Document:

EXHIBIT 10.19

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                           LOAN AND SECURITY AGREEMENT

                                  BY AND AMONG

                                 DIAMOND JO, LLC

                                       AND

                        THE OLD EVANGELINE DOWNS, L.L.C.

                                  AS BORROWERS,

                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 AS THE LENDERS,

                                       AND

                           WELLS FARGO FOOTHILL, INC.

                            AS THE ARRANGER AND AGENT

                           DATED AS OF JUNE 16, 2004

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<PAGE>

                                TABLE OF CONTENTS

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1.   DEFINITIONS AND CONSTRUCTION..............................................1

     1.1      Definitions......................................................1

     1.2      Accounting Terms................................................36

     1.3      Code............................................................36

     1.4      Construction....................................................36

     1.5      Schedules and Exhibits..........................................36

2.   LOAN AND TERMS OF PAYMENT................................................36

     2.1      Advances........................................................36

     2.2      Term Loan.......................................................37

     2.3      Borrowing Procedures and Settlements............................37

     2.4      Payments........................................................44

     2.5      Overadvances....................................................46

     2.6      Interest:  Rates, Payments, and Calculations....................47

     2.7      [Intentionally Omitted].........................................48

     2.8      Crediting Payments..............................................48

     2.9      Designated Account..............................................48

     2.10     Maintenance of Loan Account; Statements of Obligations..........49

     2.11     Fees............................................................49

     2.12     Letters of Credit...............................................50

     2.13     Registered Notes................................................52

     2.14     Capital Requirements............................................53

     2.15     Joint and Several Liability of Borrowers........................53

     2.16     LIBOR Option....................................................56

3.   CONDITIONS; TERM OF AGREEMENT............................................58

     3.1      Conditions Precedent to Initial Extension of Credit.............58

     3.2      Conditions Subsequent to Initial Extension of Credit............61

     3.3      Conditions Precedent to all Extensions of Credit................61

     3.4      Term............................................................62

     3.5      Effect of Termination...........................................62

     3.6      Early Termination by Borrowers..................................62

                                      -i-
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                                TABLE OF CONTENTS
                                   (continued)

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4.   CREATION OF SECURITY INTEREST............................................63

     4.1      Grant of Security Interest......................................63

     4.2      Negotiable Collateral...........................................63

     4.3      Collection of Accounts, General Intangibles, and
              Negotiable Collateral...........................................64

     4.4      Delivery of Additional Documentation Required...................64

     4.5      Power of Attorney...............................................65

     4.6      Right to Inspect................................................66

     4.7      Control Agreements..............................................66

     4.8      FF&E Letter of Credit...........................................66

5.   REPRESENTATIONS AND WARRANTIES...........................................66

     5.1      No Encumbrances.................................................67

     5.2      [Intentionally Omitted].........................................67

     5.3      [Intentionally Omitted].........................................67

     5.4      Equipment.......................................................67

     5.5      Location of Inventory and Equipment.............................67

     5.6      Inventory Records...............................................67

     5.7      State of Incorporation; Location of Chief Executive Office;
              FEIN; Organizational ID Number; Commercial Tort Claims..........67

     5.8      Due Organization and Qualification; Subsidiaries................67

     5.9      Due Authorization; No Conflict..................................68

     5.10     Litigation......................................................69

     5.11     No Material Adverse Change......................................69

     5.12     Fraudulent Transfer.............................................69

     5.13     Employee Benefits...............................................69

     5.14     Environmental Condition.........................................69

     5.15     Brokerage Fees..................................................70

     5.16     Intellectual Property...........................................70

     5.17     Leases..........................................................70

     5.18     Deposit Accounts................................................70

     5.19     Complete Disclosure.............................................70

                                      -ii-
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                                TABLE OF CONTENTS
                                   (continued)

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     5.20     Indebtedness....................................................71

     5.21     Licenses and Permits............................................71

     5.22     Senior Debt.....................................................71

6.   AFFIRMATIVE COVENANTS....................................................71

     6.1      Accounting System...............................................71

     6.2      Reporting.......................................................72

     6.3      Financial Statements, Reports, Certificates.....................72

     6.4      [Intentionally Omitted].........................................75

     6.5      [Intentionally Omitted].........................................75

     6.6      Maintenance of Properties.......................................75

     6.7      Taxes...........................................................75

     6.8      Insurance.......................................................76

     6.9      Location of Inventory and Equipment.............................77

     6.10     Compliance with Laws............................................78

     6.11     Leases..........................................................78

     6.12     Brokerage Commissions...........................................78

     6.13     Existence.......................................................78

     6.14     Environmental...................................................78

     6.15     Disclosure Updates..............................................78

     6.16     Government Authorization........................................79

     6.17     License Renewals................................................79

     6.18     Licenses and Permits............................................79

     6.19     Subsidiary Guarantees...........................................79

     6.20     Collateral for FF&E Obligations.................................80

7.   NEGATIVE COVENANTS.......................................................80

     7.1      Indebtedness....................................................80

     7.2      Liens...........................................................82

     7.3      Restrictions on Fundamental Changes.............................82

     7.4      Disposal of Assets..............................................82

     7.5      Change Name.....................................................84

                                      -iii-
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                                TABLE OF CONTENTS
                                   (continued)

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     7.6      Guarantee.......................................................84

     7.7      Nature of Business..............................................84

     7.8      Prepayments and Amendments......................................84

     7.9      Change of Control...............................................85

     7.10     Operation of Diamond Jo Vessels.................................85

     7.11     Restricted Payments.............................................85

     7.12     Accounting Methods..............................................87

     7.13     Investments.....................................................88

     7.14     Transactions with Affiliates....................................88

     7.15     Suspension......................................................89

     7.16     Compensation....................................................89

     7.17     Use of Proceeds.................................................89

     7.18     Change in Location of Chief Executive Office; Inventory
              and Equipment with Bailees......................................89

     7.19     Securities Accounts.............................................89

     7.20     Financial Covenants.............................................90

     7.21     Management Agreements...........................................91

8.   EVENTS OF DEFAULT........................................................91

9.   AGENT'S RIGHTS AND REMEDIES..............................................94

     9.1      Rights and Remedies.............................................94

     9.2      Remedies Cumulative.............................................99

10.  TAXES AND EXPENSES.......................................................99

11.  WAIVERS; INDEMNIFICATION................................................100

     11.1     Demand; Protest................................................100

     11.2     The Lender Group's Liability for Collateral....................100

     11.3     Indemnification................................................100

12.  NOTICES.................................................................100

13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................102

14.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................103

     14.1     Assignments and Participations.................................103

                                      -iv-
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                                TABLE OF CONTENTS
                                   (continued)

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     14.2     Successors.....................................................106

15.  AMENDMENTS; WAIVERS.....................................................106

     15.1     Amendments and Waivers.........................................106

     15.2     Replacement of Holdout Lender..................................107

     15.3     No Waivers; Cumulative Remedies................................108

16.  AGENT; THE LENDER GROUP.................................................108

     16.1     Appointment and Authorization of Agent.........................108

     16.2     Delegation of Duties...........................................109

     16.3     Liability of Agent.............................................109

     16.4     Reliance by Agent..............................................109

     16.5     Notice of Default or Event of Default..........................109

     16.6     Credit Decision................................................110

     16.7     Costs and Expenses; Indemnification............................110

     16.8     Agent in Individual Capacity...................................111

     16.9     Successor Agent................................................111

     16.10    Lender in Individual Capacity..................................111

     16.11    Withholding Taxes..............................................112

     16.12    Collateral Matters.............................................114

     16.13    Restrictions on Actions by the Lenders; Sharing of Payments....114

     16.14    Agency for Perfection..........................................115

     16.15    Payments by Agent to the Lenders...............................115

     16.16    Concerning the Collateral and Related Loan Documents...........115

     16.17    Field Audits and Examination Reports; Confidentiality;
              Disclaimers by the Lenders; Other Reports and Information......115

     16.18    Several Obligations; No Liability..............................117

17.  GENERAL PROVISIONS......................................................117

     17.1     Effectiveness..................................................117

     17.2     Section Headings...............................................117

     17.3     Interpretation.................................................117

     17.4     Severability of Provisions.....................................117

                                       -v-
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                                TABLE OF CONTENTS
                                   (continued)

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     17.5     Amendments in Writing..........................................117

     17.6     Counterparts; Telefacsimile Execution..........................117

     17.7     Revival and Reinstatement of Obligations.......................118

     17.8     Integration....................................................118

     17.9     Combined Administration........................................118

                                      -vi-
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                             EXHIBITS AND SCHEDULES

Exhibit A-1            Form of Assignment and Acceptance
Exhibit B-1            Form of Borrowing Base Certificate
Exhibit C-1            Form of Compliance Certificate
Exhibit L-1            Form of LIBOR Notice

Schedule A-1           Agent's Account
Schedule C-1           Commitments
Schedule D-1           Designated Account
Schedule P-1           Permitted Liens
Schedule P-2           Existing Investments
Schedule R-1           Real Property Collateral
Schedule 2.12          Existing Letters of Credit
Schedule 5.5           Locations of Equipment
Schedule 5.7           Jurisdiction; Chief Executive Office; FEIN; State
                       Organizational No.; Commercial Tort Claims
Schedule 5.8(b)        Capitalization of Borrowers
Schedule 5.8(c)        Capitalization of Borrowers' Subsidiaries
Schedule 5.8(e)        Restricted Subsidiaries; Unrestricted Subsidiaries
Schedule 5.10          Litigation
Schedule 5.14          Environmental Matters
Schedule 5.16          Intellectual Property
Schedule 5.18          Demand Deposit Accounts
Schedule 5.20          Existing Indebtedness
Schedule 5.21          Licenses and Permits
Schedule 7.14          Affiliate Transactions

<PAGE>

                           LOAN AND SECURITY AGREEMENT

      THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
June 16,  2004, by  and among,  on the one hand,  the lenders  identified on the
signature pages hereof (such lenders,  together with their respective successors
and  permitted  assigns,  are referred to  hereinafter  each  individually  as a
"Lender" and  collectively  as the  "Lenders"),  WELLS FARGO  FOOTHILL,  INC., a
California  corporation,  as the arranger  and agent for the Lenders  ("Agent"),
and, on the other hand,  DIAMOND JO, LLC  (formerly  known as  Peninsula  Gaming
Company,  LLC),  a  Delaware  limited  liability  company  ("DJL"),  and THE OLD
EVANGELINE DOWNS, L.L.C., a Louisiana limited liability company ("OED", together
with DJL,  referred  to  hereinafter  each  individually  as a  "Borrower",  and
individually and collectively, jointly and severally, as "Borrowers").

            The parties agree as follows:

1.    DEFINITIONS AND CONSTRUCTION.

      1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:

            "Account"  means an "account" (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.

            "Account Debtor" means any Person who is or who may become obligated
under,  with  respect  to, or on account  of, an Account,  chattel  paper,  or a
General Intangible.

            "Acquired  Debt"  means  Indebtedness  of a  Person  or  any  of its
Subsidiaries  existing  at the time such  Person is merged  with or into  either
Borrower  or  a  Restricted  Subsidiary,  becomes  a  Restricted  Subsidiary  or
Indebtedness  assumed in  connection  with the  acquisition  of assets from such
Person other than Indebtedness  incurred in connection with, or in contemplation
of, such Person merging with or into either Borrower or a Restricted  Subsidiary
or becoming a Restricted Subsidiary or such acquisition of assets.

            "Additional   Documents"  has  the  meaning  set  forth  in  Section
4.4(b)(i).

            "Advances" has the meaning set forth in Section 2.1(a).

            "Affiliate"  means, as applied to any Person,  any other Person who,
directly or indirectly,  controls,  is controlled by, or is under common control
with,  such  Person.  For  purposes  of this  definition,  "control"  means  the
possession,  directly or  indirectly,  of the power to direct the management and
policies  of a Person,  whether  through  the  ownership  of Capital  Stock,  by
contract, or otherwise.

            "Affiliate Transaction" has the meaning set forth in Section 7.14.

<PAGE>

            "Agent" means Wells Fargo Foothill,  solely in its capacity as agent
for the Lenders hereunder, and any successor thereto.

            "Agent's Account" means the account identified on Schedule A-1.

            "Agent Advances" has the meaning set forth in Section 2.3(e)(i).

            "Agent's  Liens" means the Liens  granted by Borrowers or Guarantors
to Agent for the benefit of the Lender  Group under this  Agreement or the other
Loan Documents.

            "Agent-Related  Persons" means Agent,  together with its Affiliates,
officers, directors, employees and agents.

            "Agreement" has the meaning set forth in the preamble hereto.

            "Annualized  Quarterly  Combined  EBITDA"  means,  as of any date of
determination  (which date of  determination  shall be as of the last day of any
month and need not be the end of a fiscal  quarter),  the product of  Borrowers'
Combined EBITDA for the period of 3 months then ending times 4.

            "Applicable Capital Gain Tax Rate" means a rate equal to the sum of:

            (a) the highest  marginal  Federal income tax rate applicable to net
capital gain of an individual who is a citizen of the United States, plus

            (b)  (i)  the  greatest  of (x) an  amount  equal  to the sum of the
highest marginal state and local income tax rates applicable to net capital gain
of an  individual  who is a resident of the State of  California,  (y) an amount
equal to the sum of the  highest  marginal  state  and  local  income  tax rates
applicable to net capital gain of an  individual  who is a resident of the State
of Louisiana,  and (z) an amount equal to the sum of the highest  marginal state
and local income tax rates  applicable to net capital gain of an individual  who
is a resident of the State of Iowa, multiplied by (ii) a factor equal to 1 minus
the highest marginal Federal income tax rate described in clause (a) above.

            "Applicable Income Tax Rate" means a rate equal to the sum of:

            (a) the highest marginal Federal ordinary income tax rate applicable
to an individual who is a citizen of the United States, plus

            (b)  (i)  the  greatest  of (x) an  amount  equal  to the sum of the
highest  marginal  state and local  ordinary  income tax rates  applicable to an
individual who is a resident of the State of California,  (y) an amount equal to
the sum of the  highest  marginal  state and  local  ordinary  income  tax rates
applicable to an individual who is a resident of the State of Louisiana, and (z)
an amount  equal to the sum of the  highest  marginal  state and local  ordinary
income tax rates  applicable to an individual  who is a resident of the State of
Iowa,  multiplied by (ii) a factor equal to 1 minus the highest marginal Federal
income tax rate described in clause (a) above.

            "Applicable Gaming Laws" has the meaning set forth in Section 9.1.

                                       2
<PAGE>

            "Applicable  Margin"  means  as of any  date of  determination,  the
applicable  percentage  indicated below that  corresponds to Combined EBITDA for
the 12-month period ended immediately prior to the date of determination:

--------------------------------------------------------------------------------
 Pricing         Combined        Applicable       Applicable        Applicable
  Level        EBITDA as of      Margin for       Margin for        Margin for
                the end of      Advances that    Advances that      Letter of
                each fiscal     are Base Rate      are LIBOR        Credit Fee
                  quarter           Loans         Rate Loans
--------------------------------------------------------------------------------
 Level I     Less than              1.00%            3.50%            3.00%
             $25,000,000
--------------------------------------------------------------------------------
 Level II    Greater than or        0.75%            3.25%            2.75%
             equal to
             $25,000,000, but
             less than
             $35,000,000
--------------------------------------------------------------------------------
Level III    Greater than or        0.50%            3.00%            2.50%
             equal to
             $35,000,000
--------------------------------------------------------------------------------

The  Applicable  Margin for each  Advance  and the Letter of Credit Fee shall be
determined as of the end of each fiscal quarter by reference to Combined  EBITDA
for the 12-month period then ending;  provided,  however,  that (a) no change in
the Applicable Margin shall be effective until 3 Business Days after the date on
which Agent receives  financial  statements  pursuant to Section  6.3(a),  and a
certificate of the chief financial officer of Parent  demonstrating such amount,
attaching  thereto a schedule in form  reasonably  satisfactory  to Agent of the
computations  used by  Parent  in  determining  such  Combined  EBITDA  for such
preceding 12 month period ending as of the end of the most recently ended fiscal
quarter,  and (b) the  Applicable  Margin shall be the interest  rate margin set
forth for Level I above with  respect to the  applicable  Advances and Letter of
Credit Fee,  respectively,  (i) from the Closing Date through and  including the
second Business Day after Agent receives the information  required by clause (a)
of this proviso for the fiscal quarter ending September 30, 2004, (ii) if Parent
has not  submitted  to Agent the  information  described  in clause  (a) of this
proviso  as and  when  required  under  Section  6.3(a),  for so  long  as  such
information  has not been received by Agent,  and (iii) at the election of Agent
or the Required Lenders,  upon the occurrence and during the continuation of any
Event of Default  (whether or not the Default Rate of interest  shall then be in
effect).

            "Applicable   Prepayment   Premium"   means,   as  of  any  date  of
determination,  an amount  equal to (a) during the period of time from and after
the date of the execution and delivery of this  Agreement up to the date that is
the first anniversary of the Closing Date, $1,400,000,  (b) during the period of
time from and  including the date that is the first  anniversary  of the Closing
Date  up to the  date  that  is the  second  anniversary  of the  Closing  Date,
$1,050,000,  (c) during the period of time from and  including  the date that is
the second  anniversary  of the Closing Date up to the third  anniversary of the
Closing Date, $700,000, and (d) during the period of time from and including the
date that is the third  anniversary of the Closing Date up to the Maturity Date,
$350,000.

                                       3
<PAGE>

            "Asset Sale" means:

            (a) any  direct  or  indirect  sale,  assignment,  transfer,  lease,
conveyance,  or other  disposition  (including,  without  limitation,  by way of
merger or consolidation) (collectively, a "transfer") of any assets of Borrowers
or any Restricted Subsidiary; or

            (b) any direct or indirect  issuance or sale of any Equity Interests
of any Borrower or any Restricted  Subsidiary (other than directors'  qualifying
shares),  in each case to any  Person  (other  than  Borrowers  or a  Restricted
Subsidiary).

            "Assignee" has the meaning set forth in Section 14.1(a).

            "Assignment  and  Acceptance"  means an Assignment and Acceptance in
the form of Exhibit A-1.

            "Authorized  Person"  means any  officer  or other  employee  of any
Borrower.

            "Availability" means, as of any date of determination,  if such date
is a Business Day, and  determined  at the close of business on the  immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that  Borrowers  are  entitled to borrow as  Advances  under  Section 2.1
(after giving effect to all then  outstanding  Obligations and all sublimits and
reserves applicable hereunder).

            "Bankruptcy  Code" means title 11 of the United  States Code,  as in
effect from time to time.

            "Base LIBOR Rate" means the rate per annum,  determined  by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%),  to be the rate at which Dollar  deposits (for delivery on the
first day of the  requested  Interest  Period) are offered to major banks in the
London  interbank  market  2  Business  Days  prior to the  commencement  of the
requested  Interest  Period,  for a term  and  in an  amount  comparable  to the
Interest  Period and the amount of the LIBOR Rate Loan requested  (whether as an
initial LIBOR Rate Loan or as a continuation  of an extant LIBOR Rate Loan or as
a  conversion  of a Base  Rate  Loan to a  LIBOR  Rate  Loan)  by  Borrowers  in
accordance with this Agreement,  which  determination shall be conclusive in the
absence of manifest error.

            "Base Rate" means, the rate of interest announced within Wells Fargo
at its  principal  office  in  San  Francisco  as its  "prime  rate",  with  the
understanding  that the  "prime  rate" is one of Wells  Fargo's  base rates (not
necessarily  the  lowest of such  rates)  and  serves as the  basis  upon  which
effective  rates of interest are  calculated  for those loans  making  reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.

            "Base Rate Loan" means the portion of the  Advances or the Term Loan
that bears interest at a rate determined by reference to the Base Rate.

            "Base Rate Term Loan Margin" means 2.50%.

                                       4
<PAGE>

            "Beneficial  Owner" or "beneficial owner" has the meaning attributed
to it in Rules  13d-3 and  13d-5  under  the  Exchange  Act (as in effect on the
Closing Date) whether or not otherwise applicable.

            "Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any  Subsidiary or ERISA  Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past 6 years.

            "Board of  Directors"  means the board of directors  (or  comparable
managers) of Parent or any  committee  thereof duly  authorized to act on behalf
thereof.

            "Books" means all of Borrowers' and their  respective  Subsidiaries'
now owned or  hereafter  acquired  books  and  records  (including  all of their
Records  indicating,  summarizing,  or evidencing  their assets  (including  the
Collateral) or liabilities, all of Borrowers' and their respective Subsidiaries'
Records relating to their business operations or financial condition, and all of
their goods or General Intangibles related to such information).

            "Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.

            "Borrower  Collateral"  means  all of each  Borrower's  now owned or
hereafter acquired right, title, and interest in and to each of the following:

            (a) all of its Accounts,

            (b) all of its Books,

            (c) all of its commercial tort claims described on Schedule 5.7,

            (d) all of its Deposit Accounts;

            (e) all of its Equipment,

            (f) all of its General Intangibles,

            (g) all of its Inventory,

            (h) all of its Investment Property,

            (i) all of its judgments,

            (j) all of its Negotiable Collateral,

            (k) all of its Real Property Collateral,

            (l) all  money or other  assets of each  such  Borrower  that now or
hereafter come into the possession, custody, or control of Agent, and

            (m) the proceeds and products,  whether  tangible or intangible,  of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all

                                       5
<PAGE>

Accounts, Books, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, Real Property, money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange,  collection,  or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.

      Notwithstanding the foregoing, "Borrower Collateral" shall not include any
of the Excluded Assets.

            "Borrowing" means a borrowing  hereunder  consisting of Advances (or
term  loans,  in the case of the Term Loan) made on the same day by the  Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance, in each case, to a Borrower.

            "Borrowing Base" has the meaning set forth in Section 2.1(a).

            "Borrowing  Base  Certificate"  means a  certificate  in the form of
Exhibit B-1.

            "Business  Day"  means any day that is not a  Saturday,  Sunday,  or
other day on which  national  banks are  authorized  or required to close in New
York, New York or Los Angeles, California,  except that, if a determination of a
Business Day shall  relate to a LIBOR Rate Loan,  the term  "Business  Day" also
shall exclude any day on which banks are closed for dealings in Dollar  deposits
in the London interbank market.

            "Capital Expenditure Carry Forward Amount" shall mean, to the extent
positive,  for any fiscal year, a carry  forward  amount equal to (a) for fiscal
year 2005,  $7,000,000 less the aggregate  amount of capital  expenditures  made
pursuant to Section  7.20(b)(i) in fiscal year 2004 and (b) for fiscal year 2006
and each fiscal year thereafter, $6,000,000 less the aggregate amount of capital
expenditures  made pursuant to Section  7.20(b)(i) in the immediately  preceding
fiscal year.

            "Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

            "Capitalized Lease Obligation" means that portion of the obligations
under a Capital  Lease that is required to be  capitalized  in  accordance  with
GAAP.

            "Capital  Stock"  means,  (a) with  respect to any Person  that is a
corporation,  any and all  shares,  interests,  participations,  rights or other
equivalents  (however  designated)  of  corporate  stock,  (b) with respect to a
limited  liability  company,  any and all  membership  interests,  and (c)  with
respect to any other Person,  any and all partnership or other equity  interests
of such Person.

            "Cash Equivalents" means (a) securities issued or directly and fully
guaranteed  or  insured  by the  United  States  of  America  or any  agency  or
instrumentality  thereof  (provided that the full faith and credit of the United
States of  America  is  pledged  in  support  thereof),  (b) time  deposits  and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic  commercial bank of recognized  standing having capital and surplus
in excess of $250,000,000  and commercial  paper issued by others rated at least
A-2 or the equivalent  thereof by S&P or at least P-2 or the equivalent  thereof
by Moody's and in each case maturing within

                                       6
<PAGE>

one year after the date of  acquisition,  (c)  investments in money market funds
substantially  all of whose assets comprise  securities of the type described in
clauses  (a) and  (b)  above  and  (d)  repurchase  obligations  for  underlying
securities of the types and with the maturities described above.

            "CFC"  means a  controlled  foreign  corporation  (as  that  term is
defined in the IRC).

            "Change of Control"  means the  occurrence of any of the  following:
(a) during any period of 2 consecutive  calendar  years,  individuals who at the
beginning of such period  constituted the Managers of Parent  (together with any
new Managers  whose election as a Manager or whose  nominations  for election by
Parent's  members or  stockholders,  was approved by a majority of Managers then
still in office who were  either  Managers  at the  beginning  of such period or
whose election or nomination for election was previously so approved)  cease for
any reason to constitute a majority of such  Managers then in office;  provided,
however, that there shall be no Change of Control pursuant to this clause (a) if
during  such  2-year  period any of the  Excluded  Persons  continue to (i) own,
directly or indirectly, a majority of the Voting Stock of Parent or (ii) control
or manage, directly or indirectly,  the day-to-day operations of Parent; (b) any
Person  (other than an  Excluded  Person) is or becomes  the  Beneficial  Owner,
directly or  indirectly,  of more than 50% of the aggregate  voting power of the
Voting  Stock of Parent,  or  conversely,  any Person  that  beneficially  owns,
directly or indirectly,  a majority of the aggregate  voting power of the Voting
Stock of Parent on the Closing Date becomes the  Beneficial  Owner,  directly or
indirectly,  of less than a majority of the voting  power of the Voting Stock of
Parent;  (c) any  Borrower  adopts  a plan of  liquidation;  (d) the  direct  or
indirect sale,  transfer,  conveyance or other disposition (other than by way of
merger or consolidation),  in one or a series of related transactions, of all or
substantially all of the properties or assets of any Borrower and its Restricted
Subsidiaries,  in each  case,  taken  as a whole,  to any  Person  other  than a
Borrower or a Restricted Subsidiary;  or (e) the first day on which Parent fails
to own 100% of the issued and outstanding Capital Stock of Borrowers. As used in
this definition,  "Person" (including any group that is deemed to be a "Person")
has the  meaning  given by Section  13(d) of the  Exchange  Act,  whether or not
applicable.

