Construction Subsidiary may enter into or take by assignment the
     Mall  Management   Agreement  and  assign  its  interest  therein  to  Mall
     Subsidiary and Mall Subsidiary may assign its interest  therein to New Mall
     Subsidiary;

     (xvii)  Borrowers  may  make  the  transfers  permitted  under  subsections
     7.3(iii), (iv), (v) and (x).

     (xviii)  Venetian and Mall  Construction  Subsidiary (or Mall Subsidiary or
     New Mall  Subsidiary,  as applicable)  may enter into the Billboard  Master
     Lease and the other Master Leases (as defined in that certain FADAA Limited
     Waiver  dated as of  November  12, 1999 among  inter alia  Borrowers,  Mall
     Construction Subsidiary and Scotiabank as bank agent);

     (xix)  Borrowers and their  Subsidiaries  may transfer any assets leased or
     acquired with proceeds of a Non-Recourse  Financing permitted under Section
     7.1 or other  financing  permitted  under  Section  7.1(xii)  to the lender
     providing such  financing  upon default,  expiration or termination of such
     Non-Recourse Financing or other financing;

     (xx) Borrowers may sell  receivables  for fair market value in the ordinary
     course of business; and

     (xxi)  incurrence of Liens permitted  under Section 7.2,  provided that any
     leases  (whether or not  constituting  Permitted  Liens) shall be permitted
     only to the extent provided in clause (vii) above and the last paragraph of
     this Subsection 7.7.

     Notwithstanding  the foregoing  provisions of this  subsection  7.7, clause
(vii) shall be subject to the additional  provisos that: (a) no Event of Default
or Potential  Event of Default shall exist and be continuing at the time of such
transaction  or lease or would  occur  after as a result of  entering  into such
transaction or lease (or immediately  after any renewal or extension  thereof at
the option of Borrowers or one of their  Subsidiaries),  (b) such transaction or
lease will not materially  interfere with,  impair or detract from the operation
of the business of Borrowers and their  Subsidiaries,  (c) such  transaction  or
lease is at a fair market rent or value (in light of other similar or comparable
prevailing commercial  transactions) and contains such other terms such that the
lease,  taken as a whole, is  commercially  reasonable and fair to Borrowers and
their  Subsidiaries  in light of prevailing or comparable  transactions in other
casinos,  hotels,  hotel attractions or shopping venues, (d) no gaming or casino
operations  (other than the  operation of arcades and games for children) may be
conducted on any space that is subject to such  transaction  or lease other than
by  Borrowers  and (e) no lease may provide  that the  Borrowers or any of their
Subsidiaries may subordinate its fee,  condominium or leasehold  interest to any
lessee or any party financing any lessee,  provided that Administrative Agent on
behalf of Lenders  shall agree to provide the tenant under any such lease with a
Subordination,  Non-Disturbance  and Attornment  Agreement with the tenant under
any such  lease  substantially  in the form of  Exhibit  VIII  hereto  with such
changes  as  Administrative  Agent  may  approve,  which  approval  shall not be
unreasonably withheld or delayed.

7.8    Sales and Lease-Backs.
       ----------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or  indirectly,  become or remain liable as lessee or as a guarantor or
other surety with respect to any lease,  whether an Operating Lease or a Capital
Lease, of any property (whether real,  personal or mixed),  whether now owned or
hereafter acquired, (i) which Borrowers or any of their Subsidiaries has sold or
transferred  or is to  sell or  transfer  to any  other  Person  or  (ii)  which
Borrowers or any of their Subsidiaries intends to use for substantially the same
purpose as any other  property which has been or is to be sold or transferred by
Borrowers or any of their  Subsidiaries  to any Person in  connection  with such
lease,   except  that   Borrowers   and  their   Subsidiaries   may  enter  into
sale-leaseback  transactions  in  connection  with  any  Non-Recourse  Financing
permitted  hereunder or such other  financings  permitted  under clause (xii) of
subsection 7.1 to the extent that the assets subject to such  sale-leaseback are
acquired  contemporaneously with, or within 180 days prior to, such Non-Recourse
Financing or such other  financings  and with the  proceeds  thereof and neither
Borrower  nor any of its  Subsidiaries  theretofore  held any  interest  in such
assets.

7.9    Sale or Discount of Receivables.
       --------------------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly,  sell with  recourse,  or discount or otherwise sell for
less than the face value thereof,  any of its notes or accounts receivable other
than an  assignment  for  purposes  of  collection  in the  ordinary  course  of
business.

<PAGE>

7.10   Transactions with Shareholders and Affiliates.
       ----------------------------------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly, enter into or permit to exist any transaction (including
the  purchase,  sale,  lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity  Securities of any
Borrower or with any Affiliate of a Borrower or of any such holder, except, that
Borrowers may enter into and permit to exist:

     (i)  transactions  that are on terms  that are not less  favorable  to that
     Borrower  or  Subsidiary,  as the case may be,  than  those  that  might be
     obtained at the time from Persons who are not such a holder or Affiliate if
     (a) Borrowers  have delivered to  Administrative  Agent (1) with respect to
     any  transaction  involving  an amount in excess of  $500,000,  an Officers
     Certificate  certifying that such transaction complies with this subsection
     7.10, (2) with respect to any transaction  involving an amount in excess of
     $1,000,000,  a  resolution  adopted  by a  majority  of  the  disinterested
     non-employee  directors of the applicable Borrower or Subsidiary  approving
     such  transaction  and  an  Officers   Certificate   certifying  that  such
     transaction   complies  with  this  subsection   7.10,  at  the  time  such
     transaction  is entered into and (c) with  respect to any such  transaction
     that involves aggregate payments in excess of $10,000,000 or that is a loan
     transaction  involving  a  principal  amount in excess of  $10,000,000,  an
     opinion as to the fairness to the applicable  Borrower or Subsidiary from a
     financial point of view issued by an Independent  Financial  Advisor at the
     time such transaction is entered into,

     (ii) the Services Agreement;

     (iii)  purchases of materials or services from a Joint Venture  Supplier by
     the  Borrowers  or any of their  Subsidiaries  in the  ordinary  course  of
     business on arm's length terms;

     (iv) any employment,  indemnification,  noncompetition  or  confidentiality
     agreement entered into by Borrowers or any of their Subsidiaries with their
     employees or directors in the ordinary course of business;

     (v) loans or advances  to  employees  of  Borrowers  or their  Subsidiaries
     permitted under subsection 7.3(viii);

     (vi) the payment of  reasonable  fees to directors  of Borrowers  and their
     Subsidiaries who are not employees of Borrowers or their Subsidiaries;

     (vii)  the grant of stock  options  or  similar  rights  to  employees  and
     directors of Borrowers pursuant to plans approved by the Board of Directors
     of LVSI and any  repurchases  of stock or  options of  Borrowers  from such
     employees to the extent permitted by subsection 7.5;

     (viii)   transactions   between  or  among   Borrowers  and  any  of  their
     wholly-owned Subsidiaries;

     (ix) the transactions contemplated by the Adelson Completion Guaranty;

     (x) the transactions contemplated by the Cooperation Agreement;

     (xi) the transactions contemplated by the HVAC Services Agreement;

     (xii) the use of the  Congress  Center  by the owner of the Sands  Expo and
     Convention  Center;  provided that Venetian  receives fair market value for
     the use of such property;

     (xiii) [Intentionally omitted];

     (xiv) [Intentionally omitted];

     (xv) [Intentionally omitted];

     (xvi) Borrowers may enter into and perform their obligations under a gaming
     operations lease agreement with Phase II Subsidiary  relating to the casino
     to be in the  casino  resort  owned  by the  Phase II  Subsidiary  on terms
     substantially similar to those of the Casino Lease except that (a) the rent
     payable  under such lease shall be equal to all revenues  derived from such
     casino  minus the sum of (1) the  operating  costs  related to such  casino
     (including an allocated portion (based on gaming revenue) of the Borrower's
     administrative  costs related to its gaming  operations) and (2) the lesser
     of $250,000 or 1.0% of such casino's  operating income (or zero if there is
     an operating loss)  (determined in accordance with GAAP), (b) the Borrowers
     may agree that they shall  operate the casino in the casino resort owned by
     the Phase II  Subsidiary  and the casino in the  Project  in  substantially
     similar  manners and (c) the  Borrowers may agree to have common gaming and
     surveillance  operations  in such casinos  (based on equal  allocations  of
     revenues and operating costs).

     (xvii)  employees of Interface may  participate in the Las Vegas Sands Inc.
     401(k) Retirement Plan if Interface reimburses the Borrowers for a pro rata
     portion of the administrative  expenses of such plan based on the number of
     employees of each of Interface and LVSI participating in such plan;

<PAGE>

     (xviii) transactions contemplated by the Interface Lease;

     (xix) the  Borrowers may reimburse  Yona  Aviation  Services,  Inc., or its
     successors  for its  operating  and lease  costs  related to the use of its
     aircraft by the Borrower's  employees  (based on the actual allocated costs
     and time of usage);

     (xx) transactions contemplated by the Restaurant Leases; and

     (xxi) transactions contemplated by the Billboard Master Lease and the other
     Master Leases.

7.11   Disposal of Subsidiary Stock.
       -----------------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
directly or indirectly sell, assign,  pledge or otherwise encumber or dispose of
any shares of capital  stock or other equity  Securities  of Borrowers or any of
their  Subsidiaries,  except (i) to qualify  directors if required by applicable
law and (ii) to the extent  required by any Nevada Gaming  Authority in order to
preserve a material Gaming License.

7.12   Conduct of Business.
       --------------------

     Borrowers  shall not,  and shall not permit any of their  Subsidiaries  to,
engage in any business  other than (i) in the case of LVSI,  the casino  gaming,
hotel,  retail and  entertainment  mall and resort  business and any activity or
business  incidental,  directly related or similar thereto (including  operating
the conference center and meeting facilities),  or any business or activity that
is a  reasonable  extension,  development  or  expansion  thereof  or  ancillary
thereto, including any hotel, entertainment, recreation, convention, trade show,
meeting,  retail  sales or other  activity  or business  designated  to promote,
market, support, develop,  construct or enhance the casino gaming, hotel, retail
and  entertainment  mall and resort  business  operated by  Borrowers  and their
Subsidiaries, including, without limitation, participating in the Supplier Joint
Ventures and ownership of Mall Manager,  Phase II Manager and Venetian,  (ii) in
the case of Venetian  and its  Subsidiaries  (other than those  listed in clause
(iii) below),  (a)  development,  construction and the operation of the Project,
(b) the casino gaming,  hotel, retail and entertainment mall and resort business
(including  operating a conference center and meeting facilities) at the Project
and any activity or business incidental, directly related or similar thereto, or
any  business  or  activity  that  is a  reasonable  extension,  development  or
expansion  thereof or ancillary  thereto,  including  any hotel,  entertainment,
recreation,  convention, trade show, meeting, retail sales, or other activity or
business designated to promote, market, support,  develop,  construct or enhance
the casino gaming,  hotel,  retail and  entertainment  mall and resort  business
operated at the Project by Borrowers and their Subsidiaries,  including, without
limitation,  participating in the Supplier Joint Venturers, and (c) ownership of
equity interests in Subsidiaries,  including the Intermediate  Holding Companies
and (iii) in the case of Intermediate Holding Companies, the ownership of equity
interests in Mall Direct Holdings,  Phase II Direct Holdings and the delivery of
guarantees in favor of the Lenders,  the Mortgage Noteholders and the holders of
the Subordinated Notes.  Borrower shall not permit the Excluded Subsidiaries set
forth below to engage in any business other than (i) in the case of Mall Manager
and Phase II Manager,  ownership  of 1% managing  membership  interests  in Mall
Subsidiary  and Mall Direct  Holdings and Phase II Direct  Holdings and Phase II
Subsidiary,  respectively, (ii) in the case of New Mall Subsidiary, ownership of
the Mall and other matters reasonably  incidental thereto;  (iii) in the case of
Mall Direct Holdings and Phase II Direct Holdings, ownership of equity interests
in Mall  Subsidiary and Phase II Subsidiary,  respectively;  (iv) in the case of
Mall  Subsidiary,  ownership of equity interests in New Mall Subsidiary (v) Mall
Manager may hold the equity  interests  in New Mall Manager and (vi) in the case
of New Mall Manager,  ownership of a 1% managing membership interest in New Mall
Subsidiary.

7.13   Certain Restrictions on Changes to Operative Documents, Permits, Project
       Budget or Project Schedule.
       -------------------------------------------------------------------------

     A. Modifications of Certain Operative  Documents and Permits;  New Material
Contracts  or Permits.  Borrowers  shall not,  and shall not permit any of their
Subsidiaries  to,  agree to any  material  amendment  to,  or  waive  any of its
material  rights  under,  any  Permit or  Material  Contract  or enter  into new
Material  Contract or Permits (it being  understood that any Material  Contracts
which  are  covered  by  clause  B or C  below  shall  also  be  subject  to the
restrictions set forth therein) without in each case obtaining the prior written
consent of Requisite  Lenders if in any such case,  such  amendment or waiver or
new Material  Contract or Permit could reasonably be expected to have a Material
Adverse Effect or otherwise adversely affect Lenders in any material respect.