            "Closing Date" means June ___, 2004.

            "Closing  Date  Business  Plan"  means  the  set of  Projections  of
Borrowers  for the period from the Closing Date to December 31, 2004 (on a month
by month  basis),  in form and substance  (including as to scope and  underlying
assumptions) satisfactory to Agent.

            "Code" means the New York Uniform Commercial Code, as in effect from
time to time.

            "Collateral"  means all assets and  interests in assets and proceeds
thereof now owned or hereafter  acquired by each Borrower,  its  Subsidiaries or
each  Guarantor  in or upon  which  a Lien  is  granted  under  any of the  Loan
Documents.  Notwithstanding the foregoing, "Collateral" shall not include any of
the Excluded Assets.

            "Collateral  Access  Agreement"  means  a  landlord  waiver,  bailee
letter, or  acknowledgement  agreement of any lessor,  warehouseman,  processor,
consignee, or other Person

                                       7
<PAGE>

in  possession  of,  having a Lien upon,  or having  rights or  interests in the
Books, Equipment or Inventory,  in each case, in form and substance satisfactory
to Agent.

            "Collections" means all cash, checks, notes, instruments,  and other
items of payment (including  insurance proceeds and proceeds of cash sales, rent
and tax refunds).

            "Combined  EBITDA"  means,  with respect to Borrowers for any fiscal
period, the sum of Combined Net Income for such period, without duplication;

            plus (a)  consolidated  income  tax  expense  of  Borrowers  and the
Restricted  Subsidiaries paid or accrued in accordance with GAAP for such period
and the amount of Permitted Tax Distributions  subtracted from Net Income in the
determination of the Combined Net Income of such Person for such period;

            plus (b) Combined Interest Expense, to the extent that such Combined
Interest Expense was deducted in computing such Combined Net Income;

            plus (c)  Combined  Non-Cash  Charges,  to the  extent  deducted  in
computing such Combined Net Income;

            plus (d)  reasonable  costs  and  expenses  (other  than  costs  and
expenses incurred in connection with the acquisition, construction or renovation
of any Gaming Property)  directly relating to the opening of any Gaming Property
that was, or is under,  construction,  to the extent  deducted in computing such
Combined Net Income;

            minus (e) (i) non-cash gains increasing such Combined Net Income and
(ii) the amount of all cash payments made by Borrowers or any of the  Restricted
Subsidiaries  during such period to the extent such payments  relate to non-cash
charges that were added back in determining  Combined  EBITDA for such period or
any prior period;

provided,  however,  that in determining Combined EBITDA with respect to OED for
any period ending on or about:  (x) March 31, 2004,  Combined  EBITDA of OED for
such period shall be deemed to be equal to the product of (i) Combined EBITDA of
OED for the period from  January 1, 2004 to the last day of such period and (ii)
4; (y) June 30, 2004,  Combined EBITDA of OED for such period shall be deemed to
be equal to the  product  of (i)  Combined  EBITDA  of OED for the  period  from
January 1, 2004 to the last day of such period and (ii) 2; and (z) September 30,
2004,  Combined EBITDA of OED for such period shall be deemed to be equal to the
product of (i) Combined EBITDA of OED for the period from January 1, 2004 to the
last day of such period and (ii) 1.333.

            "Combined Interest Expense" means, with respect to Borrowers for any
period,  the result of (a) the  consolidated  interest  expense of Borrowers and
their  Restricted   Subsidiaries  for  such  period,  whether  paid  or  accrued
(including  amortization of original issue discount,  noncash interest  payment,
and the interest component of Capitalized Lease Obligations), to the extent such
expense was deducted in computing Combined Net Income for such period, minus (b)
amortization  expense,  write-off  of  deferred  financing  costs and any charge
related to any premium or penalty paid, in each case, accrued during such period
in  connection  with  redeeming or retiring any  Indebtedness  before its stated
maturity,  as determined  in  accordance  with GAAP, to the extent such expense,
cost, or charge was included in the calculation made pursuant to

                                       8
<PAGE>

clause (a) above;  provided that any premiums,  fees and expenses (including the
amortization  thereof)  payable in connection  with the initial  offering of the
Notes and the  application of the net proceeds  therefrom and the refinancing of
the obligations  under that certain Loan and Security  Agreement between DJL and
Wells Fargo  Foothill,  dated as of February  23,  2001,  that  certain Loan and
Security Agreement among OED, OED Capital and Wells Fargo Foothill,  dated as of
June  24,  2003,  in each  case as  amended  through  the  Closing  Date and the
Equipment Loan Agreement,  and all documents  executed in connection with any of
the foregoing, shall be excluded from this definition.

            "Combined  Net Income"  means,  with  respect to  Borrowers  for any
period,  the  aggregate  of the Net  Income of  Borrowers  and their  Restricted
Subsidiaries for such period,  determined on a consolidated  basis in accordance
with GAAP excluding (to the extent included in calculating  such net income) (a)
any gain or loss,  together  with any related taxes paid or accrued on such gain
or loss,  realized in connection with any Asset Sales and dispositions  pursuant
to sale-leaseback  transactions and (b) any extraordinary gain or loss, together
with any taxes paid or accrued on such gain or loss; provided,  that (a) the Net
Income of any other Person  (other than a Restricted  Subsidiary  of a Borrower)
shall be included only to the extent of the amount of dividends or distributions
paid to a Borrower or a Wholly Owned  Subsidiary of a Borrower,  and (b) the Net
Income of any  Restricted  Subsidiary  shall not be  included to the extent that
declarations of dividends or similar distributions by such Restricted Subsidiary
are not at the time permitted, directly or indirectly, by operation of the terms
of its organizational documents or any agreement,  instrument, judgment, decree,
order,  statute,  rule or governmental  regulation applicable to such Restricted
Subsidiary or its owners.

            "Combined Non-Cash Charges" means, with respect to Borrowers for any
period,  (a) the aggregate  depreciation and amortization  expense for Borrowers
and their Restricted  Subsidiaries for such period  determined on a consolidated
basis in accordance  with GAAP and (b) all other  non-cash  charges of Borrowers
and their Restricted Subsidiaries for such period, in each case, determined on a
consolidated  basis in  accordance  with GAAP,  including,  without  limitation,
non-cash  charges  related to (i) the  Management  Agreements  or the pricing or
repricing or  issuances of Equity  Interests of Borrowers or PGP to employees of
Borrowers  (whether  accruing at or subsequent to the time of such  repricing or
issuance),  (ii)  impairment of goodwill,  intangibles  or fixed  assets,  (iii)
purchase accounting adjustments, and (iv) restructuring charges, non-capitalized
transaction  costs and other non-cash charges incurred in connection with actual
or  proposed  financings,   acquisitions  or  divestitures  (including,  without
limitation, the initial issuance of the Notes) of Borrowers and their Restricted
Subsidiaries for such period; but, in each case,  excluding (x) any such charges
constituting  an  extraordinary  item or  loss,  and (y) any such  charge  which
requires an accrual of or a reserve for cash charges for any future period.

            "Commercial  Tort  Claim/Judgment  Assignment"  has the  meaning set
forth in Section 4.4(e).

            "Commitment"  means,  with  respect  to each  Lender,  its  Revolver
Commitment,  its Term Loan Commitment,  or its Total Commitment,  as the context
requires,  and, with respect to all Lenders,  their Revolver Commitments,  their
Term Loan Commitments,  or their Total Commitments,  as the context requires, in
each case as such Dollar  amounts are set forth beside such  Lender's name under
the applicable heading on Schedule C-1 or on the signature page of

                                       9
<PAGE>

the  Assignment  and  Acceptance  pursuant to which such Lender  became a Lender
hereunder in accordance with the provisions of Section 14.1.

            "Compliance  Certificate"  means a certificate  substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

            "Contractor" means W.G. Yates & Sons Construction Company.

            "Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities  intermediary with respect to a Securities Account
or the applicable bank with respect to a Deposit Account.

            "Daily Balance"  means,  with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.

            "Default"  means an event,  condition,  or  default  that,  with the
giving of notice, the passage of time, or both, would be an Event of Default.

            "Defaulting  Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.

            "Defaulting  Lender  Rate"  means  (a) the Base Rate for the first 3
days from and after the date the relevant  payment is due,  and (b)  thereafter,
the interest rate then applicable to Advances (inclusive of the Base Rate Margin
applicable thereto).

            "Deposit Account" means any deposit account (as that term is defined
in the Code).

            "Designated  Account"  means,  with respect to each  Borrower,  that
certain Deposit Account of such Borrower identified on Schedule D-1.

            "Designated Account Bank" means American Trust and Savings Bank, 895
Main Street, Dubuque, Iowa 52001.

            "Diamond Jo" means DJL's riverboat  casino which is documented under
the laws and flag of the United States with Official  Number  973800,  and which
has as its hailing port Dubuque, Iowa.

            "Diamond Jo II" means DJL's  riverboat  casino  which is  documented
under the laws and flag of the United States with Official  Number  973801,  and
which has as its hailing port Dubuque, Iowa.

                                       10
<PAGE>

            "Diamond Jo Ship Mortgage"  means that Preferred Ship Mortgage dated
as of the date  hereof and  executed by DJL in favor of Agent,  encumbering  the
Diamond Jo Vessels and their related  personal  property,  in form and substance
satisfactory to Agent.

            "Diamond Jo Vessels" means those certain riverboat casinos owned and
operated  by DJL as of the  Closing  Date,  which  are known as  Diamond  Jo and
Diamond Jo II.

            "Disbursement  Letter" means an  instructional  letter  executed and
delivered by Borrowers to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.

            "Disqualified  Capital  Stock"  means any Equity  interest  that (a)
either by its terms (or the terms of any security  into which it is  convertible
or for which it is  exchangeable) is or upon the happening of any event would be
required  to be  redeemed  or  repurchased  prior  to the  Maturity  Date  or is
redeemable at the option of the holder thereof at any time prior to the Maturity
Date, or (b) is convertible or  exchangeable at the option of the issuer thereof
or any other Person for debt  securities  that are pari passu or  subordinate in
respect of payment to the Obligations. Notwithstanding the foregoing, any Equity
Interests that would constitute  Disqualified  Capital Stock solely because such
Equity Interests mature or become  mandatorily  redeemable,  or give the holders
thereof the right to require Borrowers to repurchase such Equity  Interests,  in
each case, upon the occurrence of a Change of Control or an Asset Sale shall not
constitute  Disqualified  Capital  Stock if the terms of such  Equity  Interests
provide  that the  applicable  Borrower  may not  repurchase  or redeem any such
Equity Interests pursuant to the provisions of this Agreement.

            "DJL" has the meaning set forth in the preamble to this Agreement.

            "Dollars" or "$" means United States dollars.

            "Eligible  Transferee"  means (a) a commercial  bank organized under
the laws of the United States, or any state thereof,  and having total assets in
excess of  $250,000,000,  (b) a commercial  bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development  or a political  subdivision of any such country and which has total
assets in excess of  $250,000,000,  provided that such bank is acting  through a
branch or agency located in the United States, (c) a finance company,  insurance
company,  or other  financial  institution  or fund that is  engaged  in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000,  (d) any Affiliate  (other than  individuals) of a Lender that was
party  hereto as of the  Closing  Date,  (e) so long as no Event of Default  has
occurred and is  continuing,  any other Person  approved by Agent and Borrowers,
and (f)  during  the  continuation  of an Event of  Default,  any  other  Person
approved by Agent.

            "Environmental  Actions"  means any  complaint,  summons,  citation,
notice,  directive,  order,  claim,  litigation,   investigation,   judicial  or
administrative  proceeding,  judgment,  letter, or other  communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of  Hazardous  Materials  from (a) any assets,  properties,  or
businesses  of any  Borrower,  any  Subsidiary  of a  Borrower  or any of  their
predecessors in interest,  (b) from adjoining  properties or businesses,  or (c)
from or onto any

                                       11
<PAGE>

facilities which received  Hazardous  Materials  generated by any Borrower,  any
Subsidiary of a Borrower or any of their predecessors in interest.

            "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule,  regulation,  ordinance,  code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter  in effect and in each case as amended,  or any judicial or
administrative  interpretation thereof, including any judicial or administrative
order, consent decree or judgment,  to the extent binding on any Borrower or any
Subsidiary  of a Borrower,  relating  to the  environment,  employee  health and
safety,  or Hazardous  Materials,  including  CERCLA;  RCRA;  the Federal  Water
Pollution  Control Act, 33 USC ss. 1251 et seq.;  the Toxic  Substances  Control
Act, 15 USC, ss. 2601 et seq.;  the Clean Air Act, 42 USC ss. 7401 et seq.;  the
Safe  Drinking  Water Act, 42 USC. ss. 3803 et seq.;  the Oil  Pollution  Act of
1990,  33 USC.  ss.  2701 et seq.;  the  Emergency  Planning  and the  Community
Right-to-Know  Act of 1986, 42 USC. ss. 11001 et seq.;  the  Hazardous  Material
Transportation  Act, 49 USC ss. 1801 et seq.;  and the  Occupational  Safety and
Health  Act, 29 USC.  ss.651 et seq.  (to the extent it  regulates  occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.

            "Environmental   Liabilities  and  Costs"  means  all   liabilities,
monetary  obligations,  Remedial  Actions,  losses,  damages,  punitive damages,
consequential  damages,  treble  damages,  costs  and  expenses  (including  all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and  costs  of  investigation  and  feasibility  studies),   fines,   penalties,
sanctions,  and  interest  incurred  as a result  of any  claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.

            "Environmental  Lien"  means  any Lien in favor of any  Governmental
Authority for Environmental Liabilities and Costs.

            "Equipment"  means  equipment (as that term is defined in the Code),
machinery,  machine tools, motors, furniture,  furnishings,  fixtures,  vehicles
(including motor vehicles),  computer  hardware,  tools,  parts and goods (other
than consumer goods, farm products, or Inventory),  wherever located,  including
all   attachments,   accessories,   accessions,   replacements,   substitutions,
additions, and improvements to any of the foregoing.

            "Equipment  Loan  Agreement"  means that  certain  Loan and Security
Agreement,  dated as of September 22, 2003,  by and among OED, OED Capital,  the
lenders  party  thereto,   and  Wells  Fargo  Foothill,   as  the  arranger  and
administrative agent, and the other parties party thereto from time to time.

            "Equity Holder" means (a) with respect to a corporation, each holder
of Capital Stock of such  corporation,  (b) with respect to a limited  liability
company or similar  entity,  each member of such  limited  liability  company or
similar  entity,  (c)  with  respect  to a  partnership,  each  partner  of such
partnership,  (d) with respect to any entity  described in clause (a)(iv) of the
definition  of "Flow  Through  Entity",  the owner of such entity,  and (e) with
respect to a trust described in clause (a)(v) of the definition of "Flow Through
Entity",  the persons  treated for Federal  income tax purposes as the owners of
the trust property.

                                       12
<PAGE>

            "Equity Interests" means Capital Stock or warrants, options or other
rights to  acquire  Capital  Stock  (but  excluding  any debt  security  that is
convertible into, or exchangeable for, Capital Stock).

            "ERISA" means the Employee  Retirement  Income Security Act of 1974,
as amended, and any successor statute thereto.

            "ERISA  Affiliate"  means  (a) any  Person  subject  to ERISA  whose
employees  are treated as employed by the same  employer as the  employees  of a
Borrower or a Subsidiary of a Borrower under IRC Section  414(b),  (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower or a Subsidiary of a Borrower  under IRC
Section 414(c),  (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization  subject to ERISA that is a member of an affiliated
service  group of which a Borrower  or a  Subsidiary  of a Borrower  is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section  412 of the IRC,  any  Person  subject  to  ERISA  that is a party to an
arrangement  with a Borrower or a Subsidiary  of a Borrower and whose  employees
are  aggregated  with the  employees of a Borrower or a Subsidiary of a Borrower
under IRC Section 414(o).

            "Event of Default" has the meaning set forth in Section 8.

            "Event of Loss" means,  with  respect to any property or asset,  any
(a)  loss,  destruction  or  damage  of  such  property  or  asset  or  (b)  any
condemnation,  seizure or taking,  by exercise of the power of eminent domain or
otherwise,  of such property or asset, or confiscation or requisition of the use
of such property or asset.

            "Excess   Availability"  means  the  amount,  as  of  the  date  any
determination  thereof is to be made, equal to Availability  minus the aggregate
amount,  if any, of all trade payables of Borrowers and their  Subsidiaries aged
in  excess  of  their  historical  levels  with  respect  thereto  and all  book
overdrafts of Borrowers  and their  Subsidiaries  in excess of their  historical
practices  with  respect  thereto,  in each case as  determined  by Agent in its
Permitted Discretion.

            "Excess Cash Distribution  Amount for Taxes" means the excess of (a)
the aggregate actual cash distributions received by any Borrower or a Restricted
Subsidiary from all Flow Through  Entities that are not Restricted  Subsidiaries
during  the  period  commencing  with the  Closing  Date and  continuing  to and
including the date on which a proposed  Permitted Tax Distribution is to be made
under clause 3 of the second  paragraph  of Section 7.11 over (b) the  aggregate
amount of such cash distributions  described in the immediately preceding clause
(a) that have  already  been  taken  into  account  for  purposes  of making (i)
Permitted Tax  Distributions  previously  made and which were  attributable to a
Flow  Through  Entity  that was not a  Restricted  Subsidiary  at the time  such
Permitted Tax Distribution was made plus (ii) Restricted  Payments  permitted by
clause (c)(i) of Section 7.11 (treating such cash  distributions  in this clause
(b)(ii) as used to make a  Restricted  Payment  during  such  period only to the
extent that in such period, the total amount of Restricted  Payments during such
period  exceeded  the  excess of (1) the total  amount  of  Restricted  Payments
permitted  to be  made  in  such  period  over  (2)  the  amount  of  such  cash
distributions  described  in the  immediately  preceding  clause  (a) that  were
actually received by Borrowers or a Restricted Subsidiary during such period and
that were not previously used to make a Permitted Tax Distribution.

                                       13
<PAGE>

            "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as in
effect from time to time.

            "Excluded  Assets"  means (a) the  lease  for the off track  betting
parlor operated by Parent in New Iberia,  Louisiana;  (b) cash,  other than cash
deposited in Deposit Accounts; (c) assets securing Purchase Money Obligations or
Capitalized Lease  Obligations  permitted to be incurred under this Agreement to
the extent a second Lien would not be permitted  under the documents  evidencing
such obligations;  and (d) any agreements,  permits,  licenses (including Gaming
Licenses),  or the like  (including  any  parcels  of the  Warner  Land that are
subject to the mortgage granted by OED to the seller of such land) solely in the
event and to the extent that: (i) such  agreements,  permits,  licenses,  or the
like  (including any parcels of the Warner Land that are subject to the mortgage
granted by OED to the seller of such land)  cannot be  subjected to a consensual
security interest in favor of Agent without the consent of the licensor or other
party to such agreement, permit, license, or the like; (ii) any such restriction
is effective and enforceable under applicable law; and (iii) such consent is not
obtainable  by any  Borrower;  provided,  that each  Borrower  agrees to use all
commercially reasonable efforts (which shall not require the payment of cash to,
or the  reimbursement of fees and expenses of the consenting party or the making
of any material concessions under any such agreement, permit, license (including
a Gaming License) or the like (including any parcels of the Warner Land that are
subject to the mortgage granted by OED to the seller of such land) to obtain all
requisite  consents  to enable such  Borrower to provide a security  interest in
such  agreement,  permit,  license  (including  Gaming  Licenses)  or the  like;
provided,  further,  however,  that (i) Excluded  Assets shall not include (and,
accordingly,  the  Collateral  shall include) any and all proceeds of any of the
assets  described  in clause  (d) above and any and all  proceeds  of any of the
assets  described in clauses (b) and (c) above or of any other Collateral to the
extent such proceeds do not constitute  Excluded Assets, and (ii) any agreement,
permit,  license,  or the like  qualifying as an Excluded Asset under clause (d)
above no longer shall constitute an Excluded Asset (and instead shall constitute
Collateral)  immediately from and after such time as the licensor or other party
to such  agreement,  permit,  license,  or the like  consents  to the grant of a
security interest in favor of Agent in such agreement,  permit,  license, or the
like or the prohibition against granting a security interest therein in favor of
Agent shall cease to be effective.

            "Excluded Person" means (a) Parent, (b) PGP; (c) PGP Investors;  (d)
M. Brent  Stevens,  Michael S. Luzich and any  Affiliate or Manager of PGP, DJL,
PGP  Investors,  M.  Brent  Stevens  or Michael  S.  Luzich  (collectively,  the
"Existing Holders"), (e) any trust, corporation, partnership or other entity (i)
controlled by the Existing  Holders and members of the  immediate  family of the
Existing  Holders or (ii) 80% of the  beneficiaries,  stockholders,  partners or
owners of which  consist  solely of the  Existing  Holders  and  members  of the
immediate  family  of the  Existing  Holders  or (f) any  partnership,  the sole
general  partners of which consist solely of the Existing Holders and members of
the immediate family of the Existing Holders.

            "Fee Letter"  means that  certain fee letter,  dated as of even date
herewith,  between  Borrowers and Agent,  in form and substance  satisfactory to
Agent.

            "FEIN" means Federal Employer Identification Number.

                                       14
<PAGE>

            "FF&E" means  furniture,  fixtures and equipment  (including  Gaming
Equipment) acquired by Borrowers and the Restricted Subsidiaries in the ordinary
course of  business  for use in the  construction  and  business  operations  of
Borrowers and the Restricted Subsidiaries.

            "FF&E Collateral" means all of OED's now owned or hereafter acquired
right,  title and  interest in and to (a) any and all Gaming  Equipment or other
Equipment, the purchase of which was financed or refinanced, in full or in part,
with  proceeds of the Term Loan or  proceeds  of loans made under the  Equipment
Loan  Agreement,  and  (b)  the  proceeds  and  products,  whether  tangible  or
intangible, of any of the foregoing, including proceeds of insurance coverage of
any and all of the foregoing.

            "FF&E Letter of Credit"  means that certain  letter of credit issued
in favor of Agent by Wells  Fargo in the face  amount of  $3,200,000.00,  and in
form and substance acceptable to the Lender Group.

            "FF&E  Obligations" means the principal and interest owing by OED to
the Lender Group in connection with the Term Loan.

            "Fixed  Construction  Costs" means,  in  connection  with the Racino
Project to the extent actually  incurred by or on behalf of OED, the sum of all:
(a) costs incurred in connection  with the purchase of real property  (including
the land on which the Racino Project is to be located,  all adjacent  tracts and
any other real property  purchased by Borrowers  related to the Racino  Project)
and off-site improvements such as easements,  access roads, drainage systems, as
evidenced by invoices,  sales  contracts and the like with respect to same, plus
(b) construction costs incurred to date in connection with the completion of the
Racino  Project as detailed in the Fixed Price Contract as evidenced by invoices
with respect to same, plus (c) costs incurred in connection  with  architectural
plans,  drawings and specifications with respect to any of the foregoing clauses
(a) and (b), plus (d) costs of acquiring furniture,  fixtures and Equipment,  to
the  extent  such  furniture,   fixtures  and  Equipment  constitute  Collateral
hereunder, in connection with the construction of the Racino Project.

            "Fixed Price  Contract"  means that certain  Agreement,  dated as of
February  25,  2003,   between  OED  and  Contractor,   as  amended,   restated,
supplemented  or otherwise  modified  from time to time to the extent  permitted
hereunder.

            "Flow Through  Entity"  means an entity that (a) for federal  income
tax purposes  constitutes (i) an "S corporation"  (as defined in Section 1361(a)
of the IRC),  (ii) a "qualified  subchapter S subsidiary" (as defined in Section
1361(b)(3)(B) of the IRC), (iii) a "partnership"  (within the meaning of Section
7701(a)(2) of the IRC) other than a "publicly traded partnership" (as defined in
Section  7704 of the IRC),  (iv) a business  entity  that is  disregarded  as an
entity separate from its owners under the IRC, the Treasury regulations,  or any
published administrative guidance of the Internal Revenue Service or (v) a trust
to the extent its income is includible  in the taxable  income of the grantor or
another  person under  Sections 671 through 679 of the IRC (each of the entities
described in the preceding  clauses (i), (ii),  (iii),  (iv) and (v), a "Federal
Flow Through Entity"),  and (b) for state and local  jurisdictions is subject to
treatment  on  a  basis  under   applicable   state  or  local  income  tax  law
substantially similar to a Federal Flow Through Entity.

                                       15
<PAGE>

            "Four Quarter Reference Period" has the meaning set forth in Section
7.1(l).

            "Funding Date" means the date on which a Borrowing occurs.

            "Funding Losses" has the meaning set forth in Section 2.16(b)(ii).