<PAGE>

     B. Amendments of Documents Relating to Other Indebtedness.  Borrowers shall
not,  and shall not  permit any of their  Subsidiaries  to,  amend or  otherwise
change the terms of any Financing  Agreements (other than the Loan Documents) or
permit  the  termination  thereof  (other  than in  accordance  with  the  terms
thereof),  or  enter  into any new  Financing  Agreements  or make  any  payment
consistent with an amendment  thereof or change  thereto,  if the effect of such
amendment  or change is to  increase  the  interest  rate or fees on such  Other
Indebtedness,  change  (to  earlier  dates) any dates  upon  which  payments  of
principal or interest are due thereon,  change any event of default or condition
to an event of default with respect  thereto  (other than to eliminate  any such
event of default or  increase  any grace  period  related  thereto or  otherwise
change such event of default in a manner more  favorable to the Borrower or such
Subsidiary   than  the  existing  event  of  default),   change  the  commitment
thereunder, change the redemption,  prepayment or defeasance provisions thereof,
change the subordination  provisions  thereof (or of any guaranty  thereof),  or
change any collateral  therefor (other than to release such  collateral),  or if
the effect of such  amendment or change,  together with all other  amendments or
changes  made,  is  to  increase  materially  the  obligations  of  the  obligor
thereunder or to confer any additional rights on the holders of the Indebtedness
or obligations  evidenced thereby (or a trustee or other representative on their
behalf)  which would be  materially  adverse to  Borrowers,  such  Subsidiary or
Lenders,  provided,  that (i) Borrowers may modify the terms of the Interim Mall
Credit  Facility  or any  agreement  relating  thereto to the  extent  expressly
permitted by the Intercreditor Agreement,  (ii) Borrowers may amend the terms of
any other Financing Agreement solely to increase the principal amount thereof to
the  extent  expressly  permitted  by  the  Intercreditor  Agreement  and  (iii)
Borrowers may enter into an Approved  Equipment Funding Commitment to the extent
permitted by the definition of such term and may amend,  supplement or terminate
an existing Approved  Equipment Funding  Commitment for the purpose of replacing
all or a portion of it with such new Approved Equipment Funding Commitment.

     C. Certain Other Restrictions on Amendments. Borrowers shall not, and shall
not permit any of their  Subsidiaries to, agree to any material amendment to, or
waive any of its material  rights under the  Cooperation  Agreement  which would
require the consent of the Administrative Agent pursuant to Article XIV, Section
26 thereof,  including,  but not limited to, any material  amendment  to, or any
waiver of material  rights  under  Article  III,  Sections 1 and 3,  Article IV,
Section 1, Article IX(b)-(e),  Articles X-XII and Article XIV, Sections 1, 3, 4,
6,  7,  8, 14 and  26,  without  obtaining  the  prior  written  consent  of the
Administrative  Agent,  which  consent  shall not be  unreasonably  withheld  or
delayed.

<PAGE>

7.14   Consolidated Capital Expenditures.
       ----------------------------------

     Borrowers  shall not, and shall not permit their  Subsidiaries  to, make or
incur  Consolidated  Capital  Expenditures,  in any four Fiscal  Quarter  period
indicated  below, in an aggregate amount in excess of the  corresponding  amount
(the  "Maximum  Consolidated  Capital  Expenditures  Amount")  set  forth  below
opposite such four Fiscal Quarter period; provided that the Maximum Consolidated
Capital  Expenditures  Amount for any four Fiscal Quarters shall be increased by
an amount  equal to the  excess,  if any, of the  Maximum  Consolidated  Capital
Expenditures  Amount for the previous four Fiscal Quarter period over the actual
amount of  Consolidated  Capital  Expenditures  for such  previous  four  Fiscal
Quarter period:

<TABLE>
<CAPTION>

======================================          ================================
Four Fiscal Quarter                             Maximum
Period                                          Consolidated Capital
                                                Expenditures Amount

======================================          ================================
<S>                                             <C>
Fiscal  Quarter  ending  December 31,           $15,000,000
1999,  Fiscal  Quarter  ending  March

31, 2000,  Fiscal Quarter ending June

30,  2000 and Fiscal  Quarter  ending
September 30, 2000
--------------------------------------          --------------------------------
Fiscal  Quarter  ending  December 31,           $25,000,000
2000,  Fiscal  Quarter  ending  March

31, 2001,  Fiscal Quarter ending June

30,  2001 and Fiscal  Quarter  ending
September 30, 2001
--------------------------------------          --------------------------------
Fiscal  Quarter  ending  December 31,           $25,000,000
2001,  Fiscal  Quarter  ending  March

31, 2002,  Fiscal Quarter ending June

30,  2002 and Fiscal  Quarter  ending
September 30, 2002
--------------------------------------          --------------------------------
Fiscal  Quarter  ending  December 31,           $25,000,000
2002,  Fiscal  Quarter  ending  March

31, 2003,  Fiscal Quarter ending June

30,  2003 and Fiscal  Quarter  ending
September 30, 2003
--------------------------------------          --------------------------------
Fiscal  Quarter  ending  December 31,           $30,000,000
2003,  Fiscal  Quarter  ending  March

31, 2004,  Fiscal Quarter ending June

30,  2004 and Fiscal  Quarter  ending
September 30, 2004
======================================          ================================
</TABLE>

7.15   Fiscal Year.
       ------------

     Neither Borrower shall change its Fiscal Year-end from December 31.

7.16   Zoning and Contract Changes and Compliance.
       -------------------------------------------

     Without  the  prior  written  approval  of the  Administrative  Agent,  the
Borrowers shall not, and shall not permit any of their Subsidiaries to, initiate
or  consent  to any  zoning  downgrade  of the  Mortgaged  Property  or seek any
material  variance under any existing zoning  ordinance or use or permit the use
of the Mortgaged Property in any manner that could result in such use becoming a
non-conforming  use (other than a non-conforming use permissible under automatic
grandfathering  provisions)  under any zoning  ordinance or any other applicable
land use law, rule or regulation.  The Borrowers shall not, and shall not permit
any of their  Subsidiaries  to,  initiate  or consent to any change in any laws,
requirements  of  Governmental  Authorities  or  obligations  created by private
contracts  which now or hereafter  could  reasonably be likely to materially and
adversely  affect the  ownership,  occupancy,  use or operation of the Mortgaged
Property without the prior written consent of the Administrative Agent.

<PAGE>

7.17   No Joint Assessment; Separate Lots.
       -----------------------------------

     Without the prior  written  approval  of the  Administrative  Agent,  which
approval  may  be  granted,  withheld,   conditioned  or  delayed  in  its  sole
discretion,  the Borrowers shall not suffer,  permit or initiate,  and shall not
permit any of their  Subsidiaries  to,  suffer,  permit or  initiate,  the joint
assessment  of  the  Mortgaged   Property  (i)  with  any  other  real  property
constituting  a  separate  tax lot and (ii) with any  portion  of the  Mortgaged
Property  which may be  deemed to  constitute  personal  property,  or any other
procedure  whereby  the lien of any Taxes  which may be levied  against any such
personal  property  shall be  assessed  or levied or  charged  to the  Mortgaged
Property as a single lien.  The  Mortgaged  Property is comprised of one or more
parcels,  each of  which,  to the  knowledge  of the  Borrowers,  constitutes  a
separate tax lot and none of which constitutes a portion of any other tax lot.

7.18   Certain Covenants Applicable to New Mall Subsidiary and Other Mall
       Related Companies.
       -------------------------------------------------------------------------

     A. Line of  Business.  Borrowers  shall not permit New Mall  Subsidiary  to
engage in any  business  other  than (i)  acquiring,  developing,  constructing,
owning,  holding,  managing,  marketing  and  operating  of the  Mall,  (ii) any
activity and business incidental, directly related or similar thereto, and (iii)
engaging in any business or activity that is a reasonable extension, development
or expansion  thereof or ancillary  thereto  including  any retail,  restaurant,
entertainment  or other  activity  or  business  designed  to  promote,  market,
support, develop,  construct or enhance the retail, restaurant and entertainment
business of the Mall  (including,  owning and operating joint ventures to supply
materials or services for the construction or operation of the Mall).  Borrowers
shall not permit Mall Direct Holdings, Mall Subsidiary or Mall Manager to engage
in any  business or any  transaction  except (i) Mall Direct  Holdings  may hold
equity  interests  in Mall  Subsidiary,  (ii) Mall  Subsidiary  may hold  equity
interests  in New Mall  Subsidiary,  (iii) Mall  Manager  may hold a 1% managing
membership  interest in Mall Direct Holdings and Mall Subsidiary and may own the
equity  interests  in New Mall  Manager and (iv) New Mall  Manager may hold a 1%
managing membership interest in New Mall Subsidiary.

     B.  Restrictions  on  Investment.  Borrowers  shall  not  permit  New  Mall
Subsidiary  to  purchase  or acquire  any  Securities,  loan,  advance,  capital
contribution  or other  investment  of any kind except (i) advances to employees
for moving,  entertainment  and travel  expenses,  drawing  accounts and similar
expenditures  in the ordinary course of business,  (ii) any such  investments in
Cash  Equivalents and similar liquid  Investments  permitted under the Financing
Agreements to which it is a party;  (iii) any investments in Joint Ventures with
third  parties to develop and operate  restaurants  in the Mall in an  aggregate
amount  not to  exceed  $5,000,000  at any time;  (iv)  other  such  investments
reasonably necessary for the operation,  maintenance and improvement of the Mall
in an  aggregate  amount  not to exceed  $2,500,000  at any  time;  (v) loans or
advances to employees  made in the  ordinary  course of business of the New Mall
Subsidiary in an aggregate  amount not to exceed  $500,000 at any time; and (vi)
stock,  obligations or securities received in settlement of debts created in the
ordinary  course of business and owing to New Mall Subsidiary or in satisfaction
of judgments.

     C. Affiliate  Transactions.  Borrowers shall not permit New Mall Subsidiary
to,  directly  or  indirectly,  enter  into or permit  to exist any  transaction
(including  the  purchase,  sale,  lease  or  exchange  of any  property  or the
rendering of any service),  with any holder of 5% or more of any class of equity
Securities  of any Borrower or New Mall  Subsidiary  or with any  Affiliate of a
Borrower  or New Mall  Subsidiary  or any such  holder,  provided  that New Mall
Subsidiary may enter into or permit to exist (i) transactions  that are not less
favorable to New Mall  Subsidiary  than those that might be obtained at the time
from Persons who are not such a holder or Affiliate if Borrowers  have delivered
to Administrative Agent (a) with respect to any transaction  involving an amount
in excess of $500,000, an Officers Certificate  certifying that such transaction
complies with this clause (i), (b) with respect to any transaction  involving an
amount in excess of  $1,000,000,  a  resolution  adopted  by a  majority  of the
disinterested non-employee directors of the Borrowers approving such transaction
and an Officers Certificate  certifying that such transaction complies with this
clause (i) and (c) with respect to any such transaction that involves  aggregate

<PAGE>

payments  in excess of  $10,000,000  or that is a loan  transaction  involving a
principal amount in excess of $10,000,000,  an opinion as to the fairness to New
Mall  Subsidiary  from a  financial  point  of  view  issued  by an  Independent
Financial   Advisor  at  the  time  such   transaction  is  entered  into,  (ii)
transactions  contemplated or permitted by the Sale and Contribution  Agreement,
the Second Sale and Contribution  Agreement dated December 20, 1999 between Mall
Subsidiary  and New Mall  Subsidiary,  the Permanent  Mall Loan  Agreement as in
effect on the date hereof, the HVAC Services Agreements, the Services Agreement,
the Restaurant  Leases,  the Billboard  Master Lease and the other Master Leases
(as defined in that certain FADAA  Limited  Waiver dated as of November 12, 1999
among inter alia Borrowers,  Mall Construction Subsidiary and Scotiabank as bank
agent)  and  the  Cooperation  Agreement,  (v)  any  guarantees  by  Adelson  of
Indebtedness  of New Mall  Subsidiary,  (vi)  purchases of materials or services
from a Joint Venture  Supplier by the New Mall Subsidiary in the ordinary course
of  business  on arm's  length  terms;  (vii) any  employment,  indemnification,
noncompetition or confidentiality  agreement entered into by New Mall Subsidiary
with its employees or directors in the ordinary course of business, (viii) loans
or advances to employees of New Mall Subsidiary,  but in any event not to exceed
$500,000 in the  aggregate  outstanding  at any one time and (ix) the payment of
reasonable  fees to directors of New Mall  Subsidiary or its managing member who
are not employees of New Mall Subsidiary.

     D.  Restricted  Junior  Payments.  Borrowers  shall  not  permit  New  Mall
Subsidiary,  Mall  Subsidiary,  Mall Direct  Holdings,  Mall Manager or New Mall
Manager (the "Excluded Mall Subsidiaries") to make any payments or distributions
which would  constitute  Restricted  Junior  Payments  described  in clauses (i)
through (iii)  inclusive of the definition of Restricted  Junior Payments if the
reference  to Borrower in each such  clause were a reference  to the  applicable
Excluded Mall Subsidiary  unless such payments or distributions  are made (i) to
the Borrowers or their  Subsidiaries  or another  Excluded Mall  Subsidiary (for
further distribution to Borrowers or their Subsidiaries) or (ii) pro rata on all
equity  interests of the applicable  Excluded Mall Subsidiary (so that Borrowers
receive  a  portion  of such  payment  or  distribution  equal to the  direct or
indirect ownership interest of Borrowers in such Excluded Mall Subsidiary).

7.19   Limitation on Declaration of Restricted Subsidiaries.
       -----------------------------------------------------

     Borrowers  shall not declare or permit to be  designated  as a  "Restricted
Subsidiary"  under either of the Mortgage Note Indenture or  Subordinated  Notes
Indenture any Affiliate which is an Excluded Subsidiary.

7.20   Payments to Adelson.
       --------------------

     Borrowers  shall not directly or indirectly  make any payment to or for the
benefit of  Adelson  until the  Additional  Contingent  Claims  shall be finally
determined  and paid in full  except for (i)  payments  made  pursuant to and as
permitted by the Adelson Subordination Agreement,  (ii) payments made in respect
of Adelson's taxes, salary and as reimbursement for reasonable expenses, in each
case, if and to the extent  permitted under the Facility  Agreements,  and (iii)
payments made to Affiliates that are required under the Cooperation Agreement or
any other arm's-length  agreement entered into with an Affiliate,  provided that
nothing  contained  herein  shall be deemed to permit any such payment to or for
the  benefit  of  Adelson  if such  payment  shall be  otherwise  prohibited  or
restricted  under any other  provision  of this  Agreement  (including,  without
limitation, subsections 7.5 or 7.10) or any other agreement or document.

7.21   Limitation on Phase II Construction.
       ------------------------------------

     Borrowers  shall  not,  and  shall  not  permit  any of their  Subsidiaries
(including any Excluded  Subsidiary),  at any time prior to receipt by Borrowers
or any such  Subsidiary  of a  temporary  certificate  of  occupancy  from Clark
County,  Nevada with respect to the Project in its  entirety  (a) to  construct,
develop  or  improve  the  Phase II Land or any  building  on the  Phase II Land
(including  any  excavation  or site work and  excluding  the  Phase II  parking
garage),  (b)  enter  into any  contract  or  agreement  for such  construction,
development or improvement, or for any materials, supplies or labor necessary in
connection  with such  construction  development  or  improvement  (other than a
contract that is conditioned upon satisfaction of the above  condition),  or (c)
incur any  Indebtedness  the  proceeds of which are  expected to be used for the
construction, development or improvement of the Phase II Land or any building on
the Phase II Land,  except (i) any  construction,  development or improvement on
the Phase II Land or any  temporary  building on the Phase II Land in connection
with the Project in accordance with the Plans and Specifications and included in
the  Project  Budget;  and  (ii)  any  design,  architectural,   engineering  or
development work not involving actual construction on the Phase II Land.

Section 8.        EVENTS OF DEFAULT

     If any of the following  conditions or events set forth in subsections  8.1
through  8.19  inclusive  below shall occur or if prior to the Final  Completion
Date  any  Disbursement  Agreement  Event  of  Default  shall  occur  (any  such
conditions or events collectively "Events of Default"):

<PAGE>

8.1    Failure to Make Payments When Due.
       ----------------------------------

     Failure by Borrowers to pay any  installment  of principal on any Loan when
due,  whether  at stated  maturity,  by  acceleration,  by  notice of  voluntary
prepayment,  by mandatory  prepayment or otherwise;  failure by Borrowers to pay
when due any  amount  payable  to an  Issuing  Lender  in  reimbursement  of any
drawings;  or failure by Borrowers to pay any interest on any Loan or any fee or
any other amount due under this  Agreement  within five days after the date due;
or

8.2    Default under Other Indebtedness or Contingent Obligations.
       ----------------------------------------------------------

     (i) Failure of any Borrower or any of its Subsidiaries, to pay when due any
     principal of or interest on or any other  amount  payable in respect of one
     or more items of  Indebtedness  (other  than  Indebtedness  referred  to in
     subsection 8.1) or Contingent Obligations in an individual principal amount
     of $2,500,000 or more or with an aggregate  principal  amount of $5,000,000
     or more, in each case beyond the end of any grace period provided therefor;
     or (ii) breach or default by any Borrower or any of its  Subsidiaries  with
     respect to any other material term of (a) one or more items of Indebtedness
     or Contingent  Obligations in the individual or aggregate principal amounts
     referred  to in  clause  (i)  above  or (b) any loan  agreement,  mortgage,
     indenture or other  agreement  relating to such item(s) of  Indebtedness or
     Contingent  Obligation(s),  if the  effect of such  breach or default is to
     cause,  or to  permit  the  holder  or  holders  of  that  Indebtedness  or
     Contingent Obligation(s) (or a trustee on behalf of such holder or holders)
     to cause,  that  Indebtedness or Contingent  Obligation(s)  to become or be
     declared  due and  payable  prior  to its  stated  maturity  or the  stated
     maturity of any underlying obligation,  as the case may be (upon the giving
     or receiving of notice, lapse of time, both, or otherwise); or

8.3    Breach of Certain Covenants.
       ----------------------------

     Failure of Loan  Parties to  perform or comply  with any term or  condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement  provided that
the  failure  to  perform  or comply  with any such  provision  incorporated  by
reference from the  Disbursement  Agreement shall constitute an Event of Default
hereunder  only to the extent such  failure to perform or comply  constitutes  a
Disbursement Agreement Event of Default; or

8.4    Breach of Warranty.
       -------------------

     Any  representation,  warranty,  certification  or other  statement made by
Borrowers or any of their  Subsidiaries in any Loan Document or in any statement
or  certificate at any time given by Borrowers or any of their  Subsidiaries  in
writing pursuant hereto or thereto or in connection  herewith or therewith shall
be false in any material  respect on the date as of which made provided that the
failure to perform or comply with any such provision  incorporated  by reference
from the Disbursement  Agreement shall constitute an Event of Default  hereunder
only  to  the  extent  such  failure  to  perform  or to  comply  constitutes  a
Disbursement Agreement Event of Default; or

8.5     Other Defaults Under Loan Documents.
        ------------------------------------

     Any Loan Party shall default in the  performance of or compliance  with any
term contained in this Agreement or any of the other Loan Documents,  other than
any such term  referred to in any other  subsection  of this Section 8, and such
default  shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Borrowers or such Loan Party becoming aware of such default
or (ii) receipt by Borrowers  and such Loan Party of notice from  Administrative
Agent or any  Lender of such  default  provided  that the  failure to perform or
comply with any such provision  incorporated by reference from the  Disbursement
Agreement shall constitute an Event of Default hereunder only to the extent such
failure to perform  or comply  constitutes  a  Disbursement  Agreement  Event of
Default; or

8.6    Involuntary Bankruptcy; Appointment of Receiver, etc.
       -----------------------------------------------------

     (i) A court having  jurisdiction  in the  premises  shall enter a decree or
order for  relief in  respect of a  Borrower  or any of its  Subsidiaries  in an
involuntary  case  under  the  Bankruptcy  Code or under  any  other  applicable
bankruptcy,  insolvency or similar law now or hereafter in effect,  which decree
or order is not stayed;  or any other similar  relief shall be granted under any
applicable  federal or state law; or (ii) an involuntary case shall be commenced
against a Borrower  or any of its  Subsidiaries,  under the  Bankruptcy  Code or
under  any  other  applicable  bankruptcy,  insolvency  or  similar  law  now or

<PAGE>

hereafter in effect; or a decree or order of a court having  jurisdiction in the
premises for the appointment of a receiver, liquidator,  sequestrator,  trustee,
custodian or other officer  having  similar powers over a Borrower or any of its
Subsidiaries, or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary  appointment of an interim
receiver,  trustee or other custodian of a Borrower or any of its  Subsidiaries,
for all or a  substantial  part of its  property;  or a warrant  of  attachment,
execution or similar process shall have been issued against any substantial part
of the  property  of a Borrower or any of its  Subsidiaries,  and any such event
described  in this clause  (ii) shall  continue  for 60 days  unless  dismissed,
bonded or discharged; or

8.7    Voluntary Bankruptcy; Appointment of Receiver, etc.
       ---------------------------------------------------

     (i) A Borrower  or any of its  Subsidiaries  shall have an order for relief
entered  with  respect to it or commence a voluntary  case under the  Bankruptcy
Code or under any other applicable bankruptcy,  insolvency or similar law now or
hereafter in effect,  or shall consent to the entry of an order for relief in an
involuntary  case, or to the  conversion of an  involuntary  case to a voluntary
case,  under any such law,  or shall  consent  to the  appointment  of or taking
possession  by a receiver,  trustee or other  custodian for all or a substantial
part of its property;  or a Borrower or any of its  Subsidiaries  shall make any
assignment  for the  benefit  of  creditors;  or (ii) a  Borrower  or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its  inability,  to pay its debts as such  debts  become  due and in each case a
period of 30 days shall have elapsed; or the Board of Directors of a Borrower or
any of its  Subsidiaries  (or any committee  thereof) or of its managing  member
shall adopt any  resolution or otherwise  authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii); or

8.8    Judgments and Attachments.
       --------------------------

     Any money  judgment,  writ or warrant  of  attachment  or  similar  process
involving (i) in any  individual  case an amount in excess of $2,500,000 or (ii)
in the aggregate at any time an amount in excess of  $5,000,000  (in either case
not  adequately  covered by  insurance  as to which a solvent  and  unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against a
Borrower or any of its Subsidiaries or any of their respective  assets and shall
remain unpaid and undischarged,  unvacated, unbonded or unstayed for a period of
60 days (or in any event later than five days prior to the date of any  proposed
sale thereunder); or

8.9    Dissolution.
       ------------

     Any order, judgment or decree shall be entered against a Borrower or any of
its  Subsidiaries  decreeing the dissolution or split up of such Person and such
order shall remain  undischarged  or unstayed for a period in excess of 30 days;
or

8.10   Employee Benefit Plans.
       -----------------------

     There shall occur one or more ERISA  Events  which  individually  or in the
aggregate results in or might reasonably be expected to result in liability of a
Borrower, or any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $2,500,000 during the term of this Agreement;  or there shall exist
an amount of unfunded benefit  liabilities (as defined in Section 4001(a)(18) of
ERISA),  individually  or in the aggregate for all Pension Plans  (excluding for
purposes of such  computation  any Pension  Plans with  respect to which  assets
exceed benefit liabilities), which exceeds $5,000,000; or

8.11   Change in Control.
       ------------------

     As a result of any sale,  pledge or other transfer,  either (a) Adelson and
the Related  Parties  shall cease to  beneficially  own and control  directly or
indirectly at least 70% of the issued and outstanding shares of capital stock of
LVSI, entitled (without regard to the occurrence of any contingency) to vote for
the election of members of the Board of  Directors  of LVSI;  (b) Adelson or any
Related  Party (as  applicable  but  excluding  any of the persons  specified in
clause (ii) of the  definition of Related  Parties)  shall not have invested the
proceeds  of any sale,  or  transfer of shares of LVSI by Adelson or any Related
Party (as  applicable)  in the  business of  Borrowers  (including  any Excluded
Subsidiary)  or (c) LVSI  shall  cease to own 100% of the equity  Securities  of
Venetian  other than any  preferred  equity of Venetian  owned by  Interface  or
another  Affiliate  of Adelson or (d)  Borrowers  shall cease to own 100% of the
equity  securities  of each of their  Subsidiaries,  Mall  Manager  and Phase II

<PAGE>

Manager,  (e) Mall Manager and Mall Holdings together shall cease to own 100% of
Mall Direct  Holdings and Phase II Holdings and Phase II Manager  together shall
cease to own 100% of Phase II Direct  Holdings,  (f) Mall Direct  Holdings shall
cease to own not less than 99% of the equity  securities  in Mall  Subsidiary or
(g)  Mall  Subsidiary  shall  cease  to own  not  less  than  80% of the  equity
securities  in New Mall  Subsidiary  or (h) Mall Manager  shall cease to own not
less than 100% of the  equity  securities  in New Mall  Manager  or (i) Phase II
Direct  Holdings  shall  cease to own at least 51% of the equity  securities  in
Phase II  Subsidiary or (j) the sole  managing  member of Mall Direct  Holdings,
Phase II Direct Holdings,  Intermediate  Holding Companies,  Mall Subsidiary and
Phase II Subsidiary shall cease to be LVSI, Venetian or (directly or indirectly)
a wholly-owned Subsidiary of LVSI or Venetian or (k) the sole managing member of
New  Mall  Subsidiary  shall  cease  to  be  LVSI,  Venetian,  or  (directly  or
indirectly) a wholly-owned  Subsidiary of LVSI or Venetian or (l) any "Change of
Control" (as defined in either of the Indentures) shall occur; or

8.12   Failure of Guaranty; Repudiation of Obligations.
       ------------------------------------------------

     At any time after the execution and delivery  thereof,  (i) the  Subsidiary
Guaranty for any reason, other than the satisfaction in full of all Obligations,
shall  cease to be in full force or effect  (other than in  accordance  with its
terms), or shall be declared null and void by a Governmental  Instrumentality of
competent  jurisdiction,  (ii) any Collateral Document shall cease to be in full
force and effect (other than by reason of a release of Collateral  thereunder in
accordance  with the terms hereof or thereof,  the  satisfaction  in full of the
Obligations or any other  termination of such Collateral  Document in accordance
with the  terms  hereof  or  thereof)  or shall be  declared  null and void by a
Governmental Instrumentality of competent jurisdiction,  or Administrative Agent
shall not have or shall cease to have a valid and perfected  First Priority Lien
in the First  Priority  Collateral  for any  reason  other  than the  failure of
Administrative  Agent or any Lender to take any action  within its  control,  or
(iii) any Loan Party shall  contest the validity or  enforceability  of any Loan
Document in writing or deny in writing that it has any further  liability  prior
to the indefeasible payment in full of all Obligations,  the cancellation of all
outstanding Letters of Credit and the termination of all Commitments,  including
with respect to future advances by Lenders,  under any Loan Document to which it
is a party or (vi) the subordination  provisions in the Subordinated  Notes, the
Employee  Repurchase  Notes,  any  Completion  Guaranty  Note  or in  any  other
instrument  required under any provision of this Agreement to be subordinated to
the Obligations shall cease to be enforceable against the holder thereof; or