            "GAAP" means generally accepted  accounting  principles as in effect
from time to time in the United States, consistently applied.

            "Gaming  Authority"  means any  agency,  authority,  board,  bureau,
commission,  department,  office or  instrumentality of any nature whatsoever of
the United States of America or foreign  government  (including  Native American
governments),  any  state,  province  or city  or  other  political  subdivision
thereof,  whether now or hereafter existing, or any officer or official thereof,
including  the  Louisiana   Regulatory   Authorities  and  the  Iowa  Regulatory
Authorities,  and any other  agency with  authority  to  regulate  any gaming or
racing  operation (or proposed  gaming or racing  operation)  owned,  managed or
operated by any Borrower or any of its Subsidiaries.

            "Gaming  Equipment"  means all Equipment  composed of slot machines,
video poker  machines,  and all other  gaming  equipment  and  related  signage,
accessories and peripheral equipment.

            "Gaming   License"   means   any   material   license,    franchise,
registration,  qualification,  findings  of  suitability  or other  approval  or
authorization  required to own,  lease,  operate or otherwise  conduct or manage
riverboat, dockside or land-based gaming activities, including racing facilities
and activities, in any state or jurisdiction in which any Borrower or any of its
Subsidiaries conduct business or propose to conduct business (including, without
limitation,  all such licenses granted by the Louisiana  Regulatory  Authorities
and granted by the Iowa  Regulatory  Authorities  under  Chapter 99F of the Iowa
Code), and all applicable liquor licenses.

            "Gaming  Property" or "Gaming  Properties"  means one or more of the
foregoing:  (a) the Diamond Jo Vessels; (b) the Racino Project, in each case, so
long as it is owned by Borrowers or a Restricted  Subsidiary;  and (c) any other
gaming  facility or gaming  operation  owned and  controlled  or to be owned and
controlled  after the Closing Date by Borrowers or a Restricted  Subsidiary  and
that contains,  or that based upon a plan approved by the applicable  Borrower's
Managers will contain upon the  completion of the  construction  or  development
thereof,  an  aggregate of at least 500 slot  machines or other gaming  devices,
provided,  in each case,  that the  property  and assets  (other  than  Excluded
Assets) of such Gaming Property constitute Collateral.

            "Gaming Property Financing" means a financing,  in whole or in part,
of (a) the  acquisition  of any Gaming  Property,  (b) the  construction  of any
Gaming  Property (but only to the extent that the proceeds of such  Indebtedness
are used to acquire land, furniture, fixtures and equipment, prepare the site or
construct improvements thereon) or (c) an investment in any Gaming Property.

            "Gaming Vessel" means a riverboat  casino (a) which is substantially
similar in size and space to the Diamond Jo Vessels,  (b) with at least the same
overall qualities and

                                       16
<PAGE>

amenities as the Diamond Jo Vessels, and (c) that is developed,  constructed and
equipped to be in compliance with all federal,  state and local laws, including,
without limitation,  the cruising  requirements of Chapter 99F of the Iowa Code.
In the event the laws of the State of Iowa change to permit the  development and
operation of additional  land-based  casinos,  the term "Gaming Vessel" shall be
deemed to include a land-based  casino meeting the  requirements of clauses (a),
(b) and (c) herein.

            "General  Intangibles"  means general  intangibles  (as that term is
defined in the Code), including payment intangibles,  contract rights, rights to
payment, rights to gaming permits, rights arising under common law, statutes, or
regulations,  choses or things in action, goodwill,  patents, trade names, trade
secrets, trademarks,  servicemarks,  copyrights,  blueprints, drawings, purchase
orders,  customer  lists,  monies due or recoverable  from pension funds,  route
lists,  rights to  payment  and other  rights  under any  royalty  or  licensing
agreements,  infringement claims,  computer programs,  information  contained on
computer  disks or tapes,  software  (including  software  imbedded  in  goods),
literature,  reports, catalogs,  insurance premium rebates, tax refunds, and tax
refund claims),  and any and all supporting  obligations in respect thereof, and
any other personal  property other than goods,  Accounts,  Investment  Property,
Deposit Accounts and Negotiable Collateral.

            "Governing  Documents"  means,  with  respect  to  any  Person,  the
certificate  or  articles of  incorporation,  by-laws,  or other  organizational
documents of such Person.

            "Governmental  Authority" means any federal,  state, local, or other
governmental or administrative body,  instrumentality,  department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.

            "Guarantor Security Agreement" means one or more security agreements
executed and delivered by each Guarantor in favor of Agent, in each case in form
and substance satisfactory to Agent.

            "Guarantors" means Parent, OED Capital, the Restricted  Subsidiaries
and all other Persons executing a Guaranty of the Obligations in favor of Agent.

            "Guaranty"  means one or more  guaranties  executed and delivered by
each Guarantor in favor of Agent,  for the benefit of the Lender Group,  in form
and  substance  satisfactory  to  Agent,  including,   without  limitation,  the
Subsidiary Guaranty.

            "Hazardous  Materials"  means (a)  substances  that are  defined  or
listed  in,  or  otherwise  classified  pursuant  to,  any  applicable  laws  or
regulations  as  "hazardous   substances,"   "hazardous  materials,"  "hazardous
wastes," "toxic substances," or any other formulation  intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity,   reactivity,   carcinogenicity,   reproductive  toxicity,  or  "EP
toxicity",  (b) oil, petroleum,  or petroleum derived  substances,  natural gas,
natural gas liquids,  synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any  radioactive  materials,  and (d)  asbestos  in any  form  or  electrical
equipment that

                                       17
<PAGE>

contains  any oil or  dielectric  fluid  containing  levels  of  polychlorinated
biphenyls in excess of 50 parts per million.

            "Hedging  Obligations"  means,  with  respect  to  any  Person,  the
obligations  of such Person under (a) interest  rate swap  agreements,  interest
rate cap agreements,  interest rate exchange agreements and interest rate collar
agreements  and (b) other  agreements or  arrangements  designed to protect such
Person  against  fluctuations  in  interest  rates,  including  any  arrangement
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional  amount in exchange for periodic  payments made by
such Person  calculated  by applying a fixed or floating rate of interest on the
same  notional  amount,  provided  that,  in any such case,  such  agreement  or
arrangement  shall have been entered into for risk  management  purposes and not
for speculative purposes.

            "Holdout Lender" has the meaning set forth in Section 15.2.

            "Ice  Harbor  Facility"  means the  Diamond Jo Vessels (or either of
them), the Real Property relating thereto and the Lease.

            "Ice Harbor Parking Agreement" means that certain Revised Ice Harbor
Parking  Agreement for Ice Harbor Urban Renewal  District dated May 23, 2000, by
and among the City of Dubuque,  Dubuque  Racing  Association,  Ltd., the Dubuque
County Historical Society, DJL and Spirit of Dubuque, Inc. regarding the parking
rights of the parties relating to the real property described therein.

            "Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures,  notes, or other similar instruments
and all  reimbursement  or other  obligations  in  respect of letters of credit,
bankers acceptances,  interest rate swaps, or other financial products,  (c) all
obligations  under Capital Leases,  (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower or its  Subsidiaries,  irrespective
of whether such obligation or liability is assumed,  (e) all obligations for the
deferred  purchase  price of assets  (other  than  trade  debt  incurred  in the
ordinary  course of business and repayable in accordance  with  customary  trade
practices), and (f) any payment obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed,  endorsed,  co-made,  discounted, or
sold with recourse) any obligation of any other Person.

            "Indemnified Liabilities" has the meaning set forth in Section 11.3.

            "Indemnified Person" has the meaning set forth in Section 11.3.

            "Indenture" means that certain Indenture dated as of April 16, 2004,
among Parent, OED Capital, the "Subsidiary  Guarantors" (as defined therein) and
the Indenture Trustee as in effect on such date.

            "Indenture  Trustee"  means (a) U.S.  Bank National  Association,  a
National Association, in its capacity as trustee under the Indenture, or (b) any
successor trustee under the Indenture from time to time.

                                       18
<PAGE>

            "Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the  Bankruptcy  Code or under any other state
or  federal  bankruptcy  or  insolvency  law,  assignments  for the  benefit  of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization,  arrangement, or other similar
relief.

            "Intangible  Assets" means, with respect to any Person, that portion
of the book  value of all of such  Person's  assets  that  would be  treated  as
intangibles under GAAP.

            "Intercompany   Subordination   Agreement"   means  a  subordination
agreement executed and delivered by Borrowers,  the Restricted  Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.

            "Intercreditor Agreement" means that certain Intercreditor Agreement
between Wells Fargo  Foothill and the Indenture  Trustee,  dated as of April 16,
2004, in form and substance satisfactory to Agent.

            "Interest  Coverage  Ratio" means with respect to Borrowers  for any
period,  the ratio of (a) Combined EBITDA, to (b) Combined Interest Expense,  in
each case,  for such period.  In  calculating  Interest  Coverage  Ratio for any
period,  (i) pro forma  effect  shall be given to the  incurrence,  repayment or
retirement  by  any  Borrower  or  any of  its  Restricted  Subsidiaries  of any
Indebtedness  (other  than  Indebtedness  incurred  in the  ordinary  course  of
business for general corporate purposes pursuant to working capital  facilities)
subsequent  to the  commencement  of the period for which the Interest  Coverage
Ratio is being  calculated,  as if the same had occurred at the beginning of the
applicable  period; and (ii) acquisitions that have been made by any Borrower or
any of the Restricted  Subsidiaries,  including all mergers and  consolidations,
subsequent to the commencement of such period shall be calculated on a pro forma
basis,  assuming  that all such  acquisitions,  mergers and  consolidations  had
occurred on the first day of such period.  Without  limiting the foregoing,  the
financial  information  of Borrowers  with respect to any portion of such period
that falls before the Closing Date shall be adjusted to give pro forma effect to
the issuance of the Notes and the  application  of the proceeds  therefrom as if
they had occurred at the beginning of such period.

            "Interest  Period"  means,  with  respect to each LIBOR Rate Loan, a
period  commencing  on the date of the  making of such  LIBOR  Rate Loan (or the
continuation  of a LIBOR  Rate Loan or the  conversion  of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter;  provided,  however,
that (a) if any Interest  Period would end on a day that is not a Business  Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next  succeeding  Business Day, (b) interest shall accrue at the applicable rate
based  upon the LIBOR  Rate from and  including  the first day of each  Interest
Period to, but excluding,  the day on which any Interest Period expires, (c) any
Interest  Period  that  would end on a day that is not a  Business  Day shall be
extended to the next  succeeding  Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding  Business  Day, (d) with respect to an 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),  the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, 3 or 6 months after the date on which the

                                       19
<PAGE>

Interest  Period  began,  as  applicable,  and (e)  Borrowers  may not  elect an
Interest Period which will end after the Maturity Date.

            "Inventory" means inventory (as that term is defined in the Code).

            "Investment"  means,  with respect to any Person,  any investment by
such Person in any other  Person  (including  Affiliates)  in the form of loans,
guarantees,  advances,  or  capital  contributions  (excluding  (a)  commission,
travel,  and similar  advances to officers and  employees of such Person made in
the  ordinary  course of  business,  and (b) bona fide  Accounts  arising in the
ordinary course of business consistent with past practices),  purchases or other
acquisitions  for  consideration of Indebtedness or Capital Stock, and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

            "Investment  Property" means "investment  property" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.

            "Iowa Code" means the Code of Iowa  (1999),  as amended from time to
time.

            "Iowa  Regulatory  Authorities"  means the Iowa  Racing  and  Gaming
Commission, or any successor Gaming Authority in Iowa.

            "IRC" means the  Internal  Revenue  Code of 1986,  as in effect from
time to time.

            "L/C" has the meaning set forth in Section 2.12(a).

            "L/C  Disbursement"  means a  payment  made by Agent  pursuant  to a
Letter of Credit.

            "L/C Undertaking" has the meaning set forth in Section 2.12(a).

            "Lease" means that certain Lease  Agreement dated as of February 28,
1990, between the City of Dubuque, Iowa, a municipal corporation, as lessor, and
Dubuque Racing Association,  Ltd., an Iowa nonprofit corporation,  as lessee, as
amended  from  time to time,  together  with  any  subleases  relating  thereto,
including  (a) that  certain  Sublease  Agreement  dated as of October 18, 1993,
between  Dubuque  Racing  Association,  Ltd.,  as lessor,  and  Greater  Dubuque
Riverboat  Entertainment  Company,  L.C., an Iowa limited liability company,  as
lessee, as amended by that certain First Amendment to Sublease Agreement entered
into effective as of July 15, 1999, by and between  Dubuque Racing  Association,
Ltd., as lessor, and Greater Dubuque Riverboat  Entertainment  Company, L.C., an
Iowa  limited  liability  company,  as  lessee,  and (b) that  certain  Sublease
Assignment  entered into as of July 15,  1999,  by and between  Greater  Dubuque
Riverboat  Entertainment  Company,  L.C., an Iowa limited liability company,  as
assignor, and DJL, as assignee.

            "Lender"  has  the  meaning  set  forth  in  the  preamble  to  this
Agreement.

            "Lender Group" means,  individually  and  collectively,  each of the
Lenders and Agent.

                                       20
<PAGE>

            "Lender Group Expenses"  means all (a) costs or expenses  (including
taxes,  and  insurance  premiums)  required  to  be  paid  by  a  Borrower,  its
Subsidiaries  or a  Guarantor  under  any of the Loan  Documents  that are paid,
advanced or incurred by the Lender Group, (b) the actual fees or charges paid or
incurred  by Agent in  connection  with the  Lender  Group's  transactions  with
Borrowers, their Subsidiaries or the Guarantors,  including, fees or charges for
photocopying, notarization, couriers and messengers,  telecommunication,  public
record searches  (including tax lien,  litigation,  and Uniform  Commercial Code
searches  and  including  searches  with the patent and  trademark  office,  the
copyright  office,  or the  department of motor  vehicles),  filing,  recording,
publication,  appraisal  (including periodic  Collateral  appraisals or business
valuations  to the extent of the fees and  charges  (and up to the amount of any
limitation) contained in this Agreement), real estate surveys, real estate title
policies and  endorsements,  and  environmental  audits,  (c) costs and expenses
incurred  by  Agent  in the  disbursement  of  funds  to or for the  account  of
Borrowers or other members of the Lender Group (by wire transfer or  otherwise),
(d) charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable  costs and  expenses  paid or incurred by the Lender Group to correct
any  default or  enforce  any  provision  of the Loan  Documents,  or in gaining
possession of, maintaining,  handling,  preserving,  storing, shipping, selling,
preparing  for sale,  or  advertising  to sell the  Collateral,  or any  portion
thereof,  irrespective  of  whether a sale is  consummated,  (f) audit  fees and
expenses of Agent  related to audit  examinations  of the Books to the extent of
the fees and charges (and up to the amount of any limitation)  contained in this
Agreement,  (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in  enforcing  or  defending  the Loan
Documents  or in  connection  with  the  transactions  contemplated  by the Loan
Documents or the Lender Group's  relationship with any Borrower or any Guarantor
of  the  Obligations,  (h)  Agent's  reasonable  fees  and  expenses  (including
attorneys  fees)  incurred  in  advising,   structuring,   drafting,  reviewing,
administering, or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in terminating,
enforcing  (including  attorneys fees and expenses incurred in connection with a
"workout,"  a  "restructuring,"  or  an  Insolvency  Proceeding  concerning  any
Borrower or in  exercising  rights or  remedies  under the Loan  Documents),  or
defending the Loan  Documents,  irrespective  of whether suit is brought,  or in
taking any Remedial Action concerning the Collateral.

            "Lender-Related  Person"  means,  with  respect to any Lender,  such
Lender,  together with such Lender's  Affiliates,  and the officers,  directors,
employees, and agents of such Lender or any of such Lender's Affiliates.

            "Letter  of  Credit"  means  an L/C or an  L/C  Undertaking,  as the
context requires.

            "Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn face amount of all outstanding Letters of Credit.

            "LIBOR Deadline" has the meaning set forth in Section 2.16(b)(i).

            "LIBOR Notice" means a written notice in the form of Exhibit L-1.

            "LIBOR Option" has the meaning set forth in Section 2.16(a).

                                       21
<PAGE>

            "LIBOR Rate"  means,  for each  Interest  Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary,  to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve  Percentage.  The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.

            "LIBOR  Rate  Loan"  means each  portion  of an  Advance  that bears
interest at a rate determined by reference to the LIBOR Rate.

            "Lien" means any interest in an asset  securing an  obligation  owed
to, or a claim by, any Person  other than the owner of the asset,  whether  such
interest shall be based on the common law,  statute,  or contract,  whether such
interest  shall be recorded or  perfected,  and whether such  interest  shall be
contingent  upon the  occurrence of some future event or events or the existence
of some future  circumstance  or  circumstances,  including the lien or security
interest  arising  from  a  mortgage,  deed  of  trust,   encumbrance,   pledge,
hypothecation,  assignment, deposit arrangement, security agreement, conditional
sale or trust receipt,  or from a lease,  consignment,  or bailment for security
purposes and also including reservations, exceptions, encroachments,  easements,
rights-of-way,  covenants,  conditions,  restrictions,  leases,  and other title
exceptions and encumbrances affecting Real Property.

            "Loan Account" has the meaning set forth in Section 2.10.

            "Loan Documents" means this Agreement,  the Control Agreements,  the
Diamond Jo Ship Mortgage,  the FF&E Letter of Credit,  the Disbursement  Letter,
the Fee Letter, the Guaranties,  the Intercompany  Subordination  Agreement, the
Intercreditor  Agreement,  the Letters of Credit, the Mortgages,  the Management
Fees Subordination  Agreement,  the Guarantor Security Agreement,  the Officers'
Certificate,  the  Trademark  Security  Agreement,  the  Pledge  Agreement,  the
Subordination of Preferred Fleet Mortgage,  the Subordinations of Mortgage,  any
Commercial  Tort  Claim/Judgment  Assignments,  any note or notes  executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group,  and any other  agreement  entered  into,  now or in the  future,  by any
Borrower or any  Guarantor in favor of Agent or the Lender  Group in  connection
with this Agreement.

            "Louisiana   Regulatory   Authorities"  means,   collectively,   the
Louisiana Gaming Control Board and the Louisiana State Racing Commission, or any
successor Gaming Authority in Louisiana.

            "Management  Agreements"  means,  collectively,   profits  interests
grants  or  similar  equity  interest   arrangements,   employment   agreements,
consulting  agreements,  management  agreements  and other similar  arrangements
entered into from time to time by any  Borrower,  any  Guarantor or any of their
Affiliates and any manager,  officer,  member or employee  thereof or consultant
thereto and such or similar agreements,  as amended,  modified,  supplemented or
restated  from time to time  consistent  with  industry  practice  to the extent
permitted by Section 7.8(b).

            "Management  Fees   Subordination   Agreement"  means  that  certain
Management Fees  Subordination  Agreement,  dated as of the Closing Date,  among
Parent, Borrowers, Agent,

                                       22
<PAGE>

and PGP, and each supplement  thereto executed by any Person entitled to receive
management or similar fees from any Borrower, the form and substance of which is
satisfactory to Agent.

            "Manager" means,  with respect to any Person (a) if such Person is a
limited liability company,  the members of the board of managers,  or members of
such  other  body  performing  similar  functions  for such  Person,  manager or
managers,  as appointed  pursuant to the  operating  agreement of such Person as
then in effect,  or in the event that there are no managers or board of managers
or similar governing body, the sole member or (b) otherwise,  the members of the
board of directors (if such Person is a corporation)  or other governing body of
such Person.

            "Material Adverse Change" means (a) a material adverse change in the
business, prospects,  operations,  results of operations, assets, liabilities or
condition  (financial or otherwise) of Borrowers and their Subsidiaries taken as
a  whole,  (b) a  material  impairment  of a  Borrower's  or a  Subsidiary  of a
Borrower's  ability to perform its obligations under the Loan Documents to which
it is a party or of the Lender  Group's  ability to enforce the  Obligations  or
realize  upon the  Collateral  or the FF&E  Letter of Credit,  or (c) a material
impairment of the  enforceability  or priority of the Agent's Liens with respect
to the  Collateral  as a result of an action or  failure to act on the part of a
Borrower or a Subsidiary of a Borrower.

            "Maturity Date" has the meaning set forth in Section 3.4.

            "Maximum Revolver Amount" means $35,000,000.

            "Monthly  Financial  Report"  has the  meaning  set forth in Section
6.3(a).

            "Moody's"  means  Moody's  Investors   Service,   Inc.,  a  Delaware
corporation, and its successors.

            "Mortgage Policy" has the meaning set forth in Section 3.1(o).

            "Mortgages"  means,  individually  and  collectively,  one  or  more
mortgages,  deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower or a Guarantor in favor of Agent, in form and substance satisfactory to
Agent, that encumber the Real Property  Collateral and the related  improvements
thereto.

            "Negotiable  Collateral"  means letters of credit,  letter of credit
rights,  instruments,  promissory notes,  drafts,  documents,  and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.

            "Net Income" means,  with respect to any Person for any period,  (a)
the net  income  (or  loss)  of such  Person  for  such  period,  determined  in
accordance  with  GAAP,  reduced  by (b) the  maximum  amount of  Permitted  Tax
Distributions attributable to such net income for such period.

            "Net Proceeds" means the aggregate  proceeds received in the form of
cash or Cash  Equivalents in respect of any Asset Sale  (including  insurance or
other  payments in an Event of Loss and payments in respect of deferred  payment
obligations and any cash or Cash

                                       23
<PAGE>

Equivalents received upon the sale or disposition of any non-cash  consideration
received in any Asset Sale, in each case when received), net of:

            (a) the reasonable and customary direct out-of-pocket costs relating
to such  Asset  Sale  (including,  without  limitation,  legal,  accounting  and
investment  banking  fees and  sales  commissions),  other  than any such  costs
payable to an Affiliate of Borrowers,

            (b) taxes required to be paid by Borrowers,  any of their Restricted
Subsidiaries,  or any Equity Holder of Borrowers  (or, in the case of any Equity
Holder of Borrowers that is a Flow Through Entity,  the Upper Tier Equity Holder
of such Flow Through  Entity) in connection  with such Asset Sale in the taxable
year that such sale is  consummated  or in the  immediately  succeeding  taxable
year,  the  computation  of which shall take into  account the  reduction in tax
liability  resulting from any available  operating losses and net operating loss
carryovers,   tax  credits  and  tax  credit  carryforwards,   and  similar  tax
attributes,

            (c) amounts  required to be applied to the  permanent  repayment  of
Indebtedness in connection with such Asset Sale, and

            (d)  appropriate  amounts  provided  as a reserve by the  applicable
Borrower or any  Restricted  Subsidiary,  in accordance  with GAAP,  against any
liabilities  associated  with such Asset  Sale and  retained  by the  applicable
Borrower or such  Restricted  Subsidiary,  as the case may be,  after such Asset
Sale  (including,   without  limitation,   as  applicable,   pension  and  other
post-employment  benefit  liabilities,   liabilities  related  to  environmental
matters and liabilities under any indemnification  obligations arising from such
Asset Sale).

            "Note" and "Notes" shall have the meanings  ascribed  thereto in the
Indenture.

            "Obligations"  means all loans (including the Term Loan),  Advances,
debts, principal,  interest (including any interest that, but for the provisions
of  the  Bankruptcy   Code,  would  have  accrued),   contingent   reimbursement
obligations with respect to outstanding  Letters of Credit,  premiums (including
the Applicable Prepayment Premium),  liabilities  (including all amounts charged
to Borrowers' Loan Account pursuant  hereto),  obligations,  fees (including the
fees  provided for in the Fee Letter),  charges,  costs,  Lender Group  Expenses
(including  any fees or expenses  that, but for the provisions of the Bankruptcy
Code, would have accrued), lease payments, guaranties,  covenants, and duties of
any kind and  description  owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and  irrespective  of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising,  and including all interest not paid when due
and all Lender Group Expenses that Borrowers are required to pay or reimburse by
the Loan  Documents  or by law. Any  reference in this  Agreement or in the Loan
Documents to the Obligations shall include all amendments,  changes, extensions,
modifications,  renewals replacements,  substitutions,  and supplements, thereto
and  thereof,  as  applicable,  both  prior  and  subsequent  to any  Insolvency
Proceeding.

            "OED EBITDA" means, with respect to any fiscal period, OED's and its
Subsidiaries  consolidated net earnings (or loss), minus extraordinary gains and
interest  income,  plus interest  expense,  income taxes,  and  depreciation and
amortization for such period,  as determined in accordance with GAAP;  provided,
however, that in determining EBITDA for any

                                       24
<PAGE>

period ending on or about:  (a) March 31, 2004,  EBITDA for such period shall be
deemed to be equal to the product of (x) EBITDA for the period  from  January 1,
2004 to the last day of such  period  and (y) 4, (b) June 30,  2004,  EBITDA for
such  period  shall be deemed to be equal to the  product  of (x) EBITDA for the
period  from  January 1, 2004 to the last day of such  period and (y) 2, and (c)
September  30,  2004,  EBITDA for such period shall be deemed to be equal to the
product of (x) EBITDA  for the  period  from  January 1, 2004 to the last day of
such period and (y) 1.333.

            "OED  Capital"  means The Old  Evangeline  Downs  Capital  Corp.,  a
Delaware corporation.