8.13   Default Under or Termination of Operative Documents.
       ---------------------------------------------------

     Any  of  the  Operative  Documents  shall  terminate  or be  terminated  or
canceled,  prior to its stated  expiration  date or either  Borrower shall be in
default  (after the giving of any  applicable  notice and the  expiration of any
applicable  grace period) or any Affiliate of the Borrowers  shall be in default
(after the giving of any applicable  notice and the expiration of any applicable
grace period) under any of the Operative  Documents;  provided that a default or
termination  under any Project  Document  shall  constitute  an Event of Default
hereunder  only if such default or  termination  may  reasonably  be expected to
cause a Material Adverse Effect; or

8.14   Default Under or Termination of Permits.
       ----------------------------------------

     A Borrower or any of its  Subsidiaries  shall fail to  observe,  satisfy or
perform,  or there shall be a violation or breach of, any of the material terms,
provisions,  agreements,  covenants  or  conditions  attaching  to or under  the
issuance to such Person of any material  Permit,  including  the gaming  license
held by LVSI or any such  Permit  or any  material  provision  thereof  shall be
terminated  or  fail  to be  in  full  force  and  effect  or  any  Governmental
Instrumentality  shall  challenge  or seek to  revoke  any such  Permit  if such
failure to perform, breach or termination could reasonably be expected to have a
Material Adverse Effect; or

8.15   Default Under or Termination of Cooperation Agreement.
       -----------------------------------------------------

     Any default by Interface  shall occur under  Article III,  Section 3 of the
Cooperation Agreement beyond any applicable notice or cure periods; or

8.16   Bankruptcy or Dissolution of New Mall Subsidiary.
       ------------------------------------------------

     Any event or  circumstance  described  under  subsections 8.6 or 8.7 hereof
shall  occur with  respect to New Mall  Subsidiary,  Mall  Subsidiary,  New Mall
Manager, Mall Manager or Mall Direct Holdings which would constitute an Event of
Default if such Excluded  Subsidiary were a Subsidiary of Borrowers for purposes
of those subsections; or

<PAGE>

8.17   Acceleration of Obligations of New Mall Subsidiary.
       --------------------------------------------------

     New Mall Subsidiary  shall be in breach or default with respect to any term
of  one  or  more  items  or  Indebtedness  or  Contingent  Obligation(s)  in an
individual  principal  amount of  $2,500,000  or more or an aggregate  principal
amount  of  $5,000,000  or  more,  if as  result  thereof  the  holders  of such
Indebtedness or Contingent  Obligations) (or an agent or trustee acting on their
behalf) have caused that Indebtedness or Contingent  Obligation(s) to become due
and  payable  prior  to its  stated  maturity  or  the  stated  maturity  of any
underlying obligation, as the case may be; or

8.18   Certain Investments in any Excluded Subsidiary.
       -----------------------------------------------

     Adelson  or  any  of  his  Affiliates   (other  than  Borrowers  and  their
wholly-owned  Subsidiaries) shall acquire or hold any Investment in any Excluded
Subsidiary  or any Person  which any  Excluded  Subsidiary  controls or holds an
Investment  other  than  (a) in the  case of New  Mall  Subsidiary  or  Phase II
Subsidiary,  through  transactions  expressly permitted under subsection 7.18 or
purchases of public debt securities in the secondary  market and (b) in the case
of Phase II Subsidiary or any of its subsidiaries,  investments  arising through
loans, completion guaranties or other guaranties  substantially similar to those
provided in connection  with the  development of the Project and permitted under
clause (a) of this subsection 8.18; or

8.19   Conforming Adelson L/C.
       -----------------------

     Any  Conforming  Adelson  L/C shall cease to be in full force and effect at
any time  prior to  twenty-four  (24)  months  from  and  after  the date of its
delivery  to Drawing  Agent  other than  following  a drawing in full by Drawing
Agent or, if  permitted  under the  definition  of Adelson  Conforming  L/C Draw
Event,  the  replacement  of such  Adelson  Conforming  L/C  with a cash  equity
contribution in Borrowers in the amount of the Adelson Conforming L/C;

THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid  principal  amount of and accrued interest on the
Loans,  (b) an amount equal to the maximum  amount that may at any time be drawn
under all Letters of Credit  then  outstanding  (whether or not any  beneficiary
under any such Letter of Credit  shall have  presented,  or shall be entitled at
such time to present, the drafts or other documents or certificates  required to
draw  under  such  Letter  of  Credit),  and (c)  all  other  Obligations  shall
automatically become immediately due and payable,  without presentment,  demand,
protest or other  requirements  of any kind,  all of which are hereby  expressly
waived by Borrowers,  and the  obligation  of each Lender to make any Loan,  the
obligation of  Administrative  Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the  continuation  of any other Event of
Default,  Administrative  Agent  shall,  upon the  written  request  or with the
written consent of Requisite  Lenders,  by written notice to Borrowers,  declare
all or any portion of the amounts  described in clauses (a) and (b) above to be,
and the same  shall  forthwith  become,  immediately  due and  payable,  and the
obligation of each Lender to make any Loan,  the  obligation  of  Administrative
Agent to issue any  Letter of  Credit  and the right of any  Lender to issue any
Letter  of  Credit  hereunder  shall  thereupon  terminate;  provided  that  the
foregoing  shall  not  affect  in any  way  the  obligations  of  Lenders  under
subsection 3.3C(i).

     Any amounts  described in clause (b) above, when received by Administrative
Agent,  shall be held by  Administrative  Agent  pursuant  to a cash  collateral
arrangement  reasonably  satisfactory to Administrative  Agent.  Notwithstanding
anything contained in the second preceding  paragraph,  if at any time within 60
days  after  an  acceleration  of the  Loans  pursuant  to  clause  (ii) of such
paragraph  Borrowers  shall pay all  arrears of  interest  and all  payments  on
account of principal  which shall have become due otherwise  than as a result of
such  acceleration  (with interest on principal and, to the extent  permitted by
law, on overdue  interest,  at the rates  specified in this  Agreement)  and all
Events of Default and Potential Events of Default (other than non-payment of the
principal  of and accrued  interest on the Loans,  in each case which is due and
payable solely by virtue of  acceleration)  shall be remedied or waived pursuant
to subsection 10.6, then Requisite Lenders, by written notice to Borrowers,  may
at their option rescind and annul such  acceleration and its  consequences;  but
such action shall not affect any subsequent  Event of Default or Potential Event
of  Default or impair  any right  consequent  thereon.  The  provisions  of this
paragraph are intended merely to bind Lenders to a decision which may be made at
the election of Requisite Lenders and are not intended,  directly or indirectly,
to benefit Borrowers,  and such provisions shall not at any time be construed so
as to grant  Borrowers  the right to  require  Lenders  to  rescind or annul any
acceleration  hereunder  or to  preclude  Administrative  Agent or Lenders  from
exercising any of the rights or remedies available to them under any of the Loan
Documents, even if the conditions set forth in this paragraph are met.

<PAGE>

Section 9.        AGENTS

9.1    Appointment.
       ------------

     A.  Appointment of  Administrative  Agent.  Scotiabank is hereby  appointed
Administrative  Agent  hereunder  and under the other  Loan  Documents  and each
Lender hereby authorizes  Administrative Agent to act as its agent in accordance
with the terms of this  Agreement and the other Loan  Documents.  GSCP is hereby
appointed  Arranger and  Syndication  Agent  hereunder  and under the other Loan
Documents and each Lender hereby  authorizes  Arranger and Syndication  Agent to
act as its agent in  accordance  with the terms of this  Agreement and the other
Loan Documents.  Each Agent agrees to act upon the express conditions  contained
in this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 9 are solely for the benefit of each Agent and  Lenders;  Borrowers
shall  have no  rights as a third  party  beneficiary  of any of the  provisions
thereof. In performing its functions and duties under this Agreement, each Agent
shall act  solely as an agent of  Lenders  and does not  assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for  Borrowers or any of their  Subsidiaries.  Upon the Closing Date all
obligations of Arranger and Syndication Agent hereunder shall terminate.

     B. Appointment of Supplemental  Agents. It is the purpose of this Agreement
and the other Loan  Documents that there shall be no violation of any law of any
jurisdiction  denying  or  restricting  the  right of  banking  corporations  or
associations to transact business as agent or trustee in such  jurisdiction.  It
is  recognized  that in case of  litigation  under this  Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan  Documents,  or in case any Agent  deems  that by reason of any  present or
future law of any jurisdiction it may not exercise any of the rights,  powers or
remedies  granted herein or in any of the other Loan Documents or take any other
action which may be desirable or necessary in  connection  therewith,  it may be
necessary  that such Agent appoint an additional  individual or institution as a
separate trustee, co-trustee,  collateral agent or collateral co-agent (any such
additional  individual or institution being referred to herein individually as a
"Supplemental Agent" and collectively as "Supplemental Agents").

     In the event that an Agent  appoints a  Supplemental  Agent with respect to
any Collateral,  (i) each and every right, power, privilege or duty expressed or
intended by this Agreement or any of the other Loan Documents to be exercised by
or vested in or conveyed to an Agent with  respect to such  Collateral  shall be
exercisable by and vest in such  Supplemental  Agent to the extent,  and only to
the extent, necessary to enable such Supplemental Agent to exercise such rights,
powers and privileges with respect to such Collateral and to perform such duties
with respect to such Collateral,  and every covenant and obligation contained in
the Loan Documents and necessary to the exercise or performance  thereof by such
Supplemental  Agent shall run to and be enforceable by either such Agent or such
Supplemental Agent, and (ii) the provisions of this Section 9 and of subsections
10.2  and  10.3  that  refer  to  Agent  shall  inure  to the  benefit  of  such
Supplemental  Agent and all  references  therein to Agent  shall be deemed to be
references  to  Administrative  Agent  and/or such  Supplemental  Agent,  as the
context may require.

     Should any  instrument in writing from Borrowers or any other Loan Party be
required by any  Supplemental  Agent so appointed  for more fully and  certainly
vesting in and  confirming  to him or it such  rights,  powers,  privileges  and
duties, Borrowers shall, or shall cause such Loan Party to, execute, acknowledge
and  deliver  any  and  all  such  instruments  promptly  upon  request  by  the
appropriate  Agent. In case any  Supplemental  Collateral  Agent, or a successor
thereto,  shall die, become incapable of acting,  resign or be removed,  all the
rights, powers,  privileges and duties of such Supplemental Agent, to the extent
permitted by law, shall vest in and be exercised by  Administrative  Agent until
the appointment of a new Supplemental Agent.

9.2    Powers and Duties; General Immunity.
       ------------------------------------

     A.  Powers;   Duties   Specified.   Each  Lender   irrevocably   authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are  specifically  delegated  or  granted to  Administrative  Agent by the terms
hereof and  thereof,  together  with such  powers,  rights and  remedies  as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and  responsibilities  that are  expressly  specified in this  Agreement and the
other Loan Documents.  Administrative Agent may exercise such powers, rights and
remedies  and  perform  such  duties by or  through  its  agents  or  employees.
Administrative  Agent shall not have, by reason of this  Agreement or any of the
other Loan Documents,  a fiduciary  relationship  in respect of any Lender;  and
nothing in this  Agreement  or any of the other  Loan  Documents,  expressed  or
implied,   is  intended  to  or  shall  be  so   construed  as  to  impose  upon
Administrative  Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.

<PAGE>

     B. No Responsibility for Certain Matters. Administrative Agent shall not be
responsible  to  any  Lender  for  the  execution,  effectiveness,  genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other  Loan  Document  or  for  any  representations,  warranties,  recitals  or
statements  made herein or therein or made in any written or oral  statements or
in any financial or other  statements,  instruments,  reports or certificates or
any other documents  furnished or made by Administrative  Agent to Lenders or by
or on behalf of Borrowers to  Administrative  Agent or any Lender in  connection
with the Loan  Documents and the  transactions  contemplated  thereby or for the
financial  condition or business affairs of Borrowers or any other Person liable
for the payment of any Obligations,  nor shall  Administrative Agent be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions,  provisions,  covenants or  agreements  contained in any of the Loan
Documents  or as to the  use of the  proceeds  of the  Loans  or the  use of the
Letters of Credit or as to the  existence or possible  existence of any Event of
Default or Potential Event of Default.  Anything  contained in this Agreement to
the contrary notwithstanding,  Administrative Agent shall not have any liability
arising from  confirmations of the amount of outstanding  Loans or the Letter of
Credit Usage or the component amounts thereof.

     C.  Exculpatory  Provisions.  Neither  Administrative  Agent nor any of its
officers,  directors,  employees  or agents  shall be liable to Lenders  for any
action taken or omitted by Administrative  Agent under or in connection with any
of the Loan  Documents  except to the extent  caused by  Administrative  Agent's
gross negligence or willful misconduct.  Administrative  Agent shall be entitled
to refrain  from any act or the taking of any action  (including  the failure to
take an  action)  in  connection  with this  Agreement  or any of the other Loan
Documents or from the exercise of any power,  discretion or authority  vested in
it  hereunder or  thereunder  unless and until  Administrative  Agent shall have
received  instructions in respect thereof from Requisite  Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6) and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be),  Administrative Agent shall be entitled to act or (where so
instructed)  refrain  from  acting,  or to exercise  such power,  discretion  or
authority,  in  accordance  with such  instructions.  Without  prejudice  to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying,  upon any communication,  instrument or
document  believed  by it to be genuine  and  correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected  in  relying  on  opinions  and  judgments  of  attorneys  (who may be
attorneys for Borrowers and their Subsidiaries),  accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action  whatsoever  against  Administrative  Agent as a result of Administrative
Agent  acting  or  (where so  instructed)  refraining  from  acting  under  this
Agreement or any of the other Loan Documents in accordance with the instructions
of  Requisite  Lenders  (or such other  Lenders as may be  required to give such
instructions under subsection 10.6).

     D.  Administrative  Agent  Entitled  to Act as Lender.  The  agency  hereby
created  shall in no way  impair or affect  any of the  rights and powers of, or
impose any duties or obligations  upon,  Administrative  Agent in its individual
capacity as a Lender  hereunder.  With respect to its participation in the Loans
and the Letters of Credit,  Administrative  Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder,  and the term
"Lender" or  "Lenders"  or any similar  term shall,  unless the context  clearly
otherwise  indicates,  include  Administrative Agent in its individual capacity.
Administrative  Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking,  trust, financial advisory or other
business with  Borrowers or any of its  Affiliates as if it were not  performing
the duties specified herein,  and may accept fees and other  consideration  from
Borrowers for services in connection  with this Agreement and otherwise  without
having to account for the same to Lenders.

     E. Administrative  Agent  Determinations.  To the extent the Administrative
Agent is entitled or required to make any determinations under the Intercreditor
Agreement,  the  Adelson  Intercreditor  Agreement,  the  Adelson  Subordination
Agreement or any FF&E Intercreditor  Agreement,  the Administrative  Agent shall
make such determinations upon the advice of Requisite Lenders.

9.3    Representations and Warranties; No Responsibility For Appraisal of Credit
       Worthiness.
       -------------------------------------------------------------------------

     Each Lender  represents  and warrants that it has made its own  independent
investigation  of the  financial  condition  and affairs of Borrowers  and their
Subsidiaries  in connection with the making of the Loans and the issuance of the
Letters of Credit  hereunder and that it has made and shall continue to make its
own  appraisal  of the  creditworthiness  of Borrowers  and their  Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing  basis, to make any such  investigation or any such appraisal
on  behalf  of  Lenders  or to  provide  any  Lender  with any  credit  or other
information with respect thereto,  whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall  not  have any  responsibility  with  respect  to the  accuracy  of or the
completeness of any information provided to Lenders.

<PAGE>

9.4 Right to Indemnity.
    -------------------

     Each  Lender,  in  proportion  to its Pro Rata Share,  severally  agrees to
indemnify  Administrative  Agent, to the extent that Administrative  Agent shall
not have been reimbursed by Borrowers,  for and against any and all liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature  whatsoever  which may be imposed on, incurred by or asserted  against
Administrative Agent in exercising its powers, rights and remedies or performing
its duties  hereunder  or under the other Loan  Documents  or  otherwise  in its
capacity as  Administrative  Agent in any way relating to or arising out of this
Agreement or the other Loan  Documents;  provided that no Lender shall be liable
for any portion of such liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  resulting from
Administrative Agent's gross negligence or willful misconduct.  If any indemnity
furnished  to  Administrative  Agent for any  purpose  shall,  in the opinion of
Administrative  Agent, be insufficient or become impaired,  Administrative Agent
may call for  additional  indemnity and cease,  or not commence,  to do the acts
indemnified against until such additional indemnity is furnished.

9.5    Successor Administrative Agent.
       -------------------------------

     Administrative  Agent  may  resign  at any time by  giving  30 days'  prior
written notice thereof to Lenders and Borrowers, and Administrative Agent may be
removed  at any time  with or  without  cause  by an  instrument  or  concurrent
instruments  in writing  delivered to  Borrowers  and  Administrative  Agent and
signed by Requisite  Lenders.  Upon any such notice of  resignation  or any such
removal, Requisite Lenders shall have the right, upon five Business Days' notice
to Borrowers,  to appoint a successor  Administrative  Agent (provided that such
successor is or simultaneously  therewith becomes a Lender). Upon the acceptance
of  any   appointment  as   Administrative   Agent   hereunder  by  a  successor
Administrative  Agent,  that  successor  Administrative  Agent  shall  thereupon
succeed to and become vested with all the rights, powers,  privileges and duties
of the  retiring  or removed  Administrative  Agent and the  retiring or removed
Administrative  Agent shall be discharged from its duties and obligations  under
this Agreement. After any retiring or removed Administrative Agent's resignation
or removal hereunder as  Administrative  Agent, the provisions of this Section 9
shall inure to its benefit as to any actions  taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.

9.6    Collateral Documents and Subsidiary Guaranties.
       -----------------------------------------------

     Each Lender hereby further  authorizes  Administrative  Agent, on behalf of
and for the  benefit of  Lenders,  to enter into each  Collateral  Document  and
Subsidiary  Guaranty as secured party or beneficiary (as  applicable),  and each
Lender  agrees  to be  bound  by the  terms  of  each  Collateral  Document  and
Subsidiary Guaranty; provided that Administrative Agent shall not (i) enter into
or consent to any material amendment, modification, termination or waiver of any
provision contained in any Collateral Document or Subsidiary  Guaranty,  or (ii)
release any  Collateral  (except as  otherwise  expressly  permitted or required
pursuant to the terms of this Agreement or the applicable  Collateral Document),
in each case  without the prior  consent of  Requisite  Lenders (or, if required
pursuant to subsection  10.6, all Lenders);  provided  further,  however,  that,
without further written consent or  authorization  from Lenders,  Administrative
Agent may execute any  documents  or  instruments  necessary  to (i) release any
Subsidiary  from  the  Subsidiary  Guaranty  to the  extent  the  stock  of such
Subsidiary is sold in a transaction  permitted under this Agreement or otherwise
consented to by Requisite  Lenders in accordance  with  subsection 10.6 and (ii)
release any Lien  encumbering  any item of  Collateral  that is the subject of a
sale or other  disposition  of assets  permitted  by this  Agreement or to which
Requisite  Lenders have otherwise  consented in accordance with Subsection 10.6.
Anything contained in any of the Loan Documents to the contrary notwithstanding,
Borrowers,  Administrative Agent and each Lender hereby agree that (X) no Lender
shall have any right  individually  to realize upon any of the Collateral  under
any Collateral Document,  it being understood and agreed that all powers, rights
and remedies under the  Collateral  Documents and each Guaranty may be exercised
solely by Administrative Agent for the benefit of Lenders in accordance with the
terms thereof,  and (Y) in the event of a foreclosure by Administrative Agent on
any of the Collateral pursuant to a public or private sale, Administrative Agent
or any Lender may be the purchaser of any or all of such  Collateral at any such
sale and  Administrative  Agent, as agent for and representative of Lenders (but
not any  Lender or  Lenders  in its or their  respective  individual  capacities
unless  Requisite  Lenders shall  otherwise agree in writing) shall be entitled,
for the  purpose of bidding  and making  settlement  or payment of the  purchase
price for all or any portion of the Collateral  sold at any such public sale, to
use and apply any of the  Obligations  as a credit on  account  of the  purchase
price for any collateral payable by Administrative Agent at such sale.

<PAGE>

9.7    Disbursement Agreement and Intercreditor Agreement.
       ---------------------------------------------------

     Each Lender hereby further  authorizes  Administrative  Agent, on behalf of
and for the benefit of Lenders,  to enter into the Disbursement  Agreement,  the
Intercreditor  Agreement,  the  Adelson  Intercreditor  Agreement,  the  Adelson
Subordination  Agreement  and any FF&E  Intercreditor  Agreements  and any other
intercreditor  agreements  in the form of the  Adelson  Intercreditor  Agreement
entered into by Administrative Agent with any subsequent holders of a Substitute
Tranche B Note (as such term is defined in the Existing  Credit  Agreement) or a
Completion Guaranty Note, and each Lender agrees to be bound by the terms of the
Disbursement  Agreement,   the  Intercreditor  Agreement  and  each  other  such
intercreditor agreement; provided that Administrative Agent shall not enter into
or  consent  to  any  amendment,  modification,  termination  or  waiver  of any
provision contained in the Disbursement  Agreement,  the Intercreditor Agreement
or any other such intercreditor agreement without the prior consent of Requisite
Lenders (or, if such amendment, modification, termination or waiver would result
in a change that under  Section  10.6 would  require the consent of all Lenders,
then the prior consent of all Lenders).

9.8    Appointment of Joint-Lead Arrangers and Syndication Agent after Closing
       Date.
       -------------------------------------------------------------------------

     GSCP is hereby  appointed  Syndication  Agent and GSCP and  Scotiabank  are
hereby  appointed  Joint-Lead  Arrangers  hereunder  and under  the  other  Loan
Documents  and each Lender  hereby  authorizes  such  Joint-Lead  Arrangers  and
Syndication  Agent to act as its  agent  in  accordance  with the  terms of this
Agreement  and the  other  Loan  Documents.  Each of the  Syndication  Agent and
Joint-Lead  Arrangers agree to act upon the express conditions contained in this
Agreement and the other Loan  Documents,  as applicable.  The provisions of this
Section  9 are  solely  for  the  benefit  of  each  of the  Syndication  Agent,
Joint-Lead  Arrangers  and  Lenders;  Borrowers  shall have no rights as a third
party beneficiary of any of the provisions  thereof. In performing its functions
and duties under this Agreement,  each of the  Syndication  Agent and Joint-Lead
Arrangers  shall act solely as an agent of  Lenders  and do not assume and shall
not be deemed to have assumed any obligation  towards or  relationship of agency
or  trust  with  or for  Borrowers  or  any  of  their  Subsidiaries.  Upon  the
Restatement Closing Date all obligations of the Syndication Agent and Joint-Lead
Arrangers hereunder shall terminate.

Section 10.       MISCELLANEOUS

10.1   Assignments and Participations in Loans.
       ----------------------------------------

     A. General.  Subject to subsection  10.1B, each Lender shall have the right
at any time to (i) sell,  assign or transfer to any Eligible  Assignee,  or (ii)
sell  participations  to any  Eligible  Assignee  or any other  Person  with the
approval  of  Borrowers  in, all or any part of its  Commitments  or any Loan or
Loans made by it or its Letters of Credit or participations therein or any other
interest  herein or in any other  Obligations  owed to it; provided that no such
sale,  assignment,  transfer  or  participation  shall,  without  the consent of
Borrowers,   require  Borrowers  to  file  a  registration  statement  with  the
Securities  and Exchange  Commission or apply to qualify such sale,  assignment,
transfer or  participation  under the  securities  laws of any state;  provided,
further that no such sale,  assignment or transfer described in clause (i) above
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment  or transfer  shall have been  accepted by  Administrative  Agent and
recorded  in the  Register as provided in  subsection  10.1B(ii)  and  provided,
further that no such sale,  assignment,  transfer or participation of any Letter
of Credit  or any  participation  therein  may be made  separately  from a sale,
assignment,  transfer  or  participation  of a  corresponding  interest  in  the
Commitment and the Loans of the Lender effecting such sale, assignment, transfer
or  participation.  Except as otherwise  provided in this  subsection  10.1,  no
Lender shall,  as between  Borrowers and such Lender,  be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations  in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations  therein,  or the other Obligations owed
to such Lender.