            "OED  Indenture"  means that certain  Indenture dated as of February
25, 2003, among OED, OED Capital, the "Guarantors" (as defined therein) and U.S.
Bank National Association, as trustee.

            "OED Note Documents"  means,  collectively,  the OED Indenture,  the
Notes (as  defined  in the OED  Indenture),  and the  Collateral  Documents  (as
defined in the OED  Indenture),  in each case as such  document  may be amended,
restated, supplements or modified from time to time with the consent of Agent.

            "Officers'  Certificate" means the representations and warranties of
officers form submitted by Agent to each Borrower, together with such Borrower's
completed  responses to the inquiries set forth therein,  the form and substance
of such responses to be satisfactory to Agent.

            "Originating Lender" has the meaning set forth in Section 14.1(e).

            "Overadvance" has the meaning set forth in Section 2.5.

            "Parent" means Peninsula  Gaming,  LLC, a Delaware limited liability
company.

            "Participant" has the meaning set forth in Section 14.1(e).

            "Participant Register" has the meaning set forth in Section 14.1(i).

            "Permitted  Discretion" means a determination made in good faith and
in the exercise of reasonable  (from the  perspective  of a secured  asset-based
lender) business judgment.

            "Permitted  Dispositions"  means (a) sales or other  dispositions by
any Borrower or any Guarantor of FF&E Collateral (other than assets that compose
the Ice Harbor  Facility and the Racino  Project)  that is  substantially  worn,
damaged,  or obsolete in the  ordinary  course of business;  provided,  however,
Agent  shall  have  received  10 days'  prior  written  notice  of such  sale or
disposition,  and upon the  consummation of such sale of disposition,  OED shall
repay the Term Loan in an amount equal to the Net  Proceeds for such  Collateral
(which repayment shall be applied against the installments due under Section 2.2
in the  inverse  order of  maturity),  (b)  sales or other  dispositions  by any
Borrower or any  Guarantor of Equipment  (other than (i) assets that compose the
Ice Harbor  Facility and the Racino  Project and (ii) FF&E  Collateral)  that is
substantially  worn,  damaged,  or obsolete in the ordinary  course of business;
provided,  however,  Agent shall have received 10 days' prior written  notice of
such sale or disposition, and upon the consummation of such sale of disposition,
such Borrower shall repay Advances, as applicable, in

                                       25
<PAGE>

an  amount  equal to the Net  Proceeds  for such  Collateral,  (c)  sales by any
Borrower or any  Guarantor  of  Inventory  to buyers in the  ordinary  course of
business,  (d) the use or transfer of money or Cash Equivalents by any Borrower,
any Restricted Subsidiary or any Guarantor in a manner that is not prohibited by
the terms of this  Agreement or the other Loan  Documents,  (e) the licensing by
any Borrower,  any Restricted  Subsidiary or any Guarantor,  on a  non-exclusive
basis,  of patents,  trademarks,  copyrights,  and other  intellectual  property
rights in the ordinary course of business, (f) transfers of assets by a Borrower
or a Restricted Subsidiary to another Borrower or another Restricted Subsidiary,
(g) any exchange of Equipment for  replacement  Equipment in the ordinary course
of business, so long as such replacement Equipment is of equal fair market value
to the Equipment so replaced and (h) so long as no Event of Default has occurred
and is then continuing, dispositions of assets (other than FF&E Collateral) with
an aggregate fair market value not to exceed  $1,000,000 during the term of this
Agreement.

            "Permitted Investments" means:

            (a) Investments in Borrowers or in any Restricted Subsidiary;

            (b) Investments in Cash Equivalents;

            (c)  Investments  in a Person,  if, as a result of such  Investment,
such Person (i) becomes a Wholly Owned  Subsidiary,  or (ii) is,  subject to the
terms of Section 7.3,  merged,  consolidated  or  amalgamated  with or into,  or
transfers or conveys  substantially all of its assets to, or is liquidated into,
Borrowers or a Wholly Owned Subsidiary;

            (d) Hedging Obligations;

            (e) Investments as a result of consideration  received in connection
with an Asset Sale made in compliance Section 7.4;

            (f)  Investments  existing  on the  Closing  Date  and set  forth on
Schedule P-2 attached hereto;

            (g)  Investments  paid for solely  with  Capital  Stock  (other than
Disqualified Capital Stock) of Parent;

            (h) credit  extensions to gaming customers in the ordinary course of
business, consistent with industry practice;

            (i) stock, obligations or securities received in settlement of debts
created  in the  ordinary  course  of  business  and owing to  Borrowers  (i) in
satisfaction  of judgments  or (ii)  pursuant to any plan of  reorganization  or
similar  arrangement  upon the  bankruptcy or  insolvency of trade  creditors or
customers;

            (j)  loans or other  advances  to  employees  of  Borrowers  and the
Restricted  Subsidiaries made in the ordinary course of business in an aggregate
amount not to exceed $500,000 at any one time outstanding;

            (k)  intercompany  Indebtedness  incurred  pursuant to clause (f) of
Section 7.1;

                                       26
<PAGE>

            (l) Investments in the Notes or any additional Notes; and

            (m) Investments  not otherwise  permitted by clauses (a) through (l)
above, not to exceed $10,000,000.

            "Permitted Lien" means:

            (a) Liens in favor of Agent securing the Obligations;

            (b) Liens arising by reason of any judgment,  decree or order of any
court for an amount and for a period not  resulting  in an Event of Default with
respect  thereto,  so long as such Lien is being  contested in good faith and is
adequately bonded, and any appropriate legal proceedings that may have been duly
initiated for the review of such  judgment,  decree or order shall not have been
finally adversely  terminated or the period within which such proceedings may be
initiated shall not have expired;

            (c) security for the performance of bids, tenders,  trade, contracts
(other than contracts for the payment of borrowed  money) or leases,  surety and
appeal bonds,  performance and return-of-money  bonds and other obligations of a
like  nature  incurred  in the  ordinary  course of  business,  consistent  with
industry practice and not in connection with the borrowing of money;

            (d) Liens for taxes,  assessments or other governmental charges that
do not cause an Event of Default hereunder and are either (i) not yet delinquent
or (ii) the subject of a Permitted Protest;

            (e) Liens of carriers, warehousemen,  mechanics, landlords, material
men, suppliers, repairmen or other like Liens, in each case arising by operation
of law in the ordinary  course of business  consistent  with industry  practices
(other than Liens arising under ERISA) and not in connection  with the borrowing
of money if (i) the underlying  obligations are not overdue for a period of more
than 30 days or (ii) such Liens are the subject of a Permitted Protest;

            (f) easements,  rights of way, zoning and similar  restrictions  and
other similar  encumbrances or title defects  incurred in the ordinary course of
business,  and that, in the aggregate,  do not materially detract from the value
of the  property  subject  thereto (as such  property is used by  Borrowers or a
Restricted  Subsidiary) or materially interfere with the ordinary conduct of the
business of Borrowers or any of the Restricted Subsidiaries;

            (g) Liens  arising  from  deposits  made in the  ordinary  course of
business in connection with workers'  compensation,  unemployment  insurance and
other types of social security  legislation or otherwise  arising from statutory
or regulatory requirements of Borrowers or any of the Restricted Subsidiaries;

            (h) Liens securing Refinancing  Indebtedness  incurred in compliance
with the terms hereof to  refinance  Indebtedness  secured by  Permitted  Liens;
provided,  (i) such Liens do not extend to any  additional  property  or assets;
(ii) if the Liens securing the Indebtedness  being refinanced were  subordinated
to or pari passu with the  Obligations,  such new Liens are  subordinated  to or
pari passu with such Liens to the same extent, and any related  subordination or
intercreditor  agreement is confirmed on terms reasonably satisfactory to Agent;
and (iii) such

                                       27
<PAGE>

Liens  are no more  adverse  to the  interests  of the  Lenders  than the  Liens
replaced or extended thereby;

            (i) Liens that secure Acquired Debt or Liens on property acquired by
a Borrower or any Restricted Subsidiary in the ordinary course of business or in
connection with a Permitted Investment;  provided, that such Liens do not extend
to or  cover  any  other  property  or  assets  and  were  not put in  place  in
anticipation of such acquisition;

            (j) any  interest or title of a lessor  under any  operating  lease;
provided  that such Liens do not extend to any  property or assets which are not
leased property subject to such operating lease;

            (k) Liens that secure  Purchase Money  Obligations  and  Capitalized
Lease Obligations  permitted to be incurred under this Agreement;  provided that
such Liens do not  extend to or cover any  property  or assets  other than those
being acquired,  leased or developed and property and assets which,  immediately
prior to the incurrence of such Purchase Money  Obligations or Capitalized Lease
Obligations,  secured  other  Indebtedness  of a  Borrower  and  the  Restricted
Subsidiaries (to the extent such other  Indebtedness and the Liens securing such
other  Indebtedness  are permitted  under this  Agreement) to the lender of such
Purchase Money Obligations or Capitalized Lease Obligations;

            (l) Liens in favor of the Indenture Trustee securing the Senior Note
Documents; provided such Liens are subject to the Intercreditor Agreement at all
times;

            (m) with respect to any vessel included in the  Collateral,  certain
maritime liens, including liens for crew's wages and salvage;

            (n) Liens on deposit  accounts or Cash  Equivalents  incurred in the
ordinary  course  of  business  securing  Hedging  Obligations,   which  Hedging
Obligations are otherwise permitted under this Agreement;

            (o) Liens  existing  on the  Closing  Date to the  extent and in the
manner such Liens are in effect on the Closing Date;

            (p)  Liens  on the  Capital  Stock  of any  Unrestricted  Subsidiary
securing any Indebtedness of such Unrestricted Subsidiary;

            (q) leases or  subleases  of Real  Property  (other  than the Racino
Project and the Ice Harbor Facility)  granted to others that do not interfere in
any material  respect  with the  business of Borrowers or any of the  Restricted
Subsidiaries  or  materially  detract from the value of the  relative  assets of
Borrowers or any Restricted Subsidiary;

            (r)  Liens  securing  reimbursement   obligations  with  respect  to
commercial letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; and

            (s) Liens with  respect  to the Real  Property  Collateral  that are
exceptions to the commitments for title insurance  issued in connection with the
Mortgages, as accepted by Agent.

                                       28
<PAGE>

            "Permitted  Protest"  means the right of any  Borrower or any of its
Subsidiaries,  as applicable, to protest any Lien (other than any such Lien that
secures the Obligations),  taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental  payment,  provided that
(a) a reserve with respect to such  obligation  is  established  on the Books in
such  amount as is  required  under  GAAP,  (b) any such  protest is  instituted
promptly and prosecuted  diligently by such Borrower or any of its Subsidiaries,
as applicable,  in good faith,  and (c) Agent is satisfied that,  while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.

            "Permitted Tax  Distribution" in respect of Borrowers,  means,  with
respect to any  taxable  year or portion  thereof in which a Borrower  is a Flow
Through  Entity,  the sum of: (i) the product of (a) the excess of (1) all items
of taxable  income or gain (other than capital  gain) of such  Borrower for such
year or portion  thereof over (2) all items of taxable  deduction or loss (other
than capital loss) of such Borrower for such year or portion thereof, multiplied
by (b) the  Applicable  Income  Tax Rate,  plus (ii) the  product of (a) the net
capital  gain (i.e.,  net  long-term  capital gain over net  short-term  capital
loss), if any, of such Borrower for such year or portion thereof,  multiplied by
(b) the Applicable  Capital Gain Tax Rate, plus (iii) the product of (a) the net
short-term  capital  gain (i.e.,  net  short-term  capital gain in excess of net
long-term  capital  loss),  if any,  of such  Borrower  for such year or portion
thereof,  multiplied  by (b) the  Applicable  Income  Tax Rate,  minus  (iv) the
aggregate  Tax Loss  Benefit  Amount for such  Borrower for such year or portion
thereof;  provided, that in no event shall the Applicable Income Tax Rate or the
Applicable  Capital  Gain Tax Rate  exceed the greater of (i) the greater of (a)
the highest aggregate applicable effective marginal rate of Federal,  state, and
local  income  tax to  which  a  corporation  doing  business  in the  State  of
California and (b) the highest aggregate  applicable  effective marginal rate of
Federal,  state,  and local income tax to which a corporation  doing business in
the  state  of  Louisiana,   would  be  subject  to  in  the  relevant  year  of
determination  (as certified to Agent by a nationally  recognized tax accounting
firm)  plus 5% and (ii) 60%.  For  purposes  of  calculating  the  amount of the
Permitted Tax Distributions the items of taxable income, gain, deduction or loss
(including  capital  gain or loss)  of any Flow  Through  Entity  of which  such
Borrower is treated for  Federal  income tax  purposes as a member (but only for
periods for which such Flow Through Entity is treated as a Flow Through Entity),
which items of income,  gain,  deduction  or loss are  allocated to or otherwise
treated as items of income, gain, deduction or loss of such Borrower for Federal
income tax purposes,  shall be included in determining the taxable income, gain,
deduction or loss (including capital gain or loss) of such Borrower.

            Estimated  tax  distributions  may be made within 30 days  following
March 15, May 15,  August  15, and  December  15 based upon an  estimate  of the
excess  of (x) the tax  distributions  that  would  be  payable  for the  period
beginning  on January 1 of such year and ending on March 31, May 31,  August 31,
and December 31 if such period were a taxable year (computed as provided  above)
over (y)  distributions  attributable  to all prior periods  during such taxable
year.

            The amount of the  Permitted  Tax  Distribution  for a taxable  year
shall be re-computed  promptly  after (i) the filing by the applicable  Borrower
and each Subsidiary of such Borrower that is treated as a Flow Through Entity of
their  respective  annual income tax returns and (ii) an appropriate  Federal or
state  taxing  authority  finally  determines  that the  amount  of the items of
taxable income, gain, deduction, or loss of such Borrower or any such Subsidiary
that is

                                       29
<PAGE>

treated as a Flow Through Entity for such taxable year or the aggregate Tax Loss
Benefit Amount carried  forward to such taxable year should be adjusted (each of
clauses  (i)  and  (ii) a "Tax  Calculation  Event").  To the  extent  that  the
Permitted Tax  Distributions  previously  distributed  in respect of any taxable
year are either greater than (a "Tax Distribution Overage") or less than (a "Tax
Distribution  Shortfall") the Permitted Tax  Distributions  with respect to such
taxable year, as determined by reference to the computation of the amount of the
items of  income,  gain,  deduction,  or loss of such  Borrower  and  each  such
Subsidiary  in  connection  with a Tax  Calculation  Event,  the  amount  of the
estimated  Permitted  Tax  Distributions  that may be made on the  estimated tax
distribution  date  immediately  following such Tax  Calculation  Event shall be
reduced  or  increased  as  appropriate  to the  extent of the Tax  Distribution
Overage or the Tax Distribution Shortfall. To the extent that a Tax Distribution
Overage remains after the estimated tax distribution date immediately  following
such  Tax  Calculation  Event,  the  amount  of  the  estimated   Permitted  Tax
Distribution that may be made on the subsequent  estimated tax distribution date
shall be reduced to the extent of such Tax Distribution Overage.

            Prior to making any  Permitted  Tax  Distributions,  the  applicable
Borrower  shall  require  each Equity  Holder to agree that  promptly  after the
second estimated tax distribution  date following a Tax Calculation  Event, such
Equity Holder shall  reimburse the applicable  Borrower to the extent of its pro
rata share (based on the portion of Permitted Tax  Distributions  distributed to
such  Equity  Holder for the taxable  year) of any  remaining  Tax  Distribution
Overage.

            "Person"  means natural  persons,  corporations,  limited  liability
companies,  limited  partnerships,   general  partnerships,   limited  liability
partnerships,  joint ventures,  trusts,  land trusts,  business trusts, or other
organizations,  irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

            "Personal Property  Collateral" means all Borrower  Collateral other
than  Real  Property  Collateral  and the  proceeds  thereof  constituting  Real
Property.

            "PGC Indenture" means that certain  Indenture,  dated as of July 15,
1999, among DJL, Peninsula Gaming Corporation, a Delaware corporation,  and U.S.
Bank National Association, as trustee.

            "PGP"  means  Peninsula  Gaming  Partners,  LLC, a Delaware  limited
liability company, the direct parent and sole manager of Parent.

            "PGP  Investors"  means  PGP  Investors,  LLC,  a  Delaware  limited
liability company.

            "Pledge  Agreement"  means a stock  pledge  agreement  executed  and
delivered  by (a) Parent in respect of the Capital  Stock of  Borrowers  and OED
Capital,  and (b)  Borrowers in respect of the Capital  Stock of the  Restricted
Subsidiaries, in form and substance satisfactory to Agent.

            "Pro Rata Share" means, as of any date of determination:

            (a) with  respect  to a Lender's  obligation  to make  Advances  and
receive payments of principal,  interest, fees, costs, and expenses with respect
thereto,  (i) prior to the Revolver  Commitments  being terminated or reduced to
zero, the percentage obtained by dividing

                                       30
<PAGE>

(y) such Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments
of all Lenders,  and (ii) from and after the time that the Revolver  Commitments
have been terminated or reduced to zero, the percentage obtained by dividing (y)
the aggregate  outstanding principal amount of such Lender's Advances by (z) the
aggregate outstanding principal amount of all Advances,

            (b) with respect to a Lender's  obligation to participate in Letters
of Credit,  to  reimburse  Agent,  and to receive  payments of fees with respect
thereto,  (i) prior to the Revolver  Commitments  being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the  aggregate  Revolver  Commitments  of all Lenders,  and (ii) from and
after the time that the Revolver  Commitments have been terminated or reduced to
zero,  the  percentage  obtained  by  dividing  (y)  the  aggregate  outstanding
principal  amount of such  Lender's  Advances by (z) the  aggregate  outstanding
principal amount of all Advances,

            (c) with respect to a Lender's  obligation to make the Term Loan and
receive  payments of interest,  fees,  and principal with respect  thereto,  (i)
prior to the making of the Term Loan,  the  percentage  obtained by dividing (y)
such Lender's Term Loan Commitment,  by (z) the aggregate amount of all Lenders'
Term Loan Commitments,  and (ii) from and after the making of the Term Loan, the
percentage  obtained  by  dividing  (y) the  principal  amount of such  Lender's
portion of the Term Loan by (z) the principal amount of the Term Loan, and

            (d) with  respect  to all other  matters as to a  particular  Lender
(including the  indemnification  obligations  arising under Section  16.7),  the
percentage  obtained by dividing (i) such Lender's Revolver  Commitment plus the
outstanding  principal amount of such Lender's portion of the Term Loan, by (ii)
the aggregate amount of Revolver Commitments of all Lenders plus the outstanding
principal  amount of the Term  Loan;  provided,  however,  that in the event the
Revolver  Commitments  have been  terminated or reduced to zero,  Pro Rata Share
under  this  clause  shall  be the  percentage  obtained  by  dividing  (A)  the
outstanding  principal  amount of such  Lender's  Advances  plus  such  Lender's
ratable portion of the Risk Participation  Liability with respect to outstanding
Letters of Credit plus the outstanding principal amount of such Lender's portion
of the Term Loan, by (B) the outstanding  principal  amount of all Advances plus
the  aggregate  amount  of the Risk  Participation  Liability  with  respect  to
outstanding Letters of Credit plus the outstanding  principal amount of the Term
Loan.

            "Projections"  means Borrowers'  forecasted (a) balance sheets,  (b)
profit and loss  statements,  and (c) cash flow  statements,  all  prepared on a
consistent basis with Borrowers' historical financial statements,  together with
appropriate supporting details and a statement of underlying assumptions.

            "Purchase  Money  Obligations"  means  Indebtedness  the proceeds of
which  are  used  solely  by  Borrowers  and the  Restricted  Subsidiaries  (and
concurrently  with the incurrence of such  Indebtedness)  to acquire or lease or
improve,  respectively,  FF&E;  provided,  that (a) the principal amount of such
Indebtedness  does not  exceed  the costs  (including  sales and  excise  taxes,
installation and delivery charges,  capitalized  interest and other direct fees,
costs and expenses) of the FF&E  purchased or leased with  proceeds  thereof and
(b) such  Indebtedness  is  secured  only by the assets so  financed  and assets
which,  immediately prior to the incurrence of such Indebtedness,  secured other
Indebtedness of Borrowers and the Restricted Subsidiaries (to

                                       31
<PAGE>

the  extent  such  other   Indebtedness   and  the  Liens  securing  such  other
Indebtedness  are  permitted  under  this  Agreement)  to  the  lender  of  such
Indebtedness.

            "Racino  Project" means the project to design,  develop,  construct,
equip and operate that certain casino and race track to be located in Opelousas,
St. Landry Parish, Louisiana.

            "Real  Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower, any Subsidiary of a Borrower or any
Guarantor and the improvements thereto.

            "Real  Property  Collateral"  means the  parcel or  parcels  of Real
Property identified on Schedule R-1, and any Real Property hereafter acquired by
any Borrower or any Guarantor.

            "Record" means information that is inscribed on a tangible medium or
which  is  stored  in an  electronic  or  other  medium  and is  retrievable  in
perceivable form.

            "Refinance" has the meaning set forth in Section 7.1(k).

            "Refinancing  Indebtedness"  has the  meaning  set forth in  Section
7.1(k).

            "Register" has the meaning set forth in Section 14.1(h).

            "Registered Loan" has the meaning set forth in Section 2.13.

            "Registered Note" has the meaning set forth in Section 2.13.

            "Related  Business"  means  the  gaming,   entertainment  and  hotel
businesses  conducted  (or  proposed to be  conducted)  by  Borrowers  and their
Restricted  Subsidiaries as of the Closing Date and any and all other businesses
that in the good faith  judgment of the  Managers of  Borrowers  are  materially
related  or  incidental  businesses  (including,  without  limitation,  food and
beverage distribution operations).

            "Remedial  Action" means all actions taken to (a) clean up,  remove,
remediate,  contain,  treat,  monitor,  assess,  evaluate, or in any way address
Hazardous  Materials  in the  indoor or  outdoor  environment,  (b)  prevent  or
minimize a release or threatened  release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor  or  outdoor   environment,   (c)  perform  any   pre-remedial   studies,
investigations,  or post-remedial operation and maintenance  activities,  or (d)
conduct any other actions authorized by 42 USC ss. 9601.

            "Replacement Lender" has the meaning set forth in Section 15.2.

            "Report" has the meaning set forth in Section 16.17(a).

            "Required  Lenders"  means,  at any  time,  (a)  Agent,  and (b) the
Lenders  whose  Pro Rata  Shares  aggregate  51% of the  Commitments,  or if the
Commitments have been terminated, 51% of the Obligations outstanding.

                                       32
<PAGE>

            "Reserve  Percentage"  means  on any day,  for  Agent,  the  maximum
percentage  prescribed by the Board of Governors of the Federal  Reserve  System
(or  any  successor   Governmental   Authority)  for   determining  the  reserve
requirements  (including  any  basic,   supplemental,   marginal,  or  emergency
reserves) that are in effect on such date with respect to  eurocurrency  funding
(currently  referred to as "eurocurrency  liabilities") of Agent, but so long as
Agent is not required or directed under applicable  regulations to maintain such
reserves, the Reserve Percentage shall be zero.

            "Restricted  Investment"  means an Investment other than a Permitted
Investment.

            "Restricted Payment" means:

            (a) any dividend or other  distribution  declared or paid on account
of any Equity Interests of a Borrower or any of the Subsidiaries, any payment of
any  management  fees to any Person,  or any other payment to any Affiliate of a
Borrower or any Excluded Person or Affiliate  thereof (other than, in each case,
(i)  dividends  or  distributions   payable  in  Equity  Interests  (other  than
Disqualified  Capital  Stock) of such  Borrower or (ii)  amounts  payable to the
applicable Borrower or any Restricted Subsidiary);

            (b) any payment to purchase,  redeem or otherwise  acquire or retire
for value  any  Equity  Interest  of a  Borrower,  any  Subsidiary  or any other
Affiliate of such  Borrower  (other than any such Equity  Interest  owned by the
applicable Borrower or any Restricted Subsidiary); or

            (c) any Restricted Investment.

            "Restricted  Subsidiaries" means any Subsidiary which at the time of
determination is not an Unrestricted Subsidiary.

            "Return from Unrestricted Subsidiaries" has the meaning set forth in
the Indenture.

            "Revolver  Commitment"  means,  with  respect  to each  Lender,  its
Revolver  Commitment,   and,  with  respect  to  all  Lenders,   their  Revolver
Commitments,  in each case as such  Dollar  amounts  are set forth  beside  such
Lender's name under the applicable  heading on Schedule C-1 or in the Assignment
and  Acceptance  pursuant  to which such  Lender  became a Lender  hereunder  in
accordance with the provisions of Section 14.1.

            "Revolver Usage" means, as of any date of determination,  the sum of
(a) the then extant  amount of  outstanding  Advances,  plus (b) the then extant
amount of the Letter of Credit Usage.

            "Revolving Lender" means a Lender with a Revolver Commitment.

            "Risk  Participation  Liability" means, as to each Letter of Credit,
all  reimbursement  obligations  of  Borrowers  to Agent with  respect to an L/C
Undertaking,  consisting  of (a) the amount  available  to be drawn or which may
become  available  to be drawn,  (b) all amounts that have been paid by Agent to
the Underlying Issuer to the extent not reimbursed by

                                       33
<PAGE>

Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.

            "S&P"  means  Standard & Poor's  Rating  Service,  a division of The
McGraw-Hill Companies, Inc., a New York corporation, and its successors.

            "SEC" means the United States Securities and Exchange Commission and
any successor thereto.

            "Securities  Account"  means a "securities  account" as that term is
defined in the Code.

            "Seller  Preferred"  means  the  $4,000,000  face  amount  of  DJL's
redeemable preferred membership interests issued on July 15, 1999.

            "Senior Note  Documents"  means,  collectively,  the Indenture,  the
Notes,  and the Security  Agreements (as such term is defined in the Indenture),
in each case as such document may be amended, restated, supplemented or modified
from time to time with the consent of Agent.

            "Settlement" has the meaning set forth in Section 2.3(f)(i).

            "Settlement Date" has the meaning set forth in Section 2.3(f)(i).

            "Solvent"  means,  with respect to any Person on a particular  date,
that  such  Person is not  insolvent  (as such term is  defined  in the  Uniform
Fraudulent Transfer Act).

            "Subordination  of  Mortgage"  means  those  certain   subordination
agreements  relating to the Mortgages (as such term is defined in the Indenture)
dated as of even date  herewith and  executed by  Indenture  Trustee in favor of
Agent, in form and substance satisfactory to Agent.

            "Subordination of Preferred Fleet Mortgage" means that Subordination
of Preferred Fleet Mortgage in respect of the Diamond Jo Vessels dated as of the
date hereof and executed by the Indenture Trustee in favor of Agent, in form and
substance satisfactory to Agent.

            "Subsidiary" of a Person means a corporation,  partnership,  limited
liability  company,  or other entity in which that Person directly or indirectly
owns or controls  the shares of Capital  Stock having  ordinary  voting power to
elect a  majority  of the  board  of  directors  (or  appoint  other  comparable
managers) of such corporation,  partnership, limited liability company, or other
entity.

            "Subsidiary  Guaranty"  means each  guaranty,  in form and substance
satisfactory  to Agent,  executed  by the  Restricted  Subsidiaries  in favor of
Agent.

            "Swing  Lender"  means Wells Fargo  Foothill or any other  Revolving
Lender that,  at the request of a Borrower and with the consent of Agent agrees,
in such  Revolving  Lender's sole  discretion,  to become the Swing Lender under
Section 2.3(d).

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<PAGE>

            "Swing Loan" has the meaning set forth in Section 2.3(d)(i).

            "Taxes" has the meaning set forth in Section 16.11(e).

            "Tax Loss Benefit  Amount"  means with respect to any taxable  year,
the amount by which the Permitted Tax Distributions  would be reduced were a net
operating  loss or net capital loss from a prior  taxable year of such  Borrower
ending  subsequent  to the Closing Date  available to be carried  forward to the
applicable  taxable year;  provided that for such purpose the amount of any such
net operating  loss or net capital loss shall be used only once and in each case
shall be carried forward to the next succeeding  taxable year until so used. For
purposes of calculating the Tax Loss Benefit Amount,  the proportionate  part of
the items of taxable income, gain, deduction, or loss (including capital gain or
loss) of any Subsidiary that is a Flow Through Entity for a taxable year of such
Subsidiary   ending  subsequent  to  the  Closing  Date  shall  be  included  in
determining  the  amount  of net  operating  loss  or net  capital  loss  of the
applicable Borrower.

            "Term Loan" has the meaning set forth in Section 2.2.

            "Term Loan Amount" means $14,666,666.68.

            "Term Loan Commitment"  means, with respect to each Lender, its Term
Loan Commitment,  and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar  amounts are set forth  beside  such  Lender's  name
under the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender  hereunder in accordance  with the
provisions of Section 14.1.

            "Total  Commitment"  means,  with respect to each Lender,  its Total
Commitment,  and, with respect to all Lenders, their Total Commitments,  in each
case as such Dollar  amounts are set forth beside such  Lender's  name under the
applicable  heading on Schedule C-1 attached  hereto or on the signature page of
the  Assignment  and  Acceptance  pursuant to which such Lender  became a Lender
hereunder in accordance with the provisions of Section 14.1.

            "Trademark  Security Agreement" means a trademark security agreement
executed and delivered by Borrowers  and Agent,  the form and substance of which
is satisfactory to Agent.

            "Underlying Issuer" means a third Person which is the beneficiary of
an L/C  Undertaking  and which has  issued a letter of credit at the  request of
Agent for the benefit of Borrowers.

            "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

            "Unrestricted  Subsidiary"  means any Subsidiary of a Borrower that,
at or prior to the time of  determination,  shall  have been  designated  by the
Managers of Borrowers as an Unrestricted  Subsidiary and each subsidiary of such
Subsidiary;  provided,  that such Subsidiary or any of its subsidiaries does not
hold any  Indebtedness  or  Capital  Stock  of,  or any Lien on any  assets  of,
Borrowers  or any  Restricted  Subsidiary.  If,  at any time,  any  Unrestricted
Subsidiary  would fail to meet the  foregoing  requirements  as an  Unrestricted
Subsidiary,  it shall  thereafter  cease to be an  Unrestricted  Subsidiary  for
purposes of this Agreement and any Indebtedness of

                                       35
<PAGE>

such Subsidiary shall be deemed to be incurred by a Restricted  Subsidiary as of
such date. The Managers of Borrowers may at any time designate any  Unrestricted
Subsidiary to be a Restricted Subsidiary;  provided, that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted  Subsidiary of any
outstanding  Indebtedness of such  Unrestricted  Subsidiary and such designation
shall only be permitted if (a) such Indebtedness is permitted under the Interest
Coverage  Ratio test set forth in Section 7.1 hereof  calculated  on a pro forma
basis as if such  designation  had occurred at the  beginning  of the  4-quarter
reference  period,  and (b) no Default or Event of Default would be in existence
following such  designation.  Borrowers shall be deemed to make an Investment in
each Subsidiary designated as an Unrestricted  Subsidiary  immediately following
such designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation.  Any such designation by the
Managers  of  Borrowers  shall be  evidenced  to Agent by  filing  with  Agent a
certified  copy  of the  resolution  of  the  Managers  giving  effect  to  such
designation  and an  officers'  certificate  certifying  that  such  designation
complies with the foregoing conditions and is permitted by Section 7.1 hereof.

            "Upper Tier Equity  Holder"  means,  in the case of any Flow Through
Entity,  the Equity  Holder of which is, in turn,  a Flow  Through  Entity,  the
Person that is  ultimately  subject to tax on a net income basis on the items of
taxable income, gain, deduction, and loss of Borrowers and the Subsidiaries that
are Flow  Through  Entities.

            "Voidable Transfer" has the meaning set forth in Section 17.7.

            "Voting  Stock"  means  Stock  of any  Person  which at the time are
entitled to vote in the election of, as applicable, directors, Managers, members
or partners generally of such Person.

            "Warner  Land"  means the 93 acres of land  adjacent  to the  Racino
Project  acquired by OED from Bart C. Warner pursuant to the Sale with Mortgage,
dated October 24, 2003.

            "Wells  Fargo"  means  Wells  Fargo Bank,  National  Association,  a
national banking association.

            "Wells  Fargo  Foothill"   means  Wells  Fargo  Foothill,   Inc.,  a
California corporation, and its successors and assigns.

            "Wholly  Owned  Subsidiary"  means,  with  respect to any Person,  a
Subsidiary of such Person all the Capital Stock of which (other than  directors'
qualifying  shares) is owned  directly or indirectly  by such Person;  provided,
that with respect to Borrowers,  the term Wholly Owned  Subsidiary shall exclude
Unrestricted Subsidiaries.

      1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall  be  construed  in  accordance  with  GAAP.  When  used  herein,  the term
"financial  statements" shall include the notes and schedules thereto.  Whenever
the term  "Parent"  is used in  respect  of a  financial  covenant  or a related
definition,  it shall be  understood  to mean Parent and its  Subsidiaries  on a
consolidated basis unless the context clearly requires otherwise.

      1.3 CODE.  Any terms used in this  Agreement  that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.

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<PAGE>

      1.4  CONSTRUCTION.  Unless the context of this Agreement or any other Loan
Document  clearly  requires  otherwise,  references  to the plural  include  the
singular, references to the singular include the plural, the term "including" is
not  limiting,  and the term "or" has,  except where  otherwise  indicated,  the
inclusive  meaning  represented  by the  phrase  "and/or."  The words  "hereof,"
"herein,"  "hereby,"  "hereunder,"  and similar  terms in this  Agreement or any
other Loan Document refer to this Agreement or such other Loan Document,  as the
case may be, as a whole and not to any particular provision of this Agreement or
such other  Loan  Document,  as the case may be.  Section,  subsection,  clause,
schedule,  and exhibit  references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement,  instrument,  or document shall include all alterations,  amendments,
changes,  extensions,  modifications,  renewals,  replacements,   substitutions,
joinders,  and supplements,  thereto and thereof,  as applicable (subject to any
restrictions   on   such   alterations,    amendments,    changes,   extensions,
modifications, renewals, replacements,  substitutions, joinders, and supplements
set forth  herein).  Any  reference  herein to any Person  shall be construed to
include such  Person's  successors  and assigns.  Any  requirement  of a writing
contained  herein or in the  other  Loan  Documents  shall be  satisfied  by the
transmission  of  a  Record  and  any  Record  transmitted  shall  constitute  a
representation  and  warranty  as  to  the  accuracy  and  completeness  of  the
information contained therein.

      1.5 SCHEDULES AND EXHIBITS.  All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

2.    LOAN AND TERMS OF PAYMENT.

      2.1   ADVANCES.

            (a)  Subject  to the terms and  conditions  of this  Agreement,  and
during the term of this Agreement,  each Lender,  severally and not jointly,  in
accordance  with such  Lender's  Revolver  Commitment,  agrees to make  advances
("Advances") to Borrowers in an amount at any one time outstanding not to exceed
an amount  equal to the  lesser of (i) the  Maximum  Revolver  Amount,  less the
Letter  of Credit  Usage or (ii) the  Borrowing  Base less the  Letter of Credit
Usage.  For  purposes of this  Agreement,  "Borrowing  Base",  as of any date of
determination,  shall mean the  result of (y) the  lesser of (i) the  product of
Borrowers'  Combined EBITDA for the 12 month period ending as of the last day of
the most recent month for which the Monthly  Financial Report has been delivered
pursuant  to Section  6.3(a)  times  150%,  or (ii) the  product  of  Borrowers'
Annualized Quarterly Combined EBITDA as of the last day of the most recent month
for which the Monthly  Financial  Report has been delivered  pursuant to Section
6.3(a)  times  150%,  minus  (z)  the  aggregate  amount  of  reserves,  if any,
established by Agent under Section 2.1(b).

            (b) Anything to the  contrary in this  Section 2.1  notwithstanding,
Agent  shall have the right to  establish  reserves  in such  amounts,  and with
respect  to such  matters,  as  Agent in its  Permitted  Discretion  shall  deem
necessary or appropriate,  against the Borrowing Base,  including  reserves with
respect  to (i)  sums  that  Borrowers  are  required  to pay  (such  as  taxes,
assessments,  insurance  premiums,  or, in the case of leased  assets,  rents or
other amounts payable under such leases) and has failed to pay under any Section
of this  Agreement  or any  other  Loan  Document,  and  (ii)  amounts  owing by
Borrowers or their  Subsidiaries  to any Person to the extent  secured by a Lien
on, or trust over, any of the Collateral (other than any existing Permitted Lien

                                       37
<PAGE>

set forth on Schedule P-1 which is specifically  identified  thereon as entitled
to have priority over the Agent's Liens),  which Lien or trust, in the Permitted
Discretion  of Agent likely would have a priority  superior to the Agent's Liens
(such  as Liens  or  trusts  in  favor  of  landlords,  warehousemen,  carriers,
mechanics,  (including,  without limitation,  any Liens in favor of mechanics or
subcontractors  arising in  connection  with the Racino  Project),  materialmen,
laborers,  or suppliers,  or Liens or trusts for ad valorem,  excise,  sales, or
other taxes where given  priority under  applicable  law) in and to such item of
the Collateral.

            (c) The  Lenders  with  Revolver  Commitments  shall  not  have  any
obligation to make additional  Advances  hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.

            (d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and  conditions of this  Agreement,  reborrowed at any time
during the term of this Agreement.

      2.2 TERM LOAN.  Subject to the terms and conditions of this Agreement,  on
the Closing Date each Lender with a Term Loan Commitment  agrees,  severally and
not jointly, in accordance with such Lender's Term Loan Commitment, to make term
loans (collectively, the "Term Loan") to OED in an amount equal to such Lender's
Pro Rata Share of the Term Loan  Amount.  The proceeds of the Term Loan shall be
used to refinance all  outstanding  obligations of OED and OED Capital under the
Equipment  Loan  Agreement.  The Term Loan shall be repayable  in equal  monthly
installments of principal each in the amount of $333,333.33,  commencing on July
1, 2004,  and  continuing  on the first day of each month  thereafter  until the
unpaid  balance  of the Term  Loan is paid in full.  The  outstanding  principal
balance and all accrued  and unpaid  interest  under the Term Loan shall also be
due and payable in full upon the  Maturity  Date or any earlier  termination  of
this  Agreement,  whether by its  terms,  by  prepayment,  by  acceleration,  or
otherwise.

      2.3   BORROWING PROCEDURES AND SETTLEMENTS.

            (a) PROCEDURE FOR BORROWING.  Each Borrowing (other than the funding
of the Term Loan on the Closing  Date) shall be made by a written  request by an
Authorized  Person delivered to Agent (which notice must be received by Agent no
later than 10:00 a.m.  (California  time) 5 Business Days prior to the date that
is the requested  Funding Date  specifying  (i) the amount of such Borrowing and
(ii) the  requested  Funding  Date,  which  shall be a Business  Day;  provided,
however,  that  in the  case  of a  request  for  Swing  Loan  in an  amount  of
$1,000,000,  or less,  such notice will be timely  received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested  Funding  Date).  At  Agent's  election,  in  lieu of  delivering  the
above-described  request  in  writing,  any  Authorized  Person  may give  Agent
telephonic  notice of such request by the required  time,  with such  telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.

            (b)  AGENT'S  ELECTION.  Promptly  after  receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,  (i)
to have the terms of Section 2.3(c) apply to such requested  Borrowing,  or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant  to the  terms  of  Section  2.3(d)  in  the  amount  of the  requested
Borrowing;  provided,  however,  that  if  Swing  Lender  declines  in its  sole
discretion to

                                       38
<PAGE>

make a Swing Loan  pursuant  to Section  2.3(d),  Agent  shall elect to have the
terms of Section 2.3(c) apply to such requested Borrowing.

            (c) MAKING OF LOANS.

                  (i) In the event that Agent  shall  elect to have the terms of
            this Section  2.3(c) apply to a requested  Borrowing as described in
            Section  2.3(b),  then,  promptly  after  receipt of a request for a
            Borrowing  pursuant to Section 2.3(a) (other than the funding of the
            Term Loan on the Closing Date), Agent shall notify the Lenders,  not
            later  than  1:00  p.m.   (California  time)  on  the  Business  Day
            immediately  preceding  the  Funding  Date  applicable  thereto,  by
            telecopy,  telephone, or other similar form of transmission,  of the
            requested  Borrowing.  Each  Lender  shall  make the  amount of such
            Lender's  Pro Rata Share of the  requested  Borrowing  available  to
            Agent in immediately  available funds, to Agent's Account, not later
            than 10:00 a.m.  (California  time) on the Funding  Date  applicable
            thereto.  After Agent's receipt of the proceeds of such Advances (or
            the Term Loan, as applicable),  upon  satisfaction of the applicable
            conditions precedent set forth in Section 3 hereof, Agent shall make
            the  proceeds  thereof  available  to  Borrowers  on the  applicable
            Funding Date by  transferring  immediately  available funds equal to
            such  proceeds  received  by  Agent  to  the  applicable  Borrower's
            Designated  Account;   provided,   however,  that,  subject  to  the
            provisions of Section 2.3(i),  Agent shall not request any Lender to
            make,  and no Lender shall have the  obligation to make, any Advance
            (or its portion of the Term Loan, as applicable) if Agent shall have
            actual  knowledge  that  one or  more of the  applicable  conditions
            precedent  set  forth  in  Section  3 will not be  satisfied  on the
            requested  Funding  Date for the  applicable  Borrowing  unless such
            condition has been waived.

                  (ii) Unless Agent receives notice from a Lender on or prior to
            the Closing Date or, with respect to any Borrowing after the Closing
            Date,  at least 1 Business Day prior to the date of such  Borrowing,
            that  such  Lender  will not  make  available  as and when  required
            hereunder to Agent for the account of  Borrowers  the amount of that
            Lender's Pro Rata Share of the Borrowing, Agent may assume that each
            Lender  has made or will  make  such  amount  available  to Agent in
            immediately  available  funds on the Funding Date and Agent may (but
            shall not be so required),  in reliance upon such  assumption,  make
            available to Borrowers on such date a corresponding  amount.  If and
            to the  extent  any  Lender  shall  not have  made  its full  amount
            available to Agent in immediately  available funds and Agent in such
            circumstances  has made  available  to Borrowers  such amount,  that
            Lender shall on the Business  Day  following  such Funding Date make
            such  amount  available  to Agent,  together  with  interest  at the
            Defaulting  Lender  Rate for each day during such  period.  A notice
            submitted by Agent to any Lender with respect to amounts owing under
            this subsection shall be conclusive,  absent manifest error. If such
            amount is so made available,  such payment to Agent shall constitute
            such Lender's  Advance (or portion of the Term Loan, as  applicable)
            on the date of Borrowing for all purposes of this Agreement. If such
            amount is not made  available to Agent on the Business Day following
            the Funding  Date,  Agent will notify  Borrowers  of such failure to
            fund and, upon demand by Agent,  Borrowers

                                       39
<PAGE>

            shall pay such amount to Agent for Agent's  account,  together  with
            interest  thereon  for  each  day  elapsed  since  the  date of such
            Borrowing, at a rate per annum equal to the interest rate applicable
            at the  time to the  Advances  (or  portion  of the  Term  Loan,  as
            applicable)  composing such Borrowing.  The failure of any Lender to
            make any Advance (or portion of the Term Loan, as applicable) on any
            Funding  Date shall not relieve any other  Lender of any  obligation
            hereunder  to make an  Advance  (or  portion  of the Term  Loan,  as
            applicable) on such Funding Date, but no Lender shall be responsible
            for the failure of any other  Lender to make the Advance (or portion
            of the Term Loan, as  applicable) to be made by such other Lender on
            any Funding Date.

                  (iii) Agent shall not be obligated to transfer to a Defaulting
            Lender any payments  made by  Borrowers to Agent for the  Defaulting
            Lender's  benefit,  and,  in the  absence  of such  transfer  to the
            Defaulting  Lender,  Agent shall  transfer any such payments to each
            other  non-Defaulting  Lender  member of the Lender Group ratably in
            accordance with their  Commitments (but only to the extent that such
            Defaulting  Lender's  Advance was funded by the other members of the
            Lender  Group) or, if so directed by any  Borrower and if no Default
            or Event of  Default  had  occurred  and is  continuing  (and to the
            extent such Defaulting Lender's Advance was not funded by the Lender
            Group),  retain  same  to be  re-advanced  to  Borrowers  as if such
            Defaulting  Lender had made  Advances to  Borrowers.  Subject to the
            foregoing, Agent may hold and, in its Permitted Discretion,  re-lend
            to Borrowers for the account of such Defaulting Lender the amount of
            all such payments  received and retained by Agent for the account of
            such  Defaulting  Lender.  Solely  for the  purposes  of  voting  or
            consenting  to  matters  with  respect to the Loan  Documents,  such
            Defaulting  Lender  shall be deemed  not to be a  "Lender"  and such
            Lender's  Commitment  shall be deemed to be zero. This Section shall
            remain   effective  with  respect  to  such  Lender  until  (x)  the
            Obligations  under this Agreement  shall have been declared or shall
            have become  immediately  due and  payable,  (y) the  non-Defaulting
            Lenders,  Agent,  and  Borrowers  shall have waived such  Defaulting
            Lender's default in writing,  or (z) the Defaulting Lender makes its
            Pro  Rata  Share of the  applicable  Advance  and pays to Agent  all
            amounts owing by Defaulting Lender in respect thereof. The operation
            of this  Section  shall not be  construed  to increase or  otherwise
            affect  the  Commitment  of any  Lender,  to  relieve  or excuse the
            performance  by such  Defaulting  Lender or any other  Lender of its
            duties  and  obligations  hereunder,  or to  relieve  or excuse  the
            performance by Borrowers of their duties and  obligations  hereunder
            to Agent or to the Lenders other than such  Defaulting  Lender.  Any
            such failure to fund by any  Defaulting  Lender  shall  constitute a
            material  breach by such  Defaulting  Lender of this  Agreement  and
            shall  entitle  Borrowers at their  option,  upon written  notice to
            Agent,  to arrange for a substitute  Lender to assume the Commitment
            of such Defaulting  Lender,  such substitute Lender to be acceptable
            to Agent.  In connection  with the  arrangement of such a substitute
            Lender,  the  Defaulting  Lender shall have no right to refuse to be
            replaced  hereunder,  and agrees to execute  and deliver a completed
            form of Assignment and Acceptance in favor of the substitute  Lender
            (and agrees that it shall be deemed to have  executed and  delivered
            such document if it fails to do so) subject only to being repaid its
            share of the outstanding Obligations (including an assumption of

                                       40
<PAGE>

            its Pro Rata Share of the Risk Participation  Liability) without any
            premium or penalty of any kind  whatsoever  without  any  premium or
            penalty of any kind whatsoever;  provided further, however, that any
            such  assumption of the Commitment of such  Defaulting  Lender shall
            not be deemed to constitute a waiver of any of the Lender Group's or
            Borrowers'  rights or remedies  against any such  Defaulting  Lender
            arising out of or in relation to such failure to fund.

            (d) MAKING OF SWING LOANS.

                  (i) In the event Agent shall elect,  with the consent of Swing
            Lender,  as a Lender, to have the terms of this Section 2.3(d) apply
            to a requested  Borrowing  as  described  in Section  2.3(b),  Swing
            Lender as a Lender  shall  make such  Advance  in the amount of such
            Borrowing  (any such Advance made solely by Swing Lender as a Lender
            pursuant to this Section  2.3(d) being referred to as a "Swing Loan"
            and such Advances being referred to  collectively  as "Swing Loans")
            available to Borrowers  on the Funding  Date  applicable  thereto by
            transferring   immediately   available   funds  to  the   applicable
            Borrower's  Designated  Account;   provided  that,   notwithstanding
            anything to the  contrary  contained  in this  Section  2.3(d),  the
            aggregate  principal  amount of Swing Loans  outstanding  at any one
            time shall not exceed $5,000,000. Each Swing Loan shall be deemed to
            be an  Advance  hereunder  and shall be subject to all the terms and
            conditions  applicable to other Advances,  except that no such Swing
            Loan shall be eligible  to be a LIBOR Rate Loan and all  payments on
            any Swing Loan shall be payable to Swing  Lender as a Lender  solely
            for its own  account  (and  for the  account  of the  holder  of any
            participation  interest with respect to such Swing Loan). Subject to
            the  provisions  of Section  2.3(i),  Agent shall not request  Swing
            Lender as a Lender to make,  and Swing  Lender as a Lender shall not
            make, any Swing Loan if Agent has actual  knowledge that one or more
            of the applicable  conditions  precedent set forth in Section 3 will
            not be satisfied on the  requested  Funding Date for the  applicable
            Borrowing  unless such condition has been waived.  Swing Lender as a
            Lender  shall not  otherwise  be required to  determine  whether the
            applicable  conditions  precedent  set forth in  Section 3 have been
            satisfied on the Funding Date applicable thereto prior to making, in
            its sole discretion, any Swing Loan.

                  (ii) The Swing Loans  shall be secured by the  Agent's  Liens,
            constitute  Obligations  hereunder,  and bear  interest  at the rate
            applicable from time to time to Advances that are Base Rate Loans.

            (e) AGENT ADVANCES.

                  (i) Agent hereby is  authorized  by Borrowers and the Lenders,
            from  time  to  time in  Agent's  sole  discretion,  (1)  after  the
            occurrence  and during the  continuance  of a Default or an Event of
            Default,  or (2) at  any  time  that  any  of the  other  applicable
            conditions precedent set forth in Section 3 have not been satisfied,
            to make  Advances to  Borrowers on behalf of the Lenders that Agent,
            in its  Permitted  Discretion  deems  necessary or desirable  (A) to
            preserve or protect the Collateral,  or any portion thereof,  (B) to
            enhance the  likelihood of repayment of the  Obligations,  or (C) to
            pay any other amount  chargeable to Borrowers

                                       41
<PAGE>

            pursuant  to the terms of this  Agreement,  including  Lender  Group
            Expenses and the costs,  fees, and expenses  described in Section 10
            (any of the  Advances  described  in this  Section  2.3(e)  shall be
            referred to as "Agent  Advances");  provided,  that  notwithstanding
            anything to the  contrary  contained  in this  Section  2.3(e),  the
            aggregate principal amount of Agent Advances  outstanding at any one
            time shall not exceed  $2,000,000.  Each Agent Advance is an Advance
            hereunder  and shall be  subject  to all the  terms  and  conditions
            applicable to other Advances, except that all payments thereon shall
            be payable to Agent  solely for its own account (and for the account
            of the holder of any  participation  interest  with  respect to such
            Agent Advance).