     B. Assignments.

     (i) Amounts and Terms of  Assignments.  Each  Commitment,  Loan,  Letter of
     Credit or participation therein, or other Obligation may (a) be assigned in
     any amount to another Lender, or to an Affiliate of the assigning Lender or
     another Lender,  with the giving of notice to Borrowers and  Administrative
     Agent;  provided  that if such  assignment  relates to  Revolving  Loans or
     Revolving Loan  Commitments,  the assignee shall  represent that it has the
     financial   resources  to  fulfill  its  commitments   hereunder  and  such
     assignment is consented to by Administrative Agent and Issuing Lender (such
     consent not to be  unreasonably  withheld or delayed) or (b) be assigned in
     an aggregate  amount of not less than  $5,000,000 (or such lesser amount as
     shall constitute the aggregate amount of the Commitments, Loans, Letters of
     Credit and participations  therein,  and other Obligations of the assigning
     Lender) to any other  Eligible  Assignee  with the consent of Borrowers and
     Administrative  Agent (which consent shall not be unreasonably  withheld or
     delayed); provided that any such assignment in accordance with either

<PAGE>

     clause (a) or (b) above shall  effect a pro rata  assignment  (based on the
     respective principal amounts thereof then outstanding or in effect) of both
     the Term Loan Commitment and the Term Loans of the assigning Lender, on the
     one hand, and the Revolving Loan  Commitment and the Revolving Loans of the
     assigning Lender, on the other hand, except where such Lender does not hold
     both  Revolving  Loan   Commitments  or  Revolving   Loans  and  Term  Loan
     Commitments  or  Term  Loans.  To the  extent  of any  such  assignment  in
     accordance with either clause (a) or (b) above,  the assigning Lender shall
     be relieved of its  obligations  with  respect to its  Commitments,  Loans,
     Letters of Credit or  participations  therein,  or other Obligations or the
     portion  thereof  so  assigned.  The  assignor  or  assignee  to each  such
     assignment  shall  execute and  deliver to  Administrative  Agent,  for its
     acceptance and recording in the Register, an Assignment Agreement, together
     with a  processing  and  recordation  fee  of  (a)  $2,000  in  respect  of
     assignments  made between  parties  which are not Lenders as at the Closing
     Date and (b) $500 in respect of  assignments  made  between  parties one of
     which is a Lender as at the Closing Date, and such forms,  certificates  or
     other  evidence,  if any, with respect to United States  federal income tax
     withholding matters as the assignee under such Assignment  Agreement may be
     required  to  deliver  to  Administrative   Agent  pursuant  to  subsection
     2.7B(iii)(a).  Upon such execution,  delivery,  acceptance and recordation,
     from and after the effective date specified in such  Assignment  Agreement,
     (y) the assignee thereunder shall be a party hereto and, to the extent that
     rights and obligations  hereunder have been assigned to it pursuant to such
     Assignment  Agreement,  shall have the rights and  obligations  of a Lender
     hereunder and (z) the assigning Lender thereunder shall, to the extent that
     rights and obligations  hereunder have been assigned by it pursuant to such
     Assignment  Agreement,  relinquish  its rights (other than any rights which
     survive the  termination of this Agreement under  subsection  10.9B) and be
     released from its obligations  under this Agreement (and, in the case of an
     Assignment  Agreement covering all or the remaining portion of an assigning
     Lender's  rights and obligations  under this  Agreement,  such Lender shall
     cease to be a party hereto; provided that, anything contained in any of the
     Loan  Documents  to the  contrary  notwithstanding,  if such  Lender is the
     Issuing  Lender  with  respect to any  outstanding  Letters of Credit  such
     Lender  shall  continue  to have all rights and  obligations  of an Issuing
     Lender with  respect to such Letters of Credit  until the  cancellation  or
     expiration of such Letters of Credit and the  reimbursement  of any amounts
     drawn thereunder).  The Commitments  hereunder shall be modified to reflect
     the  Commitment  of such  assignee  and any  remaining  Commitment  of such
     assigning  Lender and, if any such assignment  occurs after the issuance of
     Notes hereunder, the assigning Lender shall, upon the effectiveness of such
     assignment  or  as  promptly  thereafter  as  practicable,   surrender  its
     applicable Notes to Administrative  Agent for  cancellation,  and thereupon
     new Notes  shall be issued to the  assignee  and to the  assigning  Lender,
     substantially  in the form of  Exhibits  III-A,  III-B,  or  III-C  annexed
     hereto,  as applicable,  with  appropriate  insertions,  to reflect the new
     Commitments  and/or  outstanding Loans, as the case may be, of the assignee
     and the assigning Lender.

     (ii) Acceptance by Administrative Agent;  Recordation in Register. Upon its
     receipt of an Assignment  Agreement  executed by an assigning Lender and an
     assignee  representing that it is an Eligible  Assignee,  together with the
     processing and recordation  fee referred to in subsection  10.1B(i) and any
     forms, certificates or other evidence with respect to United States federal
     income tax  withholding  matters  that such  assignee  may be  required  to
     deliver  to  Administrative  Agent  pursuant  to  subsection  2.7B(iii)(a),
     Administrative  Agent shall, if  Administrative  Agent has consented to the
     assignment  evidenced  thereby  (to the extent  such  consent  is  required
     pursuant to subsection  10.1B(i)),  (a) accept such Assignment Agreement by
     executing a counterpart thereof as provided therein (which acceptance shall
     evidence any required consent of Administrative  Agent to such assignment),
     (b) record the information contained therein in the Register,  and (c) give
     prompt notice thereof to Borrowers.  Administrative  Agent shall maintain a
     copy  of each  Assignment  Agreement  delivered  to and  accepted  by it as
     provided in this subsection 10.1B(ii).

     C. Participations. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender  to take or omit to take any  action  hereunder  except  action  directly
affecting  (i) the extension of the  scheduled  final  maturity date of any Loan
allocated to such participation,  (ii) a reduction of the principal amount of or
the rate of interest  payable on any Loan  allocated to such  participation,  or
(iii)  releasing all or  substantially  all of the  Collateral,  and all amounts
payable  by  Borrowers  hereunder  (including  amounts  payable  to such  Lender
pursuant to subsections  2.6D and 2.7) shall be determined as if such Lender had
not sold such  participation.  Borrowers and each Lender hereby  acknowledge and
agree  that,  solely  for  purposes  of  subsections  10.4  and  10.5,  (a)  any
participation  will  give  rise  to a  direct  obligation  of  Borrowers  to the
participant and (b) the participant shall be considered to be a "Lender".

<PAGE>

     D. Assignments to Federal Reserve Banks. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may  assign  and  pledge all or any  portion of its Loans,  the other
Obligations  owed to such Lender,  and its Notes to any Federal  Reserve Bank as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank;  provided that (i) no Lender shall, as between  Borrowers and such Lender,
be  relieved  of  any of its  obligations  hereunder  as a  result  of any  such
assignment  and pledge and (ii) in no event shall such  Federal  Reserve Bank be
considered  to be a "Lender" or be entitled to require the  assigning  Lender to
take or omit to take any action hereunder.

     E.  Information.   Each  Lender  may  furnish  any  information  concerning
Borrowers and their  Subsidiaries  in the possession of that Lender from time to
time  to  assignees  and  participants   (including  prospective  assignees  and
participants), subject to subsection 10.20.

     F.  Representations  of Lenders.  Each Lender listed on the signature pages
hereof  hereby  represents  and  warrants  (i) that it is an  Eligible  Assignee
described in clause (A) of the definition  thereof;  (ii) that it has experience
and  expertise in the making of loans such as the Loans;  and (iii) that it will
make its Loans for its own account in the  ordinary  course of its  business and
without  a view  to  distribution  of  such  Loans  within  the  meaning  of the
Securities Act or the Exchange Act or other federal or state securities laws (it
being  understood  that,  subject to the provisions of this subsection 10.1, the
disposition  of such Loans or any  interests  therein  shall at all times remain
within its exclusive control).  Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.

10.2   Expenses.
       ---------

     Whether or not the transactions  contemplated  hereby shall be consummated,
Borrowers  agree to pay  promptly  (i) all the actual and  reasonable  costs and
expenses of  preparation  of the Loan  Documents and any  consents,  amendments,
waivers or other  modifications  thereto;  (ii) all the costs of furnishing  all
opinions by counsel for Borrowers  (including any opinions  requested by Lenders
as to any legal matters arising hereunder) and of Borrowers'  performance of and
compliance  with all  agreements  and  conditions on its part to be performed or
complied with under this Agreement and the other Loan  Documents  including with
respect to  confirming  compliance  with  environmental,  insurance and solvency
requirements;  (iii) the reasonable fees,  expenses and disbursements of counsel
to  Administrative  Agent  in  connection  with  the  negotiation,  preparation,
execution and administration of the Loan Documents and any consents, amendments,
waivers  or other  modifications  thereto  and any other  documents  or  matters
requested by Borrowers; provided that the fees and costs of such counsel for the
preparation and negotiation of the Loan Documents may not exceed $350,000;  (iv)
all the actual costs and reasonable expenses of creating and perfecting Liens in
favor of  Administrative  Agent on behalf of Lenders  pursuant to any Collateral
Document,  including  filing and recording  fees,  expenses and taxes,  stamp or
documentary taxes, search fees, title insurance  premiums,  and reasonable fees,
expenses and  disbursements  of counsel to  Administrative  Agent and of counsel
providing  any  opinions  that  Administrative  Agent or  Requisite  Lenders may
request in respect of the  Collateral  Documents or the Liens  created  pursuant
thereto;  (v) all the  actual  costs  and  reasonable  expenses  (including  the
reasonable  fees,  expenses and  disbursements  of any auditors,  accountants or
appraisers  and any  environmental  or other  consultants,  advisors  and agents
employed or retained by  Administrative  Agent or its counsel) of obtaining  and
reviewing  any  appraisals   provided  for  under  any  Loan  Documents  or  the
Disbursement  Agreement,  any environmental audits or reports provided for under
subsection  6.8B or under the  Disbursement  Agreement;  and (vi) the custody or
preservation  of any of the  Collateral;  (vii) all other actual and  reasonable
costs and  expenses  incurred by  Administrative  Agent in  connection  with the
syndication of the Commitments and the negotiation, preparation and execution of
the Loan Documents and any consents,  amendments, waivers or other modifications
thereto  and  the  transactions  contemplated  thereby;  and  (viii)  after  the
occurrence of an Event of Default, all costs and expenses,  including reasonable
attorneys'  fees (including  allocated  costs of internal  counsel) and costs of
settlement,  incurred  by  Administrative  Agent and  Lenders in  enforcing  any
Obligations of or in collecting  any payments due from any Loan Party  hereunder
or under the other Loan Documents by reason of such Event of Default  (including
in connection with the sale of,  collection from, or other  realization upon any
of the Collateral or the  enforcement of any Guaranty) or in connection with any
refinancing  or  restructuring  of the credit  arrangements  provided under this
Agreement  in the  nature of a  "work-out"  or  pursuant  to any  insolvency  or
bankruptcy proceedings.

10.3   Indemnity.
       ----------

     In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the  transactions  contemplated  hereby shall be  consummated,  Borrowers
agree to defend (subject to Borrowers'  selection of counsel with the consent of
the Indemnitee,  which shall not be unreasonably withheld),  indemnify,  pay and
hold harmless  Administrative  Agent,  Arrangers and Lenders,  and the officers,

<PAGE>

directors,  employees,  agents and affiliates of Administrative Agent, Arrangers
and Lenders  (collectively  called the "Indemnitees"),  from and against any and
all Indemnified  Liabilities (as hereinafter  defined);  provided that Borrowers
shall not have any  obligation to any  Indemnitee  hereunder with respect to any
Indemnified  Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction.

     As used herein, "Indemnified Liabilities" means, collectively,  any and all
liabilities,  obligations, losses, damages (including natural resource damages),
penalties,  actions,  judgments, suits, claims (including Environmental Claims),
costs  (including  the costs of any  investigation,  study,  sampling,  testing,
abatement,  cleanup, removal,  remediation or other response action necessary to
remove, remediate, clean up or abate any Hazardous Materials Activity), expenses
and  disbursements  of any kind or nature  whatsoever  (including the reasonable
fees and  disbursements  of  counsel  for  Indemnitees  in  connection  with any
investigative,  administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto,  and any fees or expenses  incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal,  state or foreign  laws,  statutes,  rules or  regulations
(including  securities and commercial laws,  statutes,  rules or regulations and
Environmental  Laws),  on  common  law or  equitable  cause  or on  contract  or
otherwise,  that may be imposed on,  incurred  by, or asserted  against any such
Indemnitee,  in any manner  relating to or arising out of (i) this  Agreement or
the  other  Loan  Documents  or  the  Project   Documents  or  the  transactions
contemplated  hereby or thereby (including  Lenders' agreement to make the Loans
hereunder  or the use or  intended  use of the  proceeds  thereof  or the use or
intended use of any thereof,  or any  enforcement  of any of the Loan  Documents
(including any sale of,  collection  from, or other  realization upon any of the
Collateral or the enforcement of any Guaranty), (ii) the statements contained in
the commitment letter delivered by any Lender to Borrowers with respect thereto,
or (iii) any Environmental Claim or any Hazardous Materials Activity relating to
or  arising  from,  directly  or  indirectly,  any  past  or  present  activity,
operation,   land   ownership,   or  practice  of  Borrowers  or  any  of  their
Subsidiaries.

     To the extent  that the  undertakings  to defend,  indemnify,  pay and hold
harmless set forth in this subsection 10.3 may be  unenforceable  in whole or in
part because they are  violative of any law or public  policy,  Borrowers  shall
contribute  the maximum  portion that it is  permitted to pay and satisfy  under
applicable law to the payment and  satisfaction of all  Indemnified  Liabilities
incurred by Indemnitees or any of them.

10.4   Set-Off; Security Interest in Deposit Accounts.
       ----------------------------------------------

     In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby  authorized  by Borrowers at any time or from time
to time,  without  notice to Borrowers or to any other  Person,  any such notice
being hereby  expressly  waived,  to set off and to appropriate and to apply any
and all  deposits  (general  or special,  including  Indebtedness  evidenced  by
certificates of deposit,  whether matured or unmatured,  but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the  account  of  Borrowers  against  and on account of the
obligations  and  liabilities of Borrowers to that Lender under this  Agreement,
the Letters of Credit and  participations  therein and the other Loan Documents,
including  all claims of any nature or  description  arising out of or connected
with this  Agreement,  the Letters of Credit and  participations  therein or any
other Loan Document,  irrespective  of whether or not (i) that Lender shall have
made any demand  hereunder or (ii) the principal of or the interest on the Loans
or any  amounts  in respect of the  Letters of Credit or any other  amounts  due
hereunder  shall have become due and payable  pursuant to Section 9 and although
said  obligations  and  liabilities,  or  any of  them,  may  be  contingent  or
unmatured.  Borrowers  hereby  further grants to  Administrative  Agent and each
Lender  a  security  interest  in all  deposits  and  accounts  maintained  with
Administrative Agent or such Lender as security for the Obligations.