                  (ii) The Agent  Advances  shall be  repayable  on  demand  and
            secured  by the  Agent's  Liens  granted  to  Agent  under  the Loan
            Documents,  shall constitute Advances and Obligations hereunder, and
            shall  bear  interest  at the rate  applicable  from time to time to
            Advances.

            (f)  SETTLEMENT.  It is agreed that each Lender's  funded portion of
the Advances is intended by the Revolving  Lenders to equal, at all times,  such
Lender's  Pro  Rata  Share  of  the   outstanding   Advances.   Such   agreement
notwithstanding,  Agent,  Swing Lender,  and the Revolving  Lenders agree (which
agreement  shall not be for the benefit of or enforceable by Borrowers)  that in
order to  facilitate  the  administration  of this  Agreement and the other Loan
Documents,  settlement  among them as to the Advances,  the Swing Loans, and the
Agent  Advances  shall  take place on a periodic  basis in  accordance  with the
following provisions:

                  (i) Agent shall  request  settlement  ("Settlement")  with the
            Revolving  Lenders on a weekly basis, or on a more frequent basis if
            so determined by Agent, (1) on behalf of Swing Lender,  with respect
            to the outstanding Swing Loans, (2) for itself, with respect to each
            Agent  Advance,  and (3) with respect to Collections of Borrowers or
            their Subsidiaries  received,  as to each by notifying the Revolving
            Lenders  by   telecopy,   telephone,   or  other   similar  form  of
            transmission,  of such requested Settlement, no later than 1:00 p.m.
            (California  time) on the Business Day immediately prior to the date
            of such requested  Settlement (the date of such requested Settlement
            being the "Settlement Date"). Such notice of a Settlement Date shall
            include a summary  statement of the amount of outstanding  Advances,
            Swing  Loans,  and Agent  Advances  for the  period  since the prior
            Settlement  Date.  Subject  to the  terms and  conditions  contained
            herein (including Section 2.3(c)(iii)):  (y) if a Revolving Lender's
            balance of the Advances  (including  Swing Loans and Agent Advances)
            exceeds  such  Revolving  Lender's  Pro Rata  Share of the  Advances
            (including  Swing Loans and Agent Advances) as of a Settlement Date,
            then Agent shall, by no later than 12:00 p.m.  (California  time) on
            the Settlement Date, transfer in immediately  available funds to the
            account  of such  Revolving  Lender  as such  Revolving  Lender  may
            designate,  an amount such that each such  Revolving  Lender  shall,
            upon receipt of such amount, have as of the Settlement Date, its Pro
            Rata  Share  of  the  Advances  (including  Swing  Loans  and  Agent
            Advances),  and (z) if a Revolving  Lender's balance of the Advances
            (including  Swing  Loans  and  Agent  Advances)  is less  than  such
            Revolving  Lender's Pro Rata Share of the Advances  (including Swing
            Loans and Agent  Advances) as of a Settlement  Date,  such Revolving
            Lender shall no later than

                                       42
<PAGE>

            12:00 p.m.  (California  time) on the  Settlement  Date  transfer in
            immediately  available funds to the Agent's Account,  an amount such
            that each such Revolving Lender shall, upon transfer of such amount,
            have as of the  Settlement  Date, its Pro Rata Share of the Advances
            (including  Swing  Loans  and Agent  Advances).  Such  amounts  made
            available  to Agent under  clause (z) of the  immediately  preceding
            sentence  shall be applied  against  the  amounts of the  applicable
            Swing Loans or Agent Advances and, together with the portion of such
            Swing Loans or Agent Advances  representing  Swing Lender's Pro Rata
            Share thereof,  shall constitute Advances of such Revolving Lenders.
            If any such amount is not made  available to Agent by any  Revolving
            Lender on the  Settlement  Date  applicable  thereto  to the  extent
            required by the terms hereof, Agent shall be entitled to recover for
            its  account  such  amount on  demand  from  such  Revolving  Lender
            together with interest  thereon at the Defaulting  Revolving  Lender
            Rate.

                  (ii) In determining  whether a Revolving  Lender's  balance of
            the Advances, Swing Loans and Agent Advances is less than, equal to,
            or  greater  than  such  Revolving  Lender's  Pro Rata  Share of the
            Advances,  Swing Loans and Agent  Advances as of a Settlement  Date,
            Agent  shall,  as part of the  relevant  Settlement,  apply  to such
            balance the portion of payments  actually  received in good funds by
            Agent with respect to principal, interest, fees payable by Borrowers
            and allocable to the Revolving  Lenders  hereunder,  and proceeds of
            Collateral.  To the  extent  that a net  amount  is owed to any such
            Revolving  Lender after such  application,  such net amount shall be
            distributed by Agent to that  Revolving  Lender as part of such next
            Settlement.

                  (iii) Between Settlement Dates,  Agent, to the extent no Agent
            Advances  or  Swing  Loans  are  outstanding,  may pay over to Swing
            Lender any payments received by Agent,  that, in accordance with the
            terms of this  Agreement  would be applied to the  reduction  of the
            Advances,  for  application  to Swing Lender's Pro Rata Share of the
            Advances. If, as of any Settlement Date, Collections of Borrowers or
            their  Subsidiaries  received since the then  immediately  preceding
            Settlement  Date have been applied to Swing  Lender's Pro Rata Share
            of the Advances  other than to Swing  Loans,  as provided for in the
            previous sentence,  Swing Lender shall pay to Agent for the accounts
            of the  Revolving  Lenders,  and Agent  shall  pay to the  Revolving
            Lenders, to be applied to the outstanding Advances of such Revolving
            Lenders,  an amount  such that each  Revolving  Lender  shall,  upon
            receipt of such amount,  have, as of such  Settlement  Date, its Pro
            Rata Share of the  Advances.  During the period  between  Settlement
            Dates,  Swing Lender with respect to Swing Loans, Agent with respect
            to Agent Advances,  and each Revolving Lender (subject to the effect
            of letter agreements between Agent and individual Revolving Lenders)
            with  respect  to the  Advances  other  than  Swing  Loans and Agent
            Advances,  shall be entitled to interest at the  applicable  rate or
            rates  payable  under this  Agreement  on the daily  amount of funds
            employed  by Swing  Lender,  Agent,  or the  Revolving  Lenders,  as
            applicable.

            (g) NOTATION.  Agent shall record on its books the principal  amount
of the  Advances  (or  portion of the Term Loan,  as  applicable)  owing to each
Lender, including the

                                       43
<PAGE>

Swing Loans owing to Swing Lender,  and Agent Advances  owing to Agent,  and the
interests therein of each Lender,  from time to time, such records  constituting
conclusive  evidence,  absent manifest error, of the accuracy of the information
contained  therein.  In addition,  each Lender is  authorized,  at such Lender's
option,  to note the date and amount of each payment or  prepayment of principal
of such Lender's  Advances or portion of the Term Loan in its books and records,
including  computer  records,  such books and  records  constituting  conclusive
evidence,  absent manifest  error, of the accuracy of the information  contained
therein.

            (h)  LENDERS'  FAILURE TO PERFORM.  All  Advances  (other than Swing
Loans  and  Agent  Advances)  and the Term  Loan  shall  be made by the  Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be  responsible  for any failure by any other Lender to
perform its obligation to make any Advance (or the Term Loan or other  extension
of credit)  hereunder,  nor shall any  Commitment  of any Lender be increased or
decreased  as a result  of any  failure  by any  other  Lender  to  perform  its
obligations  hereunder,  and  (ii) no  failure  by any  Lender  to  perform  its
obligations  hereunder  shall  excuse  any  other  Lender  from its  obligations
hereunder.

            (i) OPTIONAL OVERADVANCES.  Any contrary provision of this Agreement
notwithstanding,  the  Lenders  hereby  authorize  Agent  or  Swing  Lender,  as
applicable, and Agent or Swing Lender, as applicable,  may, but is not obligated
to,  knowingly and  intentionally,  continue to make Advances  (including  Swing
Loans) to Borrowers  notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances, the outstanding
Revolver Usage does not exceed the Borrowing Base by more than the lesser of (A)
10% of the Borrowing Base and (B)  $2,000,000,  (ii) after giving effect to such
Advances,  the  outstanding  Revolver  Usage (except for and  excluding  amounts
charged to the Loan Account for interest,  fees, or Lender Group  Expenses) does
not exceed the Maximum Revolver  Amount,  and (iii) at the time of the making of
any such Advance,  Agent does not believe,  in good faith,  that the Overadvance
created by such Advance will be outstanding for more than 90 days. The foregoing
provisions are for the exclusive benefit of Agent, Swing Lender, and the Lenders
and are not  intended to benefit  Borrowers  in any way.  The Advances and Swing
Loans,  as  applicable,  that are made pursuant to this Section  2.3(i) shall be
subject to the same terms and  conditions as any other Advance or Swing Loan, as
applicable,  except that they shall not be eligible for the LIBOR Option and the
rate of interest  applicable  thereto  shall be the rate  applicable to Advances
that are Base Rate Loans  under  Section  2.6(c)  hereof  without  regard to the
presence or absence of a Default or Event of Default.

                  (i) In the  event  Agent  obtains  actual  knowledge  that the
            Revolver  Usage  exceeds  the  amounts  permitted  by the  preceding
            paragraph,  regardless of the amount of, or reason for, such excess,
            Agent shall notify the Lenders as soon as practicable  (and prior to
            making any (or any additional) intentional  Overadvances (except for
            and  excluding  amounts  charged to the Loan  Account for  interest,
            fees, or Lender Group Expenses)  unless Agent  determines that prior
            notice  would  result  in  imminent  harm to the  Collateral  or its
            value),  and the Revolving  Lenders  thereupon shall,  together with
            Agent,  jointly  determine the terms of  arrangements  that shall be
            implemented with Borrowers  intended to reduce,  within a reasonable
            time, the outstanding  principal amount of the Advances to Borrowers
            to an amount  permitted  by the  preceding  paragraph.  In the event
            Agent or any  Lender  disagrees  over  the  terms  of  reduction  or
            repayment

                                       44
<PAGE>

            of any  Overadvance,  the terms of reduction  or  repayment  thereof
            shall be implemented  according to the determination of the Required
            Lenders.

                  (ii) Each  Revolving  Lender shall be obligated to settle with
            Agent as provided in Section 2.3(f) for the amount of such Revolving
            Lender's Pro Rata Share of any  unintentional  Overadvances by Agent
            reported to such Revolving Lender, any intentional Overadvances made
            as  permitted  under  this  Section  2.3(i),  and  any  Overadvances
            resulting  from the charging to the Loan Account of interest,  fees,
            or Lender Group Expenses.

      2.4   PAYMENTS.

            (a) PAYMENTS BY BORROWERS.

                  (i)  Except  as  otherwise   expressly  provided  herein,  all
            payments  by  Borrowers  shall be made to  Agent's  Account  for the
            account  of the  Lender  Group  and  shall  be made  in  immediately
            available funds, no later than 11:00 a.m.  (California  time) on the
            date  specified  herein.  Any  payment  received by Agent later than
            11:00 a.m.  (California time), shall be deemed to have been received
            on the  following  Business Day and any  applicable  interest or fee
            shall continue to accrue until such following Business Day.

                  (ii) Unless Agent  receives  notice from any Borrower prior to
            the date on which any payment is due to the Lenders  that  Borrowers
            will not make such payment in full as and when  required,  Agent may
            assume that  Borrowers have made (or will make) such payment in full
            to Agent on such date in immediately  available  funds and Agent may
            (but shall not be so required),  in reliance  upon such  assumption,
            distribute  to each  Lender on such due date an amount  equal to the
            amount then due such Lender.  If and to the extent  Borrowers do not
            make such payment in full to Agent on the date when due, each Lender
            severally shall repay to Agent on demand such amount  distributed to
            such Lender, together with interest thereon at the Defaulting Lender
            Rate for each day from the date such amount is  distributed  to such
            Lender until the date repaid.

            (b) APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS.

                  (i) Except as otherwise  provided  with respect to  Defaulting
            Lenders and except as otherwise  provided in the Loan Documents (and
            letter agreements between Agent and individual  Lenders),  aggregate
            principal and interest  payments shall be apportioned  ratably among
            the  Lenders  (according  to the  unpaid  principal  balance  of the
            Obligations to which such payments relate held by each Lender, after
            giving effect to any letter agreements  between Agent and individual
            Lenders)  and  payments  of fees and  expenses  (other  than fees or
            expenses  that  are  for  Agent's   separate   account),   shall  be
            apportioned ratably among the Lenders having a Pro Rata Share of the
            type of Commitment or Obligation to which a particular  fee relates.
            All payments shall be remitted to Agent and all such payments (other
            than  payments  received  while no Default  or Event of Default  has
            occurred  and is  continuing  and  which  relate to the  payment  of
            principal or interest

                                       45
<PAGE>

            of specific  Obligations  or which relate to the payment of specific
            fees), and, subject to the last sentence of this Section  2.4(b)(i),
            all proceeds of Collateral or the FF&E Letter of Credit  received by
            Agent, shall be applied as follows:

                        (A) first,  to pay any Lender Group Expenses then due to
                  Agent  under  the Loan  Documents,  until  paid in  full,  (B)
                  second,  to pay any  Lender  Group  Expenses  then  due to the
                  Lenders under the Loan  Documents,  on a ratable basis,  until
                  paid in full,

                        (C)  third,  to pay any fees then due to Agent  (for its
                  separate   accounts,   after  giving   effect  to  any  letter
                  agreements between Agent and individual Lenders)under the Loan
                  Documents until paid in full,

                        (D)  fourth,  to pay any fees  then due to any or all of
                  the  Lenders  (after  giving  effect to any letter  agreements
                  between  Agent  and   individual   Lenders)   under  the  Loan
                  Documents, on a ratable basis, until paid in full,

                        (E) fifth,  to pay  interest due in respect of all Agent
                  Advances, until paid in full,

                        (F) sixth, ratably to pay interest due in respect of the
                  Advances (other than Agent Advances), the Swing Loans, and the
                  Term Loan until paid in full,

                        (G) seventh,  to pay the principal of all Agent Advances
                  until paid in full,

                        (H) eighth,  ratably to pay all  principal  amounts then
                  due and  payable  (other  than as a result of an  acceleration
                  thereof) with respect to the Term Loan until paid in full,

                        (I) ninth, to pay the principal of all Swing Loans until
                  paid in full,

                        (J) tenth,  so long as no Event of Default has  occurred
                  and is continuing, to pay principal of all Advances until paid
                  in full,

                        (K) eleventh, if an Event of Default has occurred and is
                  continuing,  ratably (i) to pay the  principal of all Advances
                  until  paid in  full,  (ii) to pay the  outstanding  principal
                  balance of the Term Loan (in the inverse order of the maturity
                  of the  installments  due  thereunder)  until the Term Loan is
                  paid in full and (iii) to Agent, to be held by Agent,  for the
                  ratable  benefit of Agent and those Lenders  having a Revolver
                  Commitment,  as cash collateral in an amount up to 105% of the
                  then extant Letter of Credit Usage until paid in full,

                        (L) twelfth,  if an Event of Default has occurred and is
                  continuing, to pay any other Obligations, and

                                       46
<PAGE>

                        (M)  thirteenth,  to  Borrowers  (to  be  wired  to  the
                  Designated  Account)  or such other  Person  entitled  thereto
                  under applicable law.

                  Notwithstanding the foregoing, (x) proceeds of FF&E Collateral
and the FF&E  Letter  of  Credit  shall  be  applied  first  to  repay  the FF&E
Obligations  and then to repay the  principal  of or interest on any Advances or
any Letter of Credit reimbursement  obligations,  and (y) proceeds of Collateral
(other than the FF&E Collateral and the FF&E Letter of Credit) shall not be used
to repay principal of or interest on the Term Loan.

                  (ii) In each  instance,  so long as no  Default  or  Event  of
            Default has occurred and is  continuing,  this Section  2.4(b) shall
            not be deemed to apply to any  payment  by  Borrowers  specified  by
            Borrowers to be for the payment of specific Obligations then due and
            payable (or prepayable) under any provision of this Agreement.

                  (iii) For  purposes  of the  foregoing,  "paid in full"  means
            payment of all amounts owing under the Loan  Documents  according to
            the terms thereof,  including loan fees, service fees,  professional
            fees,  interest (and specifically  including  interest accrued after
            the commencement of any Insolvency  Proceeding),  default  interest,
            interest on interest, and expense reimbursements, whether or not the
            same would be or is allowed or disallowed in whole or in part in any
            Insolvency Proceeding.

                  (iv) In the event of a direct  conflict  between the  priority
            provisions of this Section 2.4 and other provisions contained in any
            other Loan Document,  it is the intention of the parties hereto that
            such priority  provisions in such  documents  shall be read together
            and construed, to the fullest extent possible, to be in concert with
            each other. In the event of any actual, irreconcilable conflict that
            cannot be resolved as  aforesaid,  the terms and  provisions of this
            Section 2.4 shall control and govern.

      2.5  OVERADVANCES.  If,  at any  time or for any  reason,  the  amount  of
Obligations  (other than the FF&E  Obligations)  owed by Borrowers to the Lender
Group  pursuant  to Sections  2.1 and 2.12 is greater  than either the Dollar or
percentage  limitations  set forth in Sections  2.1 or 2.12 (an  "Overadvance"),
Borrowers  immediately  shall pay to Agent,  in cash, the amount of such excess,
which  amount shall be used by Agent to reduce the  Obligations  (other than the
FF&E Obligations) in accordance with the priorities set forth in Section 2.4(b).
In addition,  (a) Borrowers  hereby  promise to pay the  Obligations  (including
principal,   interest,  fees,  costs,  and  expenses,  but  excluding  the  FF&E
Obligations)  in Dollars in full to Agent as and when due and payable  under the
terms of this Agreement and the other Loan Documents and (b) OED hereby promises
to pay the  FF&E  Obligations  in  Dollars  in full to Agent as and when due and
payable under the terms of this Agreement and the other Loan Documents.

      2.6 INTEREST: RATES, PAYMENTS, AND CALCULATIONS.

            (a)  INTEREST  RATES.  Except as provided  in clause (c) below,  all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan  Account  pursuant  to the terms  hereof  shall bear  interest on the Daily
Balance thereof,  at Borrower's option in

                                       47
<PAGE>

accordance with Section 2.16 below, as follows:  (i) if the relevant  Obligation
is an Advance that is a LIBOR Rate Loan,  at a per annum rate equal to the LIBOR
Rate plus the  Applicable  Margin,  (ii) if the relevant  Obligation is the Term
Loan,  at a per annum  rate  equal to the Base Rate plus the Base Rate Term Loan
Margin and (iii) otherwise,  at a per annum rate equal to the Base Rate plus the
Applicable  Margin.  The  foregoing  notwithstanding,  at no time  shall (x) any
portion of the Obligations (other than the Term Loan) bear interest on the Daily
Balance  thereof  at a per  annum  rate  less than 4% and (y) the Term Loan bear
interest on the Daily  Balance  thereof at a per annum rate less than 6%. To the
extent that  interest  accrued  hereunder  at the rate set forth herein would be
less than the  foregoing  minimum  applicable  daily  rate,  the  interest  rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.

            (b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Revolving Lenders,  subject to any letter agreement between Agent
and  individual  Lenders) a Letter of Credit fee (in  addition  to the  charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to the  Applicable  Margin with  respect to Letters of Credit times
the Daily Balance of the undrawn amount of all outstanding Letters of Credit.

            (c) DEFAULT RATE. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),  (i)
all Obligations (except for undrawn Letters of Credit) that have been charged to
the Loan Account  pursuant to the terms hereof shall bear  interest on the Daily
Balance  thereof at a per annum rate equal to 2 percentage  points above the per
annum rate otherwise applicable hereunder, and the Letter of Credit fee provided
for above shall be  increased  to 2  percentage  points above the per annum rate
otherwise applicable hereunder.

            (d) PAYMENT. Interest on Base Rate Loans, Letter of Credit fees, and
all other fees payable  hereunder shall be due and payable,  in arrears,  on the
first day of each month at any time that  Obligations  or  obligation  to extend
credit hereunder are outstanding.  Interest on LIBOR Rate Loans shall be due and
payable, in arrears, on the last day of each Interest Period therefor;  provided
that,  if the Interest  Period for such  Advance is greater than 3 months,  then
interest  thereon shall be due and payable on each 3 month  anniversary  of such
Advance.  Borrowers  hereby authorize  Agent,  from time to time,  without prior
notice to Borrowers, to charge such interest and fees, all Lender Group Expenses
(as and when incurred), the charges, commissions, fees and costs provided for in
Section  2.12(e) (as and when accrued or incurred),  the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document  (including the amounts due and
payable with respect to the Term Loan) to Borrowers' Loan Account, which amounts
thereafter shall constitute  Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers'  Loan Account and shall  thereafter
constitute  Advances  hereunder  and  shall  accrue  interest  at the rate  then
applicable to Advances that are Base Rate Loans hereunder.

            (e)  COMPUTATION.  All interest and fees  chargeable  under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days  elapsed.  In the  event  the Base  Rate is  changed  from  time to time
hereafter,   the  rates  of  interest   hereunder   based  upon  the  Base  Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

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<PAGE>

            (f)  INTENT TO LIMIT  CHARGES TO MAXIMUM  LAWFUL  RATE.  In no event
shall the interest rate or rates payable  under this  Agreement,  plus any other
amounts paid in connection  herewith,  exceed the highest rate permissible under
any law that a court of competent  jurisdiction shall, in a final determination,
deem  applicable.  Borrowers and the Lender Group,  in executing and  delivering
this  Agreement,  intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided,  however, that, anything contained
herein to the  contrary  notwithstanding,  if said rate or rates of  interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement,  Borrowers are and shall be liable only
for the payment of such  maximum as allowed by law,  and payment  received  from
Borrowers in excess of such legal maximum,  whenever received,  shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.

      2.7 [INTENTIONALLY OMITTED].

      2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent shall not
be  considered a payment on account  unless such payment item is a wire transfer
of immediately available federal funds made to the Agent's Account or unless and
until such  payment  item is honored  when  presented  for  payment.  Should any
payment item not be honored when presented for payment,  then Borrowers shall be
deemed  not  to  have  made  such  payment  and  interest  shall  be  calculated
accordingly.  Anything to the contrary  contained  herein  notwithstanding,  any
payment item shall be deemed  received by Agent only if it is received  into the
Agent's Account on a Business Day on or before 11:00 a.m.  (California time). If
any payment item is received into the Agent's  Account on a non-Business  Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been  received  by  Agent  as of the  opening  of  business  on the  immediately
following Business Day.

      2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and Agent
is  authorized  to issue the Letters of Credit under this  Agreement  based upon
telephonic  or other  instructions  received  from  anyone  purporting  to be an
Authorized Person, or without  instructions if pursuant to Section 2.6(d).  Each
Borrower  agrees to  establish  and  maintain  the  Designated  Account  of such
Borrower  with the  Designated  Account  Bank for the purpose of  receiving  the
proceeds of the  Advances  requested  by such  Borrower and made by Agent or the
Lenders hereunder.  A Borrower may add or replace the Designated Account Bank or
the  Designated  Account on 30 days' prior  written  notice to Agent;  provided,
however, that (i) such prospective Designated Account Bank shall be satisfactory
to Agent and Agent shall have  consented in writing in advance to the opening of
such Designated  Account with the prospective  Designated Account Bank, and (ii)
prior to the time of the opening of such Designated Account,  Borrowers and such
prospective Designated Account Bank shall have executed and delivered to Agent a
Control Agreement.  Unless otherwise agreed by Agent and Borrowers, any Advance,
Agent  Advance or Swing Loan  requested  by  Borrowers  and made by Agent or the
Lenders hereunder shall be made to the applicable Borrower's Designated Account.

      2.10 MAINTENANCE OF LOAN ACCOUNT;  STATEMENTS OF OBLIGATIONS.  Agent shall
maintain an account on its books in the name of Borrowers  (the "Loan  Account")
on which OED will be charged  with the Term Loan and  Borrowers  will be charged
with all  Advances  (including  Agent  Advances  and Swing Loans) made by Agent,
Swing Lender or the Lenders to Borrowers or for Borrowers' account,  the Letters
of Credit  issued by Agent for  Borrowers'  account,  and with all other payment
Obligations  hereunder  or under the other Loan  Documents,  including,

                                       49
<PAGE>

accrued interest,  fees and expenses,  and Lender Group Expenses.  In accordance
with Section 2.8, the Loan Account will be credited  with all payments  received
by Agent from Borrowers or for Borrowers' account. Agent shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses  constituting  Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account  stated between  Borrowers and the Lender
Group  unless,  within 30 days after receipt  thereof by  Borrowers,  a Borrower
shall deliver to Agent written objection thereto  describing the error or errors
contained in any such statements.

      2.11 FEES.  Borrowers  shall pay to Agent the following  fees and charges,
which  fees and  charges  shall be  non-refundable  when paid  (irrespective  of
whether this Agreement is terminated thereafter):

            (a) FEE LETTER FEES.  As and when due and payable under the terms of
the Fee  Letter,  Borrowers  shall  pay to Agent  the fees set  forth in the Fee
Letter,

            (b)  AUDIT,  APPRAISAL,  AND  VALUATION  CHARGES.  For the  separate
account of Agent, audit,  appraisal,  and valuation fees and charges as follows,
(i) a fee of $850 per day, per  auditor,  plus  out-of-pocket  expenses for each
financial audit of a Borrower  performed by personnel  employed by Agent, (ii) a
fee of $1,500  per day per  appraiser,  plus  out-of-pocket  expenses,  for each
appraisal of the Collateral  performed by personnel employed by Agent, and (iii)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third  Persons  to  perform  financial  audits of  Borrowers,  to
appraise  the  Collateral,  or any portion  thereof,  or to assess a  Borrower's
business valuation, provided that so long as no Event of Default has occurred in
any 12 consecutive  month period,  Borrowers shall not be obligated to reimburse
Agent  for the  costs and  expenses  of more  than 16 audit  days in any such 12
consecutive month period, and

            (c) UNUSED  LINE FEE.  On the first day of each  quarter  during the
term of this  Agreement,  an unused line fee (for the  account of the  Revolving
Lenders in accordance with their Pro Rata Shares of the Revolver  Commitment) in
an amount equal to (i) for any preceding  quarter in which the average  Revolver
Usage during such quarter was less than $12,500,000,  0.625% per annum, (ii) for
any preceding  quarter in which the average  Revolver  Usage during such quarter
was equal to or greater than $12,500,000 but less than  $25,000,000,  0.500% per
annum and (iii) for any preceding  quarter in which the average  Revolver  Usage
during such quarter was equal to or greater than $25,000,000,  0.375% per annum,
in each case, times the result of (x) the Maximum Revolver Amount,  less (y) the
sum of (1) the average Daily Balance of Advances  that were  outstanding  during
the  immediately  preceding  quarter,  plus (2) the average Daily Balance of the
Letter of Credit Usage during the immediately preceding quarter.

      2.12 LETTERS OF CREDIT.

            (a) Subject to the terms and  conditions  of this  Agreement,  Agent
agrees to issue letters of credit for the account of Borrowers  (each, an "L/C")
or  to  purchase   participations   or  execute   indemnities  or  reimbursement
obligations  (each  such  undertaking,  an "L/C  Undertaking")  with  respect to
letters of credit  issued by an Underlying  Issuer (as of the Closing Date,  the
prospective  Underlying  Issuer  is  to be  Wells  Fargo)  for  the  account  of
Borrowers.  To request  the  issuance  of an L/C or an L/C  Undertaking  (or the
amendment, renewal, or extension

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<PAGE>

of an  outstanding  L/C or L/C  Undertaking),  a Borrower  shall hand deliver or
telecopy (or transmit by electronic communication,  if arrangements for doing so
have been  approved by Agent) to Agent and Agent  (reasonably  in advance of the
requested  date  of  issuance,   amendment,  renewal,  or  extension)  a  notice
requesting the issuance of an L/C or L/C Undertaking,  or identifying the L/C or
L/C  Undertaking  to be amended,  renewed,  or  extended,  the date of issuance,
amendment,  renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary  thereof (or of the Underlying Letter of Credit, as applicable),
and such other  information as shall be necessary to prepare,  amend,  renew, or
extend such L/C or L/C Undertaking.  If requested by Agent, Borrowers also shall
be an applicant under the application  with respect to any Underlying  Letter of
Credit  that is to be the  subject of an L/C  Undertaking.  Agent  shall have no
obligation  to issue a Letter  of Credit if any of the  following  would  result
after giving effect to the requested Letter of Credit:

                  (i) the Letter of Credit Usage would exceed the Borrowing Base
            less the then extant amount of outstanding Advances, or

                  (ii) the Letter of Credit Usage would exceed $10,000,000, or

                  (iii) the Letter of Credit  Usage  would  exceed  the  Maximum
            Revolver Amount less the then extant amount of outstanding Advances.

      Borrowers and Agent acknowledge and agree that certain  Underlying Letters
of  Credit  may be  issued  to  support  letters  of  credit  that  already  are
outstanding  as of the Closing  Date.  Each Letter of Credit (and  corresponding
Underlying Letter of Credit) shall be in form and substance  acceptable to Agent
(in the exercise of its Permitted  Discretion),  including the requirement  that
the amounts payable thereunder must be payable in Dollars. If Agent is obligated
to advance funds under a Letter of Credit, Borrowers shall immediately reimburse
such L/C  Disbursement  to Agent by paying to Agent an amount  equal to such L/C
Disbursement  not later than 11:00 a.m.,  California time, on the date that such
L/C  Disbursement  is made,  if any  Borrower  shall  have  received  written or
telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time,
on such date,  or, if such notice has not been received by any Borrower prior to
such time on such date, then not later than 11:00 a.m.,  California time, on the
(i)  Business  Day that any Borrower  receives  such  notice,  if such notice is
received prior to 10:00 a.m.,  California time, on the date of receipt,  and, in
the  absence  of  such  reimbursement,  the  L/C  Disbursement  immediately  and
automatically shall be deemed to be an Advance hereunder and, thereafter,  shall
bear interest at the rate then  applicable to Advances under Section 2.6. To the
extent an L/C  Disbursement  is deemed to be an  Advance  hereunder,  Borrowers'
obligation to reimburse such L/C  Disbursement  shall be discharged and replaced
by the resulting Advance.

            (b)  Promptly  following  receipt  of a notice  of L/C  Disbursement
pursuant to Section  2.12(a),  each Revolving Lender agrees to fund its Pro Rata
Share of any Advance  deemed made  pursuant to the  foregoing  subsection on the
same terms and  conditions as if Borrowers had requested  such Advance and Agent
shall  promptly  pay to Agent the amounts so  received by it from the  Revolving
Lenders.  By the  issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of Agent or the Lenders with Revolver Commitment,  Agent shall be deemed to have
granted to each Revolving  Lender,  and each Revolving Lender shall be deemed to
have

                                       51
<PAGE>

purchased,  a participation in each Letter of Credit,  in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of Agent, such Lender's
Pro Rata Share of any  payments  made by Agent under such  Letter of Credit.  In
consideration and in furtherance of the foregoing,  each Revolving Lender hereby
absolutely and unconditionally agrees to pay to Agent, for the account of Agent,
such  Lender's  Pro Rata  Share of each L/C  Disbursement  made by Agent and not
reimbursed  by  Borrowers  on the date due as  provided  in  clause  (a) of this
Section,  or of any  reimbursement  payment required to be refunded to Borrowers
for  any  reason.  Each  Revolving  Lender  acknowledges  and  agrees  that  its
obligation to deliver to Agent, for the account of Agent, an amount equal to its
respective  Pro Rata Share of each L/C  Disbursement  made by Agent  pursuant to
this Section  2.12(b) shall be absolute and  unconditional  and such  remittance
shall be made  notwithstanding  the  occurrence or  continuation  of an Event of
Default or Default or the failure to satisfy any  condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's  Pro Rata  Share of each L/C  Disbursement  made by Agent in respect of
such Letter of Credit as provided in this  Section,  such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of Agent) shall be entitled
to recover such amount on demand from such Lender together with interest thereon
at the Defaulting Lender Rate until paid in full.

            (c) Each Borrower hereby agrees to indemnify, save, defend, and hold
Agent  harmless  from any loss,  cost,  expense,  or liability,  and  reasonable
attorneys fees incurred by Agent arising out of or in connection with any Letter
of Credit;  provided,  however, that no Borrower shall be obligated hereunder to
indemnify for any loss, cost,  expense, or liability that is caused by the gross
negligence or willful  misconduct of Agent.  Each Borrower agrees to be bound by
the Underlying Issuer's regulations and interpretations of any Underlying Letter
of Credit or by  Agent's  interpretations  of any L/C  issued by Agent to or for
such Borrower's  account,  even though this interpretation may be different from
such Borrower's  own, and each Borrower  understands and agrees that Agent shall
not be liable for any error,  negligence,  or  mistake,  whether of  omission or
commission,  in  following  Borrowers'  instructions  or those  contained in the
Letter of Credit or any modifications,  amendments, or supplements thereto. Each
Borrower  understands  that the L/C  Undertakings may require Agent to indemnify
the Underlying Issuer for certain costs or liabilities  arising out of claims by
Borrowers  against  such  Underlying  Issuer.  Each  Borrower  hereby  agrees to
indemnify, save, defend, and hold Agent harmless with respect to any loss, cost,
expense  (including  reasonable  attorneys fees), or liability incurred by Agent
under  any  L/C  Undertaking  as a  result  of  Agent's  indemnification  of any
Underlying  Issuer;  provided,  however,  that no  Borrower  shall be  obligated
hereunder to indemnify for any loss, cost,  expense, or liability that is caused
by the gross negligence or willful misconduct of Agent.

            (d) Each  Borrower  hereby  authorizes  and directs  any  Underlying
Issuer to deliver to Agent all  instruments,  documents,  and other writings and
property  received by such Underlying  Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon Agent's  instructions  with respect to all
matters  arising in  connection  with such  Underlying  Letter of Credit and the
related application.

            (e) Any and all charges,  commissions,  fees,  and costs incurred by
Agent  relating to  Underlying  Letters of Credit  shall be Agent  Expenses  for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Agent for the account of Agent; it being

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<PAGE>

acknowledged  and agreed by each  Borrower  that,  as of the Closing  Date,  the
issuance charge imposed by the prospective  Underlying Issuer is .850% per annum
times the face amount of each  Underlying  Letter of Credit,  that such issuance
charge may be changed  from time to time,  and that the  Underlying  Issuer also
imposes  a  schedule  of  charges  for  amendments,  extensions,  drawings,  and
renewals.

            (f) If by reason of (i) any change in any  applicable  law,  treaty,
rule, or regulation or any change in the  interpretation or application  thereof
by any Governmental  Authority,  or (ii) compliance by the Underlying  Issuer or
Agent with any  direction,  request,  or  requirement  (irrespective  of whether
having the force of law) of any Governmental Authority or monetary authority:

                  (i) any reserve,  deposit,  or similar requirement is or shall
            be imposed  or  modified  in respect of any Letter of Credit  issued
            hereunder, or

                  (ii) there shall be imposed on the Underlying  Issuer or Agent
            any other condition regarding any Underlying Letter of Credit or any
            Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to Agent of issuing, making,  guaranteeing,  or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Agent, then, and in any
such  case,  Agent  may,  at any  time  within a  reasonable  period  after  the
additional  cost is  incurred  or the amount  received  is  reduced,  notify any
Borrower, and Borrowers shall pay on demand such amounts as Agent may specify to
be necessary to compensate  Agent for such additional  cost or reduced  receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Advances that are Base Rate Loans
hereunder.  The  determination  by  Agent of any  amount  due  pursuant  to this
Section,  as set forth in a certificate setting forth the calculation thereof in
reasonable detail,  shall, in the absence of manifest or demonstrable  error, be
final and conclusive and binding on all of the parties hereto.

            (g) The letters of credit described on Schedule 2.12 hereto shall be
deemed Letters of Credit issued pursuant to this Section 2.12.

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<PAGE>

      2.13 REGISTERED NOTES. Agent agrees to record each Advance on the Register
referenced in Section  14.1(h).  Each Advance  recorded on the Register  (each a
"Registered  Loan")  may  not  be  evidenced  by  promissory  notes  other  than
Registered  Notes (as defined  below).  Upon the  registration  of any  Advance,
Borrowers  agree at the  request of any  Lender,  to execute and deliver to such
Lender a promissory  note, in conformity  with the terms of this  Agreement,  in
registered  form  to  evidence  such  Registered  Loan,  in form  and  substance
reasonably  satisfactory  to such Lender,  and registered as provided in Section
14.1(h) (a "Registered Note"), payable to the order of such Lender and otherwise
duly completed,  provided that any Registered  Note issued to evidence  Advances
shall be issued in the principal amount of the applicable  Lender's  Commitment.
Once recorded on the Register, each Advance may not be removed from the Register
so long as it remains  outstanding,  and a Registered  Note may not be exchanged
for a promissory note that it is not a Registered Note.

      2.14  CAPITAL  REQUIREMENTS.   If,  after  the  date  hereof,  any  Lender
determines  that (i) the adoption of or change in any law,  rule,  regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the  interpretation  or  application  thereof by any  Governmental
Authority charged with the  administration  thereof,  or (ii) compliance by such
Lender or its parent  bank  holding  company  with any  guideline,  request,  or
directive of any such entity regarding  capital adequacy  (whether or not having
the force of law),  will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's  obligations
hereunder to a level below that which such Lender or such holding  company could
have  achieved  but for  such  adoption,  change,  or  compliance  (taking  into
consideration  such Lender's or such holding  company's  then existing  policies
with  respect to capital  adequacy and  assuming  the full  utilization  of such
entity's capital) by any amount deemed by such Lender to be material,  then such
Lender may notify Borrowers and Agent thereof. Following receipt of such notice,
Borrowers  agree to pay such  Lender on demand the amount of such  reduction  of
return of capital as and when such  reduction is  determined,  payable within 90
days after  presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such  calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount,  such Lender may use
any reasonable averaging and attribution methods.

      2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.

            (a) Each Borrower is accepting joint and several liability hereunder
and  under  the other  Loan  Documents  (other  than  with  respect  to the FF&E
Obligations) in consideration of the financial  accommodations to be provided by
Agent and the Lenders under this Agreement, for the mutual benefit, directly and
indirectly,  of each Borrower and in  consideration  of the  undertakings of the
other Borrowers to accept joint and several liability for the Obligations (other
than the FF&E Obligations).

            (b) Each Borrower,  jointly and severally,  hereby  irrevocably  and
unconditionally  accepts, not merely as a surety but also as a co-debtor,  joint
and several liability with the other Borrowers,  with respect to the payment and
performance  of  all  of the  Obligations  (other  than  the  FF&E  Obligations)
(including,  without  limitation,  any  Obligations  arising  under this Section
2.15),  it being the  intention of the parties  hereto that all the  Obligations
(other than

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<PAGE>

the FF&E Obligations) shall be the joint and several  obligations of each Person
composing Borrowers without preferences or distinction among them.

            (c) If and to the extent  that any of  Borrowers  shall fail to make
any  payment  with  respect  to any of the  Obligations  (other  than  the  FF&E
Obligations)  as and when due or to perform any of the  Obligations  (other than
the FF&E  Obligations) in accordance  with the terms thereof,  then in each such
event the other Persons composing  Borrowers will make such payment with respect
to, or perform, such Obligation.

            (d) The  Obligations of each Person  composing  Borrowers  under the
provisions of this Section 2.15 constitute the absolute and unconditional,  full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets,  irrespective  of
the  validity,  regularity  or  enforceability  of this  Agreement  or any other
circumstances whatsoever.

            (e) Except as otherwise  expressly provided in this Agreement,  each
Person  composing  Borrowers hereby waives notice of acceptance of its joint and
several  liability,  notice of any Advances or Letters of Credit issued under or
pursuant to this  Agreement,  notice of the occurrence of any Default,  Event of
Default,  or of any demand for any payment under this  Agreement,  notice of any
action at any time taken or omitted by Agent or the Lenders  under or in respect
of any of the  Obligations,  any requirement of diligence or to mitigate damages
and, generally, to the extent permitted by applicable law, all demands,  notices
and other formalities of every kind in connection with this Agreement (except as
otherwise  provided in this Agreement).  Each Person composing  Borrowers hereby
assents to, and waives notice of, any extension or  postponement of the time for
the payment of any of the  Obligations,  the acceptance of any payment of any of
the  Obligations,  the acceptance of any partial  payment  thereon,  any waiver,
consent or other action or  acquiescence  by Agent or the Lenders at any time or
times in  respect  of any  default  by any  Person  composing  Borrowers  in the
performance or  satisfaction  of any term,  covenant,  condition or provision of
this Agreement, any and all other indulgences whatsoever by Agent or the Lenders
in respect of any of the Obligations, and the taking, addition,  substitution or
release,  in whole or in part, at any time or times,  of any security for any of
the Obligations or the addition,  substitution or release,  in whole or in part,
of any Person  composing  Borrowers.  Without  limiting  the  generality  of the
foregoing,  each  Borrower  assents  to any  other  action or delay in acting or
failure to act on the part of Agent or the Lenders  with  respect to the failure
by any  Person  composing  Borrowers  to  comply  with  any  of  its  respective
Obligations,  including,  without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply  fully with  applicable
laws or  regulations  thereunder,  which might,  but for the  provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any Person
composing Borrowers, in whole or in part, from any of its Obligations under this
Section 2.15, it being the intention of each Person composing Borrowers that, so
long as any of the Obligations hereunder remain unsatisfied,  the Obligations of
such Person composing  Borrowers under this Section 2.15 shall not be discharged
except by  performance  and then only to the  extent  of such  performance.  The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be  diminished  or rendered  unenforceable  by any  winding up,  reorganization,
arrangement,  liquidation,  reconstruction or similar proceeding with respect to
any  Person  composing  Borrowers  or any  Agent or the  Lenders.  The joint and
several liability of the Persons composing Borrowers hereunder shall continue in
full force and effect  notwithstanding any absorption,  merger,  amalgamation or
any other change  whatsoever in the

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<PAGE>

name,  constitution  or  place  of  formation  of any of the  Persons  composing
Borrowers or any Agent or the Lenders.

            (f) Each Person composing Borrowers represents and warrants to Agent
and the Lenders  that such  Borrower  is  currently  informed  of the  financial
condition of Borrowers and of all other  circumstances  which a diligent inquiry
would  reveal  and which  bear upon the risk of  nonpayment  of the  Obligations
(other than the FF&E  Obligations).  Each  Person  composing  Borrowers  further
represents and warrants to Agent and the Lenders that such Borrower has read and
understands  the  terms  and  conditions  of the  Loan  Documents.  Each  Person
composing  Borrowers  hereby  covenants that such Borrower will continue to keep
informed of Borrowers'  financial  condition,  the financial  condition of other
guarantors,  if any, and of all other  circumstances which bear upon the risk of
nonpayment  or   nonperformance   of  the  Obligations   (other  than  the  FF&E
Obligations).

            (g) The  provisions of this Section 2.15 are made for the benefit of
Agent,  the Lenders and their  respective  successors  and  assigns,  and may be
enforced  by it or them  from  time to time  against  any or all of the  Persons
composing  Borrowers  as  often as  occasion  therefor  may  arise  and  without
requirement  on the part of any such Agent,  the Lenders,  successor,  or assign
first to marshal any of its or their  claims or to exercise  any of its or their
rights  against any of the other Persons  composing  Borrowers or to exhaust any
remedies  available  to it or them  against any of the other  Persons  composing
Borrowers or to resort to any other source or means of obtaining  payment of any
of the Obligations  (other than the FF&E Obligations)  hereunder or to elect any
other remedy.  The  provisions of this Section 2.15 shall remain in effect until
all of the Obligations (other than the FF&E Obligations) shall have been paid in
full or otherwise  fully  satisfied.  If at any time,  any payment,  or any part
thereof,  made  in  respect  of any of the  Obligations  (other  than  the  FF&E
Obligations),  is  rescinded  or must  otherwise  be restored or returned by any
Agent or the Lenders upon the insolvency, bankruptcy or reorganization of any of
the Persons composing  Borrowers,  or otherwise,  the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.

            (h) Each of the Persons  composing  Borrowers  hereby agrees that it
will not enforce any of its rights of  contribution  or subrogation  against the
other Persons composing  Borrowers with respect to any liability  incurred by it
hereunder or under any of the other Loan  Documents,  any payments made by it to
Agent or the Lenders with respect to any of the  Obligations  or any  collateral
security  therefor until such time as all of the  Obligations  have been paid in
full in cash.  Any claim which any Borrower may have against any other  Borrower
with respect to any payments to any Agent or the Lenders  hereunder or under any
other Loan Documents are hereby  expressly made  subordinate and junior in right
of payment,  without  limitation as to any increases in the Obligations  arising
hereunder or thereunder, to the prior payment in full in cash of the Obligations
and,  in the event of any  insolvency,  bankruptcy,  receivership,  liquidation,
reorganization  or other similar  proceeding  under the laws of any jurisdiction
relating  to any  Borrower,  its  debts  or its  assets,  whether  voluntary  or
involuntary,  all  such  Obligations  shall be paid in full in cash  before  any
payment or distribution of any character,  whether in cash,  securities or other
property, shall be made to any other Borrower therefor.

            (i) Each of the Persons  composing  Borrowers  hereby  agrees  that,
after the  occurrence  and during  the  continuance  of any  Default or Event of
Default,  the payment of any amounts due with respect to the indebtedness  owing
by any Borrower to any other Borrower is

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<PAGE>

hereby  subordinated  to the prior  payment in full in cash of the  Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default,  such Borrower  will not demand,  sue for or
otherwise  attempt to collect any  indebtedness  of any other  Borrower owing to
such Borrower  until the  Obligations  shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect,  enforce or
receive  any  amounts in respect of such  indebtedness,  such  amounts  shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower  shall  deliver  any such  amounts  to  Agent  for  application  to the
Obligations in accordance with Section 2.4(b).

      2.16 LIBOR OPTION.

            (a) INTEREST AND INTEREST  PAYMENT DATES. In lieu of having interest
charged at the rate based  upon the Base Rate,  Borrowers  shall have the option
(the  "LIBOR  Option") to have  interest on all or a portion of the  Advances be
charged at a rate of interest based upon the LIBOR Rate.  Interest on LIBOR Rate
Loans  shall be  payable  on the  earliest  of (i) the last day of the  Interest
Period  applicable  thereto,  (ii) the  occurrence  of an Event  of  Default  in
consequence  of which  Agent has  elected  to  accelerate  the  maturity  of the
Obligations,  (iii) termination of this Agreement  pursuant to the terms hereof,
or (iv) as set  forth in  Section  2.6(d).  On the  last day of each  applicable
Interest  Period,  unless any Borrower  properly has  exercised the LIBOR Option
with respect  thereto,  the  interest  rate  applicable  to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same  type  hereunder.  At any time  that an Event of  Default  has
occurred and is continuing, Borrowers no longer shall have the option to request
that  Advances bear interest at the LIBOR Rate and Agent shall have the right to
convert the interest rate on all  outstanding  LIBOR Rate Loans to the rate then
applicable  to Base Rate  Loans  hereunder.  OED  shall  not have the  option to
request that any portion of the Term Loan bear interest at the LIBOR Rate.

            (b) LIBOR ELECTION.

                  (i) The requesting  Borrower may, at any time and from time to
            time, so long as no Event of Default has occurred and is continuing,
            elect to exercise the LIBOR Option by notifying Agent prior to 11:00
            a.m.  (California  time)  at  least 3  Business  Days  prior  to the
            commencement of the proposed Interest Period (the "LIBOR Deadline").
            Notice  of  such  Borrower's  election  of the  LIBOR  Option  for a
            permitted portion of the Advances and an Interest Period pursuant to
            this  Section  shall be made by delivery to Agent of a LIBOR  Notice
            received by Agent before the LIBOR Deadline, or by telephonic notice
            received by Agent  before the LIBOR  Deadline  (to be  confirmed  by
            delivery to Agent of a LIBOR Notice  received by Agent prior to 5:00
            p.m. (California time) on the same day).

                  (ii) Each LIBOR  Notice  shall be  irrevocable  and binding on
            Borrowers.  In connection  with each LIBOR Rate Loan,  each Borrower
            shall jointly and severally  indemnify,  defend,  and hold Agent and
            the Revolving  Lenders  harmless  against any loss, cost, or expense
            incurred  by Agent or the  Revolving  Lenders as a result of (a) the
            payment  of any  principal  of any LIBOR Rate Loan other than on the
            last day of an Interest Period  applicable  thereto  (including as a
            result of an Event of Default), (b) the conversion of any LIBOR Rate
            Loan other than on the last day of the  Interest  Period  applicable
            thereto, or

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<PAGE>

            (c) the  failure to borrow,  convert,  continue  or prepay any LIBOR
            Rate  Loan on the  date  specified  in any  LIBOR  Notice  delivered
            pursuant  hereto (such losses,  costs,  and expenses,  collectively,
            "Funding  Losses").  Funding  Losses  shall be  deemed  to equal the
            amount  determined  by Agent to be the  excess,  if any,  of (i) the
            amount of interest that would have accrued on the  principal  amount
            of such LIBOR Rate Loan had such  event not  occurred,  at the LIBOR
            Rate that would have been  applicable  thereto,  for the period from
            the date of such event to the last day of the then current  Interest
            Period therefor (or, in the case of a failure to borrow, convert, or
            continue,  for the period that would have been the  Interest  Period
            therefor),  minus (ii) the amount of interest  that would  accrue on
            such  principal  amount for such period at the  interest  rate which
            Agent would be offered were it to be offered, at the commencement of
            such period,  Dollar  deposits of a comparable  amount and period in
            the London  interbank  market. A certificate of any Revolving Lender
            delivered to any Borrower  setting  forth any amount or amounts that
            such  Revolving  Lender is  entitled  to  receive  pursuant  to this
            Section shall be conclusive absent manifest error.

                  (iii) Borrowers shall have not more than 7 LIBOR Rate Loans in
            effect at any given  time.  Borrowers  only may  exercise  the LIBOR
            Option  for LIBOR  Rate Loans of at least  $1,000,000  and  integral
            multiples of $500,000 in excess thereof.