10.5   Ratable Sharing.
       ----------------

     Lenders hereby agree among themselves that if any of them shall, whether by
voluntary  payment (other than a voluntary  prepayment of Loans made and applied
in accordance with the terms of this  Agreement),  by realization upon security,
through the exercise of any right of set-off or banker's  lien, by  counterclaim
or cross action or by the  enforcement  of any right under the Loan Documents or
otherwise,  or as adequate  protection of a deposit  treated as cash  collateral
under the Bankruptcy  Code,  receive payment or reduction of a proportion of the
aggregate amount of principal,  interest,  amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder or
under the other Loan Documents  (collectively,  the  "Aggregate  Amounts Due" to
such Lender) which is greater than the  proportion  received by any other Lender
in respect of the Aggregate  Amounts Due to such other  Lender,  then the Lender
receiving such proportionately greater payment shall (i) notify Administrative

<PAGE>

Agent and each  other  Lender of the  receipt of such  payment  and (ii) apply a
portion of such payment to purchase  participations (which it shall be deemed to
have  purchased  from each  seller of a  participation  simultaneously  upon the
receipt by such seller of its portion of such payment) in the Aggregate  Amounts
Due to the other Lenders so that all such  recoveries  of Aggregate  Amounts Due
shall be shared by all Lenders in  proportion  to the  Aggregate  Amounts Due to
them;  provided  that if all or part of  such  proportionately  greater  payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the  bankruptcy or  reorganization  of Borrowers or otherwise,  those  purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing  Lender ratably to the extent of such recovery,  but
without interest.  Borrowers expressly consents to the foregoing arrangement and
agrees that any holder of a participation  so purchased may exercise any and all
rights of banker's  lien,  set-off or  counterclaim  with respect to any and all
monies owing by  Borrowers  to that holder with  respect  thereto as fully as if
that holder were owed the amount of the participation held by that holder.

10.6   Amendments and Waivers.
       -----------------------

     No amendment, modification,  termination or waiver of any provision of this
Agreement  or of  the  Notes,  and no  consent  to any  departure  by  Borrowers
therefrom,  shall in any event be effective  without the written  concurrence of
Requisite Lenders; provided that any such amendment, modification,  termination,
waiver or  consent  which:  increases  the amount of any of the  Commitments  or
reduces  the  principal  amount of any of the  Loans;  changes in any manner the
definition  of "Pro Rata Share" or the  definition  of  "Requisite  Lenders" (it
being  understood  that,  with the  consent  of  Requisite  Lenders,  additional
extensions  of credit  pursuant to this  Agreement  may be included in "Pro Rata
Share" and "Requisite  Lenders" on substantially the same terms as the Term Loan
Commitments  and the Term  Loans  and the  Revolving  Loan  Commitments  and the
Revolving  Loans);  changes in any manner any provision of this Agreement which,
by its terms,  expressly  requires the approval or  concurrence  of all Lenders;
postpones the scheduled  final maturity date of any of the Loans;  postpones the
date or reduces the amount of any  scheduled  payment  (but not  prepayment)  of
principal  of any of  the  Loans  or any  scheduled  reduction  in  commitments;
postpones  the date on which  any  interest  or any  fees or other  amounts  are
payable;  decreases  the interest rate borne by any of the Loans (other than any
waiver of any  increase  in the  interest  rate  applicable  to any of the Loans
pursuant to subsection  2.2E) or the amount of any fees or other amounts payable
hereunder; reduces the amount or postpones the due date of any amount payable in
respect of, or extends the  required  expiration  date of, any Letter of Credit;
changes in any manner the  obligations  of Lenders  relating to the  purchase of
participations in Letters of Credit;  increases the maximum duration of Interest
Periods   permitted   hereunder;   releases   any  Lien   granted  in  favor  of
Administrative  Agent with respect to 25% or more in aggregate fair market value
of the Collateral;  releases any Subsidiary Guarantor from its obligations under
its Guaranty,  other than in accordance with the terms of the Loan Documents; or
changes  in any  manner  the  provisions  contained  in  subsection  9.1 or this
subsection  10.6 shall be effective  only if evidenced by a writing signed by or
on  behalf  of all  Lenders.  In  addition,  (i)  any  amendment,  modification,
termination or waiver of any of the  provisions  contained in Section 4 shall be
effective   only  if  evidenced  by  a  writing   signed  by  or  on  behalf  of
Administrative  Agent and Requisite  Lenders,  (ii) no amendment,  modification,
termination  or waiver of any  provision of any Note shall be effective  without
the written concurrence of the Lender which is the holder of that Note, (iii) no
amendment, modification,  termination or waiver of any provision of Section 9 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of  Administrative  Agent shall be effective without
the  written  concurrence  of  Administrative   Agent  and  (iv)  no  amendment,
modification, termination or waiver of any provision of subsection 2.4 which has
the effect of changing any interim  scheduled  payments,  voluntary or mandatory
prepayments,  or Commitment reductions applicable to either Class (the "Affected
Class") in a manner that disproportionately disadvantages such Class relative to
the other Class shall be effective without the written  concurrence of Requisite
Class  Lenders of the Affected  Class (it being  understood  and agreed that any
amendment, modification,  termination or waiver of any such provision which only
postpones  or reduces any interim  scheduled  payment,  voluntary  or  mandatory
prepayment,  or Commitment reduction from those set forth in subsection 2.4 with
respect   to  one   Class  but  not  the   other   Class   shall  be  deemed  to
disproportionately  disadvantage  such one Class  but not to  disproportionately
disadvantage  such other Class for purposes of this clause (iv).  Administrative
Agent may, but shall have no obligation to, with the  concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective  only in the specific  instance and for
the specific purpose for which it was given. No notice to or demand on Borrowers
in any case shall entitle  Borrowers to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent  effected in accordance  with this  subsection  10.6 shall be binding
upon each Lender at the time  outstanding,  each future Lender and, if signed by
Borrowers, on Borrowers. To the extent the Bank Agent is entitled or required to
make  any  determinations  under  the  Intercreditor   Agreement,   the  Adelson
Intercreditor  Agreement or any FF&E Intercreditor  Agreement,  Bank Agent shall
make such determinations upon the advice of Requisite Lenders.

<PAGE>

10.7   Certain Matters Affecting Lenders.
       ----------------------------------

     (a) If (i) the Nevada Gaming  Commission  shall  determine  that any Lender
does  not  meet  suitability   standards  prescribed  under  the  Nevada  Gaming
Regulations or (ii) any other gaming authority with jurisdiction over the gaming
business  of  Borrowers  shall  determine  that  any  Lender  does  not meet its
suitability standards (in any such case, a "Former Lender"),  the Administrative
Agent or the  Borrowers  shall  have the right  (but not the duty) to  designate
bank(s) or other financial  institution(s) (in each case, a "Substitute Lender,"
which may be any Lender or Lenders that agree to become a Substitute  Lender and
to assume the rights and obligations of the Former Lender, subject to receipt by
the Administrative  Agent of evidence that such Substitute Lender is an Eligible
Assignee.  The Substitute  Lender shall assume the rights and obligations of the
Former Lender under this Agreement.  Borrowers shall bear the costs and expenses
of any Lender  required by the Nevada  Gaming  Commission,  or any other  gaming
authority with  jurisdiction  over the gaming business of Borrowers,  to file an
application for a finding of suitability in connection with the investigation of
an application by Borrowers for a license to operate a gaming establishment,  in
connection with such application for a finding of suitability.

     (b)  Notwithstanding  the provisions of subsection  (a) of this  subsection
9.7, if any Lender becomes a Former Lender, and if the  Administrative  Agent or
the Borrowers  fail to find a Substitute  Lender  pursuant to subsection  (a) of
this subsection 9.7 within any time period  specified by the appropriate  gaming
authority for the withdrawal of a Former Lender (the "Withdrawal  Period"),  the
Borrowers shall immediately  prepay in full the outstanding  principal amount of
Loans made by such Former Lender,  together with accrued interest thereon to the
earlier of (x) the date of payment or (y) the last day of any Withdrawal Period.

10.8   Independence of Covenants.
       --------------------------

     All  covenants  hereunder  shall be given  independent  effect so that if a
particular  action or condition is not permitted by any of such  covenants,  the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another  covenant shall not avoid the occurrence of an Event
of Default or  Potential  Event of Default if such action is taken or  condition
exists.

10.9   Notices.
       --------

     Unless  otherwise   specifically  provided  herein,  any  notice  or  other
communication  herein  required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier  service  and shall be deemed to have been given  when  delivered  in
person or by courier  service,  upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed;  provided that notices to Administrative Agent shall not
be effective until received.  For the purposes hereof, the address of each party
hereto  shall be as set forth under such  party's  name on the  signature  pages
hereof or (i) as to Borrowers and  Administrative  Agent,  such other address as
shall be  designated by such Person in a written  notice  delivered to the other
parties  hereto and (ii) as to each other party,  such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.

10.10  Survival of Representations, Warranties and Agreements.
       -------------------------------------------------------

     A. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.

     B.  Notwithstanding  anything  in this  Agreement  or implied by law to the
contrary,  the agreements of Borrowers set forth in subsections 2.6D, 2.7, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in subsections  9.2C, 9.4,
10.5 and 10.20 shall survive the payment of the Loans and the  reimbursement  of
any amounts drawn thereunder, and the termination of this Agreement.

10.11  Failure or Indulgence Not Waiver; Remedies Cumulative.
       -----------------------------------------------------

     No  failure or delay on the part of  Administrative  Agent or any Lender in
the exercise of any power, right or privilege  hereunder or under any other Loan
Document  shall  impair such power,  right or  privilege or be construed to be a
waiver of any default or acquiescence  therein,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise  thereof  or of any other  power,  right or  privilege.  All rights and
remedies  existing  under  this  Agreement  and the  other  Loan  Documents  are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

<PAGE>

10.12  Marshalling; Payments Set Aside.
       --------------------------------

     Neither  Administrative  Agent nor any Lender shall be under any obligation
to marshal any assets in favor of  Borrowers or any other party or against or in
payment of any or all of the  Obligations.  To the extent that  Borrowers make a
payment or payments  to  Administrative  Agent or Lenders (or to  Administrative
Agent for the benefit of Lenders),  or  Administrative  Agent or Lenders enforce
any security  interests or exercise their rights of setoff,  and such payment or
payments or the proceeds of such  enforcement  or setoff or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy  law,  any other state or federal  law,  common law or any  equitable
cause,  then,  to the extent of such  recovery,  the  obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related  thereto,  shall be revived and continued in full force and effect as
if such payment or payments had not been made or such  enforcement or setoff had
not occurred.

10.13  Severability.
       -------------

     In case any  provision in or obligation  under this  Agreement or the Notes
shall be invalid,  illegal or unenforceable in any  jurisdiction,  the validity,
legality and  enforceability of the remaining  provisions or obligations,  or of
such provision or obligation in any other jurisdiction,  shall not in any way be
affected or impaired thereby.

10.14  Obligations Several; Independent Nature of Lenders' Rights.
       ----------------------------------------------------------

     The  obligations  of Lenders  hereunder  are several and no Lender shall be
responsible  for the  obligations or Commitments of any other Lender  hereunder.
Nothing  contained herein or in any other Loan Document,  and no action taken by
Lenders pursuant hereto or thereto,  shall be deemed to constitute  Lenders as a
partnership,  an association,  a joint venture or any other kind of entity.  The
amounts  payable at any time  hereunder  to each Lender  shall be a separate and
independent  debt,  and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.

10.15  Headings.
       ---------

     Section and subsection  headings in this Agreement are included  herein for
convenience  of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

10.16  Applicable Law.
       ---------------

     THIS  AGREEMENT  AND THE RIGHTS AND  OBLIGATIONS  OF THE PARTIES  HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH,
THE  INTERNAL  LAWS OF THE STATE OF NEW YORK  (INCLUDING  SECTION  5-1401 OF THE
GENERAL  OBLIGATIONS LAW OF THE STATE OF NEW YORK),  WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.

10.17  Successors and Assigns.
       -----------------------

     This  Agreement  shall  be  binding  upon  the  parties  hereto  and  their
respective  successors and assigns and shall inure to the benefit of the parties
hereto and the  successors  and  assigns of Lenders  (it being  understood  that
Lenders'  rights  of  assignment  are  subject  to  subsection  10.1).   Neither
Borrowers'  rights or  obligations  hereunder  nor any  interest  therein may be
assigned or  delegated  by Borrowers  without the prior  written  consent of all
Lenders.

10.18  Consent to Jurisdiction and Service of Process.
       ----------------------------------------------

     ALL  JUDICIAL  PROCEEDINGS  BROUGHT  AGAINST  BORROWERS  ARISING  OUT OF OR
RELATING  TO THIS  AGREEMENT  OR ANY OTHER  LOAN  DOCUMENT,  OR ANY  OBLIGATIONS
THEREUNDER,  MAY  BE  BROUGHT  IN  ANY  STATE  OR  FEDERAL  COURT  OF  COMPETENT
JURISDICTION  IN THE  STATE,  COUNTY  AND CITY OF NEW  YORK.  BY  EXECUTING  AND
DELIVERING  THIS  AGREEMENT,  BORROWERS,  FOR THEMSELVES AND IN CONNECTION  WITH
THEIR PROPERTIES, IRREVOCABLY

     (I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE  JURISDICTION AND
     VENUE OF SUCH COURTS;

     (II) WAIVE ANY DEFENSE OF FORUM NON CONVENIENS;

     (III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH  PROCEEDING IN ANY SUCH
     COURT  MAY  BE  MADE  BY  REGISTERED  OR  CERTIFIED  MAIL,  RETURN  RECEIPT
     REQUESTED,  TO  BORROWERS  AT THEIR  ADDRESS  PROVIDED IN  ACCORDANCE  WITH
     SUBSECTION 10.9;

<PAGE>

     (IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS  SUFFICIENT TO
     CONFER PERSONAL  JURISDICTION  OVER BORROWERS IN ANY SUCH PROCEEDING IN ANY
     SUCH COURT,  AND OTHERWISE  CONSTITUTES  EFFECTIVE  AND BINDING  SERVICE IN
     EVERY RESPECT;

     (V) AGREE  THAT  LENDERS  RETAIN  THE RIGHT TO SERVE  PROCESS  IN ANY OTHER
     MANNER PERMITTED BY LAW OR TO BRING  PROCEEDINGS  AGAINST  BORROWERS IN THE
     COURTS OF ANY OTHER JURISDICTION; AND

     (VI)  AGREE  THAT THE  PROVISIONS  OF THIS  SUBSECTION  10.18  RELATING  TO
     JURISDICTION  AND VENUE  SHALL BE BINDING  AND  ENFORCEABLE  TO THE FULLEST
     EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
     OTHERWISE.

10.19  Waiver of Jury Trial.
       ---------------------

     EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS  AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS  OR ANY DEALINGS  BETWEEN
THEM  RELATING  TO  THE  SUBJECT   MATTER  OF  THIS  LOAN   TRANSACTION  OR  THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be  all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this  transaction,  including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims.  Each party hereto acknowledges that this waiver is a material
inducement to enter into a business  relationship,  that each has already relied
on this waiver in entering into this  Agreement,  and that each will continue to
rely on this waiver in their related future dealings.  Each party hereto further
warrants and represents  that it has reviewed this waiver with its legal counsel
and that it knowingly  and  voluntarily  waives its jury trial rights  following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED  EITHER  ORALLY OR IN WRITING  (OTHER  THAN BY A MUTUAL  WRITTEN
WAIVER  SPECIFICALLY  REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF
THE PARTIES HERETO),  AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,
RENEWALS,  SUPPLEMENTS  OR  MODIFICATIONS  TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN  DOCUMENTS OR TO ANY OTHER  DOCUMENTS OR  AGREEMENTS  RELATING TO THE LOANS
MADE  HEREUNDER.  In the event of  litigation,  this Agreement may be filed as a
written consent to a trial by the court.

10.20  Confidentiality.
       ----------------

     Each Lender shall hold all non-public  information obtained pursuant to the
requirements  of this  Agreement  in  accordance  with such  Lender's  customary
procedures  for  handling  confidential   information  of  this  nature  and  in
accordance  with  safe and  sound  banking  or  investment  practices,  it being
understood  and  agreed  by  Borrowers  that in any  event  a  Lender  may  make
disclosures to Affiliates of such Lender or disclosures  reasonably  required by
any bona  fide  assignee,  transferee  or  participant  in  connection  with the
contemplated  assignment  or  transfer  by  such  Lender  of  any  Loans  or any
participations  therein (provided that such assignee,  transferee or participant
agrees to also be bound by this subsection  10.20),  or disclosures  required or
requested by any governmental  agency or  representative  thereof or pursuant to
legal process;  provided that, unless specifically  prohibited by applicable law
or court  order,  each  Lender  shall  notify  Borrowers  of any  request by any
governmental  agency or  representative  thereof (other than any such request in
connection  with any  examination  of the financial  condition of such Lender by
such governmental agency) for disclosure of any such non-public information; and
provided,  further that in no event shall any Lender be obligated or required to
return any materials furnished by Borrowers or any of their Subsidiaries.

10.21  Counterparts; Effectiveness.
       ----------------------------

     This Agreement and any amendments,  waivers, consents or supplements hereto
or in connection  herewith may be executed in any number of counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same  instrument;  signature pages may
be  detached  from  multiple  separate  counterparts  and  attached  to a single
counterpart  so that all  signature  pages are  physically  attached to the same
document.  This  Agreement  shall  become  effective  upon  the  execution  of a
counterpart  hereof by each of the parties  hereto and receipt by Borrowers  and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.

<PAGE>

 10.22 Gaming Authorities.
       -------------------

     The Arrangers,  the Administrative Agent and each Lender agree to cooperate
with the Nevada Gaming  Authorities  in connection  with the  administration  of
their  regulatory  jurisdiction  over  the  Borrowers  and  their  Subsidiaries,
including,  without limitation, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions  the  provision of such  documents or other  information  as may be
requested by any such Nevada Gaming  Authority  relating to the  Arrangers,  the
Administrative  Agent  or any of  the  Lenders,  or  Borrowers  or any of  their
Subsidiaries,  or to the Loan Documents.  Notwithstanding any other provision of
the Agreement,  Borrowers expressly authorize each Agent and Lender to cooperate
with the Nevada Gaming Authorities as described above.

10.23  Limited Waiver.
       ---------------

     Subject  to  satisfaction   of  the  conditions   precedent  set  forth  in
subsections 4.1 and 4.2 and in reliance on the  representations,  warranties and
covenants of the Borrowers set forth in this Agreement, the Administrative Agent
and  Requisite  Lenders  on behalf of the  Lenders  hereby (a) waive each of the
Events of Default and  Potential  Events of Default  set forth in Schedule  5.18
annexed  hereto (to the  extent,  if any,  they exist) to the extent and for the
period  expressly set forth therein.  The waivers and consents set forth in this
subsection  10.23 and in Schedule  5.18  annexed  hereto shall be limited in all
respects  precisely as set forth herein and therein and nothing contained herein
or therein shall be deemed to:

               (a)  constitute a waiver of (i)  compliance by the Borrowers with
          respect to any term,  provision or condition of this  Agreement or any
          other instrument or agreement referred to herein,  except as expressly
          set forth in Schedule  5.18, or (ii) any Event of Default or Potential
          Event of Default, except as expressly set forth on Schedule 5.18; or

               (b) prejudice any right or remedy that the  Administrative  Agent
          or the  Lenders  have  (except to the extent  such right or remedy was
          based upon a default  that will not exist after  giving  effect to the
          limited waivers specified in Schedule 5.18 annexed hereto) under or in
          connection  with this  Agreement or any other  instrument or agreement
          referred to therein or delivered hereunder.

     Except as expressly set forth herein, the terms,  provisions and conditions
of this  Agreement and the other Loan  Documents  shall remain in full force and
effect and in all other respects are hereby ratified and confirmed.

[Remainder of page intentionally left blank]

<PAGE>

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

                  BORROWERS:

                                            LAS VEGAS SANDS, INC.

                                            By: /s/ William P. Weidner
                                                ---------------------------
                                                Name:   William P. Weidner
                                                Title:  President

                                            Notice Address:

                                                3355 Las Vegas Boulevard South
                                                Room 1A
                                                Las Vegas, Nevada 89109
                                                Attention:      General Counsel
                                                Telefax:        (702) 733-5499

                                            VENETIAN CASINO RESORT, LLC

                                            By: Las Vegas Sands, Inc.
                                                its managing member

                                            By: /s/ William P. Weidner
                                                ---------------------------
                                                Name:   William P. Weidner
                                                Title:  President

                                            Notice Address:

                                                3355 Las Vegas Boulevard South
                                                Room 1A
                                                Las Vegas, Nevada 89109
                                                Attention:      General Counsel
                                                Telefax:        (702) 733-5499

<PAGE>

         LENDERS:                        GOLDMAN SACHS CREDIT PARTNERS L.P.
                                         individually and as a Lender,
                                         Joint-Lead Arranger and
                                         Syndication Agent

                                         By:      /s/ R.T. Wagner
                                                  ---------------------------
                                                  Authorized Signatory

                                         Notice Address:

                                         Goldman Sachs Credit Partners L.P.
                                         85 Broad Street
                                         New York, New York 10004
                                         Attention: Gary Moross/David Lischer/
                                                    Elizabeth Fischer
                                         Telefax:   (212) 357 0932

<PAGE>

                                            THE BANK OF NOVA SCOTIA,
                                            individually and as a Lender,
                                            Joint-Lead Arranger and
                                            Administrative Agent

                                            By:      /s/ Alan Pendergast

                                                     ---------------------------
                                                     Name:   Alan Pendergast
                                                     Title:  Managing Director

                                            Notice Address:

                                            The Bank of Nova Scotia
                                            580 California Street, Suite 2100
                                            San Francisco, California 94104
                                            Attention:        Alan Pendergast
                                            Telefax:          (415) 397-0791

                                            With copy to:

                                            The Bank of Nova Scotia
                                            600 Peachtree Street, N.E.
                                            Atlanta, Georgia 30308
                                            Attention:  Marianne Velker
                                            Telefax: (404) 888-8998

<PAGE>

                              THE INTERNATIONAL COMMERCIAL
                              BANK OF CHINA, NEW YORK AGENCY

                              By: /s/ Wen-Hui Wang

                                       ---------------------------
                                       Name:    Wen-Hui Wang
                                       Title:   Assistant Vice President

                                                /General Manager

                                 Notice Address:

                                      The International Commercial Bank of China
                                      65 Liberty Street
                                      New York, NY 10005
                                      Attention: Mong-Shyr Wu
                                      Telefax:  (212) 766 5006

<PAGE>

                               TORONTO DOMINION (TEXAS), INC.

                               By:      /s/ Alva J. Jones
                                        -------------------------------

                                        Name:  Alva J. Jones
                                        Title: President

                                        Notice Address:
                                        The Toronto-Dominion Bank
                                        909 Fannin, Suite 1700
                                        Houston, Texas 77010
                                        Manager-Credit Administration
                                        Attention:      David G. Parker
                                        Telefax:       (713) 951-9921

<PAGE>

                                CANADIAN IMPERIAL BANK OF COMMERCE

                                By:      /s/ Koren Volk

                                        -----------------------------------
                                        Name:   Koren Volk
                                        Title:  Authorized Signatory

                                        Notice Address:
                                        Canadian Imperial Bank of Commerce
                                        425 Lexington Avenue
                                        New York, NY 10017
                                        Attention:  Koren Volk
                                        Telefax: (212) 856-3799

<PAGE>

                                NATIONAL WESTMINSTER BANK

                                BY:  NATWEST CAPITAL MARKETS, its Agent
                                BY:  GREENWICH CAPITAL MARKETS, its Agent

                                By:      /s/ Kelly A. Myers
                                         -----------------------------------
                                         Name:       Kelly A. Myers
                                         Title:      Assistant Vice President

                                Notice Address:
                                         National Westminster Bank
                                         600 Steamboat Rd.
                                         Greenwich, CT 06830
                                         Attention:  Rick Jacoby
                                         Telefax:       (203) 618-2520

<PAGE>

                                   PINEHURST TRADING, INC.

                                   By:       /s/ Ashley R. Hamilton
                                            ------------------------------
                                            Name:   Ashley R. Hamilton
                                            Title:  Assistant Vice President

                                   Notice Address:
                                            Bank of America
                                            100 North Tryon Street
                                            NC-1-007-06-07
                                            Charlotte, NC  28255
                                            Attention:  Ashley Hamilton
                                            Telefax:  (704) 388 0648

<PAGE>

                                 FOOTHILL INCOME TRUST, L.P.

                                 By:      /s/ Mike Bohannon

                                          ---------------------------------
                                          Name:   Mike Bohannon
                                          Title:  Managing General Partner

                                 Notice Address:
                                 Foothill Income Trust, L.P.
                                 11111 Santa Monica Blvd.
                                 Suite 1500
                                 Los Angeles, CA 90025
                                 Attention:  Jammy Gurican/ Mike Bohannon
                                 Telefax: (310) 479-0461

<PAGE>

                               SRV-HIGHLAND, INC.

                               By:      /s/ Ashley R. Hamilton
                                        -----------------------------------
                                        Name:   Ashley R. Hamilton
                                        Title:  Assistant Vice President

                               Notice Address:
                                        Bank of America
                                        100 North Tryon Street
                                        NC-1-007-06-07
                                        Charlotte, NC  28255
                                        Attention:  Ashley Hamilton
                                        Telefax:  704 388 0648

<PAGE>

                                    FOOTHILL INCOME TRUST II, L.P.

                                    By:       /s/ Mike Bohannon

                                             ------------------------------
                                             Name:  Mike Bohannon
                                             Title: Managing General Parnter

                                    Notice Address:
                                    Foothill Income Trust II, L.P.
                                    11111 Santa Monica Blvd.
                                    Suite 1500
                                    Los Angeles, CA 90025
                                    Attention:  Jammy Gurican/ Mike Bohannon
                                    Telefax: (310) 479-0461

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