            (c) PREPAYMENTS.  Borrowers may prepay LIBOR Rate Loans at any time;
provided,  however,  that in the event that LIBOR Rate Loans are  prepaid on any
date  that  is not the  last  day of the  Interest  Period  applicable  thereto,
including  as  a  result  of  any  automatic  prepayment  through  the  required
application   by  Agent  of  proceeds  of  Collections  of  Borrowers  or  their
Subsidiaries  in  accordance  with  Section  2.4(b)  or for  any  other  reason,
including early termination of the term of this Agreement or acceleration of the
Obligations pursuant to the terms hereof, Borrowers shall indemnify, defend, and
hold Agent,  the  Revolving  Lenders  and any  Revolving  Lender's  Participants
harmless  against any and all Funding  Losses in accordance  with clause (b)(ii)
above.

            (d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

                  (i) The LIBOR Rate may be adjusted  by Agent on a  prospective
            basis to take into account any additional or increased  costs to the
            Revolving   Lenders  of  maintaining  or  obtaining  any  eurodollar
            deposits  or  increased  costs  due to  changes  in  applicable  law
            occurring  subsequent  to the  commencement  of the then  applicable
            Interest  Period,  including  changes in tax laws (except changes of
            general  applicability  in corporate income tax laws) and changes in
            the reserve  requirements  imposed by the Board of  Governors of the
            Federal  Reserve  System (or any  successor),  excluding the Reserve
            Percentage,  which  additional or increased costs would increase the
            cost of funding  loans  bearing  interest at the LIBOR Rate.  In any
            such   event,   Agent  shall  give   Borrowers   notice  of  such  a
            determination  and  adjustment  and,  upon its receipt of the notice
            from Agents,  Borrowers may, by notice to Agent (y) require Agent to
            furnish  to  Borrowers  a  statement  setting  forth  the  basis for
            adjusting such LIBOR Rate and the method for  determining the amount
            of such  adjustment,  or (z) repay the LIBOR Rate

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<PAGE>

            Loans with respect to which such  adjustment is made  (together with
            any amounts due under clause (b)(ii) above).

                  (ii) In the event that any change in market  conditions or any
            law, regulation,  treaty, or directive,  or any change therein or in
            the interpretation of application  thereof,  shall at any time after
            the  date  hereof,  in the  reasonable  opinion  of  Agent,  make it
            unlawful  or  impractical  for  the  Revolving  Lenders  to  fund or
            maintain LIBOR Advances or to continue such funding or  maintaining,
            or to determine or charge  interest  rates at the LIBOR Rate,  Agent
            shall give notice of such changed circumstances to Borrowers and (y)
            in the case of any LIBOR Rate Loans that are  outstanding,  the date
            specified  in Agent's  notice  shall be deemed to be the last day of
            the Interest Period of such LIBOR Rate Loans,  and interest upon the
            LIBOR Rate Loans  thereafter  shall accrue interest at the rate then
            applicable  to Base  Rate  Loans,  and (z)  Borrowers  shall  not be
            entitled to elect the LIBOR  Option until Agent  determines  that it
            would no longer be unlawful or impractical to do so.

            (e) NO  REQUIREMENT  OF MATCHED  FUNDING.  Anything to the  contrary
contained herein  notwithstanding,  none of Agent, any Revolving Lender, nor any
Revolving  Lender's  Participants,  is required  actually to acquire  eurodollar
deposits to fund or otherwise  match fund any  Obligation  as to which  interest
accrues at the LIBOR Rate.  The  provisions  of this  Section  shall apply as if
Agent,  the  Revolving  Lenders  or their  Participants  had  match  funded  any
Obligation  as to which  interest  is  accruing  at the LIBOR Rate by  acquiring
eurodollar  deposits  for each  Interest  Period in the amount of the LIBOR Rate
Loans.

3.    CONDITIONS; TERM OF AGREEMENT.

      3.1 CONDITIONS  PRECEDENT TO INITIAL  EXTENSION OF CREDIT.  In addition to
satisfying  each of the  conditions  precedent  set forth in  Section  3.3,  the
obligation  of the Lender  Group (or any  member  thereof)  to make the  initial
Advance and the Term Loan (or otherwise extend any credit  hereunder) is subject
to the prior  fulfillment,  to the  satisfaction of Lender Group, of each of the
conditions set forth below:

            (a) the Closing Date shall occur on or before June ___, 2004;

            (b) Agent shall have received all financing  statements  required by
Agent, and Agent shall have received searches  reflecting the filing of all such
financing statements;

            (c) Agent shall have received each of the  following  documents,  in
form and substance  satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:

                  (i) the Control Agreements,

                  (ii) the Diamond Jo Ship Mortgage,

                  (iii) the Disbursement Letter,

                  (iv) the Fee Letter,

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<PAGE>

                  (v) the Guaranties  executed by Parent and OED Capital and the
            Guarantor Security Agreement,

                  (vi) the Intercompany Subordination Agreement,

                  (vii) the  Intercreditor  Agreement and the  Subordinations of
            Mortgage for Iowa and Louisiana,

                  (viii) the Management Fees Subordination Agreement,

                  (ix) the  Mortgages,  together with any consents  required for
            such Mortgages,

                  (x) the Officers' Certificate,

                  (xi) a solvency  certificate  with  respect to  Borrowers  and
            Guarantors,

                  (xii) the Pledge  Agreement,  together  with all  certificates
            representing the shares of Capital Stock pledged thereunder, as well
            as Capital Stock powers with respect thereto endorsed in blank, and

                  (xiii) the Subordination of Preferred Fleet Mortgage, and

                  (xiv) the Trademark Security Agreement;

            (d) Agent shall have  received a  certificate  from the Secretary of
each Borrower and Guarantor  attesting to the resolutions of such Person's board
of directors (or comparable manager)  authorizing its execution,  delivery,  and
performance  of this Agreement and the other Loan Documents to which such Person
is a party and authorizing specific officers of such Person to execute the same;

            (e)  Agent  shall  have  received  copies  of  each  Borrower's  and
Guarantor's  Governing Documents,  as amended,  modified, or supplemented to the
Closing  Date,  certified by the  Secretary of such  Borrower or  Guarantor,  as
applicable,

            (f) Agent shall have received a  certificate  of status with respect
to each Borrower and Guarantor,  dated within 10 days of the Closing Date,  such
certificate  to be issued by the  appropriate  officer  of the  jurisdiction  of
organization  of such Borrower or Guarantor,  as applicable,  which  certificate
shall  indicate  that such  Borrower or  Guarantor,  as  applicable,  is in good
standing in such jurisdiction;

            (g) Agent shall have received certificates of status with respect to
each Borrower and Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than  the  jurisdiction  of  organization  of such  Borrower  or  Guarantor,  as
applicable)  in  which  its  failure  to be duly  qualified  or  licensed  would
constitute a Material  Adverse Change,  which  certificates  shall indicate that
such  Borrower  or  Guarantor,  as  applicable,  is in  good  standing  in  such
jurisdictions;

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<PAGE>

            (h) Agent shall have received a certificate  of insurance,  together
with the  endorsements  thereto,  as are  required by Section  6.8, the form and
substance of which shall be satisfactory to Agent;

            (i) Agent shall have  received  Collateral  Access  Agreements  with
respect to OED's New Iberia, Louisiana, leased property;

            (j) Agent shall have received opinions of Borrowers' and Guarantors'
counsel (including,  without limitation,  admiralty counsel, real estate counsel
and regulatory counsel) in form and substance satisfactory to Agent;

            (k) Agent shall have  received  satisfactory  evidence  (including a
certificate  of the chief  financial  officer  of Parent)  that all tax  returns
required  to be filed by  Borrowers  have been  timely  filed and all taxes upon
Borrowers or their properties,  assets,  income, and franchises  (including Real
Property  taxes and payroll taxes) have been paid prior to  delinquency,  except
such taxes that are the subject of Permitted Protests;

            (l) Agent shall have completed its business,  legal,  and collateral
due diligence,  including a collateral  audit and review of Borrowers' Books and
verification of Borrowers'  representations  and warranties to the Lender Group,
the results of which shall be satisfactory to Agent;

            (m) Agent shall have received and reviewed the Closing Date Business
Plan and its  detailed  budget on  remaining  construction  costs at the  Racino
Project in form and substance satisfactory to Agent;

            (n) Borrowers shall have paid all Lender Group Expenses  incurred in
connection with the transactions evidenced by this Agreement;

            (o) Agent shall have received mortgagee title insurance policies (or
marked commitments to issue the same) for the Real Property Collateral issued by
a title insurance  company  satisfactory to Agent (each a "Mortgage Policy" and,
collectively, the "Mortgage Policies") in amounts satisfactory to Agent assuring
Agent  that the  Mortgages  on such  Real  Property  Collateral  are  valid  and
enforceable first priority mortgage Liens on such Real Property  Collateral free
and clear of all  defects  and  encumbrances  except  Permitted  Liens,  and the
Mortgage  Policies  otherwise  shall be in form and  substance  satisfactory  to
Agent;

            (p)  Agent  shall  have  received  copies  of each of the  following
documents,  together  with a certificate  of the Secretary of Parent  certifying
each  document  as  being  true,  correct,  and  complete:  (i)  the  Management
Agreements, (ii) the Senior Note Documents, (iii) the Lease, (iv) the Ice Harbor
Parking Agreement, and (v) the Fixed Price Contract;

            (q) Agent shall have received the Senior Note Documents and evidence
of  Borrowers  receipt  of  net  proceeds  from  the  Notes  of  not  less  than
$220,000,000;

            (r) Borrowers shall have received all licenses (including the Gaming
Licenses),  approvals or evidence of other actions  required by any Governmental
Authority,  including the Louisiana  Regulatory  Authorities and the Iowa Gaming
Authorities, in connection

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<PAGE>

with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the  consummation of the transactions  contemplated  hereby and
thereby;

            (s) Agent shall have received  evidence that the aggregate amount of
Excess  Availability  plus cash and Cash  Equivalents  subject  to  satisfactory
Control  Agreements,  after giving effect to the initial  Advances,  is not less
than $10,000,000;

            (t) Agent shall have received  evidence that, upon making of initial
Advance hereunder,  the outstanding  obligations under (i) that certain Loan and
Security  Agreement  between DJL and Wells Fargo Foothill,  dated as of February
23, 2001, (ii) that certain Loan and Security Agreement,  among OED, OED Capital
and Wells Fargo  Foothill,  dated as of June 24,  2003,  in each case as amended
through the Closing Date,  (iii) the Equipment  Loan  Agreement and (iv) the PGC
Indenture,  shall be repaid in full and such agreements  shall be terminated and
all liens thereunder shall be automatically released;

            (u)  Agent  shall  have  received   evidence  that  the  outstanding
obligations  under the OED Indenture  shall have been reduced to $6,910,000  and
that all liens under the OED Loan Documents shall have been released;

            (v) the  Diamond Jo Ship  Mortgage  shall have been  recorded in the
applicable  filing  office of the  United  States  Coast  Guard  and such  other
governmental  agency  as shall be  necessary,  and  Agent  shall  have  received
confirmation, satisfactory to Agent, of such recordation; and

            (w) all other  documents and legal  matters in  connection  with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender Group.

            Notwithstanding  the foregoing,  the Lenders are under no obligation
to make the initial  Advance or the Term Loan (or otherwise to extend any credit
provided  for  hereunder)  unless and until all of the  conditions  set forth in
Section 3.3 below are satisfied to the satisfaction of Agent.

      3.2 CONDITIONS  SUBSEQUENT TO INITIAL EXTENSION OF CREDIT.  The obligation
of the Lender  Group (or any member  thereof) to continue to make  Advances  (or
otherwise extend credit  hereunder) is subject to the fulfillment,  on or before
the date  applicable  thereto,  of each of the  conditions  subsequent set forth
below  (the  failure  by  Borrowers  to so  perform  or  cause  to be  performed
constituting an Event of Default):

            (a) within 180 days of the Closing Date,  deliver to Agent certified
copies of the policies of insurance,  together with the endorsements thereto, as
are  required  by  Section  6.8,  the  form  and  substance  of  which  shall be
satisfactory to Agent and its counsel.

      3.3 CONDITIONS  PRECEDENT TO ALL  EXTENSIONS OF CREDIT.  The obligation of
the  Lender  Group (or any member  thereof)  to make any  Advances  or issue any
Letter of Credit (or to extend any other credit  hereunder)  shall be subject to
the following conditions precedent:

            (a) the representations  and warranties  contained in this Agreement
and the other Loan Documents shall be true and correct in all material  respects
on and as of the date of

                                       62
<PAGE>

such  extension of credit,  as though made on and as of such date (except to the
extent that such  representations  and  warranties  relate  solely to an earlier
date);

            (b) no  Default  or Event of  Default  shall  have  occurred  and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;

            (c) no injunction,  writ,  restraining  order, or other order of any
nature prohibiting,  directly or indirectly,  the extending of such credit shall
have been issued and remain in force by any Governmental  Authority  against any
Borrower, Agent, any Lender, or any of their Affiliates; and

            (d) no Material Adverse Change shall have occurred.

      3.4 TERM.  This  Agreement  shall become  effective upon the execution and
delivery hereof by Borrowers,  Agent, and the Lenders and shall continue in full
force and effect for a term ending on June 15, 2008 (the "Maturity  Date").  The
foregoing  notwithstanding,  the Lender Group, upon the election of the Required
Lenders,  shall have the right to terminate its obligations under this Agreement
immediately  and without notice upon the occurrence and during the  continuation
of an Event of Default.

      3.5 EFFECT OF  TERMINATION.  On the date of termination of this Agreement,
all Obligations  (including  contingent  reimbursement  obligations of Borrowers
with respect to any outstanding  Letters of Credit) immediately shall become due
and  payable  without  notice or demand  (including  either (a)  providing  cash
collateral  to be held by Agent for the benefit of the  Lenders  with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b) causing  the  original  Letters of Credit to be  returned  to Agent).  No
termination of this Agreement,  however, shall relieve or discharge Borrowers or
the  Guarantors of their  duties,  Obligations,  or covenants  hereunder and the
Agent's  Liens in the  Collateral  shall remain in effect until all  Obligations
have been fully and finally paid in full and the Lender  Group's  obligations to
provide  additional  credit hereunder have been terminated.  When this Agreement
has been terminated and all of the Obligations  have been fully and finally paid
in full and the Lender Group's  obligations to provide  additional  credit under
the Loan Documents have been terminated  irrevocably,  Agent will, at Borrowers'
sole  expense,  execute  and deliver any  Uniform  Commercial  Code  termination
statements,  lien releases,  mortgage  releases,  re-assignments  of trademarks,
discharges  of  security  interests,  and other  similar  discharge  or  release
documents (and, if applicable,  in recordable form) as are reasonably  necessary
to  release,  as of  record,  the  Agent's  Liens and all  notices  of  security
interests and liens previously filed by Agent with respect to the Obligations.

      3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any time
upon 90 days' prior  written  notice by  Borrowers to Agent,  to terminate  this
Agreement by paying to Agent,  for the benefit of the Lender Group, in cash, the
Obligations  (including either (a) providing cash collateral to be held by Agent
for the benefit of the Lenders with a Revolver  Commitment in an amount equal to
105% of the then extant  Letter of Credit  Usage,  or (b)  causing the  original
Letters of Credit to be returned to Agent),  in full,  together with (unless the
Obligations are being refinanced with financing provided by or arranged by Wells
Fargo or any of its Affiliates)  the Applicable  Prepayment  Premium;  provided,
however,  that such Applicable Prepayment Premium shall be reduced by 50% if the
Obligations are repaid in full and this

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Agreement is  terminated as a direct  result of the  consummation  of an initial
public offering of Parent's or Borrowers'  Capital Stock, a private placement of
Parent's or Borrowers' stock or subordinated  debt, or a sale (other than a sale
that takes  place as a  consequence  of a judicial  or  nonjudicial  foreclosure
proceeding  or an  Insolvency  Proceeding)  in of all or  substantially  all the
Capital Stock or assets of Parent or Borrowers.  If Borrowers have sent a notice
of  termination  pursuant to the  provisions of this Section,  then the Lenders'
obligations to extend credit  hereunder  shall  terminate and Borrowers shall be
obligated  to  repay  the  Obligations  (including  either  (a)  providing  cash
collateral  to be held by Agent for the benefit of the  Lenders  with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b) causing the original Letters of Credit to be returned to Agent), in full,
together with the Applicable  Prepayment  Premium,  on the date set forth as the
date of  termination  of this  Agreement  in such  notice.  In the  event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason,  including (A) termination  upon the
election of Agent or the Lenders to terminate  after the  occurrence  and during
the continuance of an Event of Default,  (B) foreclosure and sale of Collateral,
(C) sale of the Collateral in any  Insolvency  Proceeding,  or (D)  restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise,  restructure, or arrangement in
any Insolvency  Proceeding,  then, in view of the  impracticability  and extreme
difficulty of ascertaining the actual amount of damages to Agent and the Lenders
or profits  lost by Agent or the Lenders as a result of such early  termination,
and by  mutual  agreement  of the  parties  as to a  reasonable  estimation  and
calculation  of the lost profits or damages of Agent or the  Lenders,  Borrowers
shall pay the Applicable Prepayment Premium to Agent for the pro rata benefit of
the Lenders, measured as of the date of such termination.

4.    CREATION OF SECURITY INTEREST.

      4.1 GRANT OF SECURITY INTEREST.

            (a) Each  Borrower  hereby  grants to Agent,  for the benefit of the
Lender Group, a continuing  security  interest in all of its right,  title,  and
interest in all currently  existing and hereafter  acquired or arising  Personal
Property  Collateral in order to secure  prompt  repayment of any and all of the
Obligations  (other than the FF&E  Obligations) in accordance with the terms and
conditions of the Loan  Documents and in order to secure prompt  performance  by
Borrowers of each of their  covenants and duties under the Loan  Documents.  The
Agent's  Liens in and to the Personal  Property  Collateral  shall attach to all
Personal  Property  Collateral  without  further  act on the  part of  Agent  or
Borrowers.

            (b) OED hereby grants to Agent, for the benefit of the Lender Group,
a continuing  security interest in all of its right,  title, and interest in all
currently existing and hereafter acquired or arising FF&E Collateral in order to
secure  prompt  repayment of any and all of the FF&E  Obligations  in accordance
with the terms and conditions of the Loan Documents. The Agent's Liens in and to
the FF&E Collateral  shall attach to all FF&E Collateral  without further act on
the part of Agent or OED.

            (c) Anything  contained in this Agreement or any other Loan Document
to the contrary  notwithstanding,  except as permitted by Section 7.4, Borrowers
have no authority,  express or implied, to dispose of any item or portion of the
Personal Property Collateral.

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      4.2 NEGOTIABLE COLLATERAL.

            (a) In the event that any Personal  Property  Collateral,  including
proceeds, is evidenced by or consists of Negotiable  Collateral,  the applicable
Borrower  shall  immediately  notify  Agent and,  and if and to the extent  that
perfection of priority of Agent's security  interest is dependent on or enhanced
by  possession,  such  Borrower,  immediately  upon the request of Agent,  shall
endorse and deliver physical possession of such Negotiable Collateral to Agent.

            (b) Upon request by Agent,  the  applicable  Borrower shall take all
steps  reasonably  necessary to grant Agent  control of all  electronic  chattel
paper in accordance with the Code and all  "transferable  records" as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act; and

            (c) In the event a Borrower retains  possession of any chattel paper
or instruments otherwise required to be endorsed and delivered to Agent pursuant
to Section  4.2(a),  all of such chattel paper and  instruments  shall be marked
with the  following  legend:  "This  writing and the  obligations  evidenced  or
secured  thereby are subject to the security  interest of Wells Fargo  Foothill,
Inc., as Agent".

      4.3   COLLECTION  OF  ACCOUNTS,   GENERAL   INTANGIBLES,   AND  NEGOTIABLE
COLLATERAL.  At any time after the occurrence and during the  continuation of an
Event of Default,  Agent or Agent's  designee may (a) notify Account  Debtors of
Borrowers that the Accounts,  chattel paper,  or General  Intangibles  have been
assigned to Agent or that Agent has a security interest therein,  or (b) collect
the Accounts,  chattel  paper,  or General  Intangibles  directly and charge the
collection costs and expenses to the Loan Account.  Each Borrower agrees that it
will  hold  in  trust  for  Agent,  as  Agent's  trustee,  any  of  its  or  its
Subsidiaries'  Collections  that it receives and  immediately  will deliver said
Collections  to Agent in  their  original  form as  received  by the  applicable
Borrower.

      4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.

            (a)  Each  Borrower   authorizes   Agent  to  file,   transmit,   or
communicate,  as  applicable,  Uniform  Commercial  Code  financing  statements,
original financing statements in-lieu of continuation  statements and amendments
describing the Collateral as "all personal property of debtor" or "all assets of
debtor" or words of similar effect in order to perfect Agent's security interest
in the Collateral without such Borrower's signature,  to the extent permitted by
applicable law;  provided,  however,  that Agent shall clearly identify Excluded
Assets as excepted items, as applicable.

            (b) At any time upon the request of Agent,  Borrowers  shall execute
and deliver,  or cause other Persons (including,  without  limitation,  those in
possession of any  Collateral) to execute and deliver,  all further  instruments
and  documents,  and  take all  further  action,  (i) to  perfect  and  continue
perfection of Agent's security interest in the Collateral  (whether now owned or
hereafter  arising or  acquired  or  tangible  or  intangible),  (ii) to create,
perfect and insure Liens in favor of Agent in any Real Property  acquired  after
the Closing  Date,  (iii) in order to consummate  fully all of the  transactions
contemplated  hereby and under the other Loan Documents and (iv) to enable Agent
to exercise and enforce its rights and remedies

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<PAGE>

hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Borrower shall:

                  (i) execute and deliver,  or cause other  Persons  (including,
            without  limitation,  those  in  possession  of any  Collateral)  to
            execute and  deliver,  any and all  financing  statements,  original
            financing  statements in lieu of  continuation  statements,  fixture
            filings,  security  agreements,   pledges,  real  property  security
            instruments, assignments, Collateral Access Agreements, instruments,
            powers of attorney,  endorsements of certificates of title,  and all
            other  documents  (collectively,  the "Additional  Documents")  that
            Agent may request in its Permitted Discretion, in form and substance
            reasonably satisfactory to Agent;

                  (ii) at any reasonable  time,  upon request by Agent,  exhibit
            the  Collateral  for, and allow  inspection  of the  Collateral  by,
            Agent, or persons designated by Agent; and

                  (iii) at Agent's reasonable request,  appear in and defend any
            action or proceeding  that may affect Agent's  security  interest in
            all or any part of the Collateral.

            (c) To the maximum extent permitted by applicable law, each Borrower
authorizes  Agent to execute any such  Additional  Documents  in the  applicable
Borrower's name and authorizes Agent to file such executed Additional  Documents
in any  appropriate  filing  office.  Each  Borrower  also hereby  ratifies  its
authorization  for  Agent  to  have  filed  in any  jurisdiction  any  financing
statements  or amendments  thereto  filed prior to the date hereof.  No Borrower
shall  terminate,  amend or file a  correction  statement  with  respect  to any
Uniform  Commercial  Code financing  statement  filed pursuant to this Section 4
without Agent's prior written  consent,  which consent shall not be unreasonably
withheld.

            (d) In addition, on such periodic basis as Agent shall require, each
Borrower  shall  (i)  provide  Agent  with  a  report  of  all  new  patentable,
copyrightable, or trademarkable materials acquired or generated by such Borrower
during the prior  period,  (ii) cause all patents,  copyrights,  and  trademarks
acquired or  generated  by such  Borrower  that are not already the subject of a
registration  with the  appropriate  filing office (or an  application  therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner  sufficient to impart  constructive  notice of such Borrower's  ownership
thereof  and  (iii)  cause to be  prepared,  executed,  and  delivered  to Agent
supplemental  schedules  to the  applicable  Loan  Documents  to  identify  such
patents,  copyrights,  and trademarks as being subject to the security interests
created thereunder.

            (e) In addition,  if any Borrower acquires any commercial tort claim
or judgment  after the date hereof,  such  Borrower  shall  promptly (but in any
event within 3 Business Days after such acquisition)  deliver to Agent a written
description of such commercial tort claim or judgment, as applicable,  and shall
deliver  a  written  agreement,  in form and  substance  satisfactory  to Agent,
pursuant to which such Borrower shall grant a perfected security interest in all
of its  right,  title  and  interest  in and to such  commercial  tort  claim or
judgment,  as applicable,  to Agent, as security for the Obligations (other than
the FF&E Obligations) (each, a "Commercial Tort Claim/Judgment Assignment").

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<PAGE>

            (f) In addition,  each Borrower  shall furnish to Agent from time to
time statements and schedules further  identifying and describing the Collateral
and such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.

      4.5  POWER  OF  ATTORNEY.   Each  Borrower   hereby   irrevocably   makes,
constitutes,  and appoints  Agent (and any of Agent's  officers,  employees,  or
agents  designated by Agent) as such Borrower's true and lawful  attorney,  with
power to,  from time to time in its  discretion,  take any action and to execute
any instrument that it may deem reasonably  necessary or advisable to accomplish
the purposes of this Agreement,  including,  without limitation,  the following:
(a) if such  Borrower  refuses to, or fails timely to execute and deliver any of
the documents described in Section 4.4, sign the name of such Borrower on any of
the documents described in Section 4.4, (b) at any time that an Event of Default
has occurred and is continuing, sign such Borrower's name on any invoice or bill
of lading relating to the Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) at any time that an Event of Default has occurred and is
continuing,  send requests for verification of Accounts, (d) at any time that an
Event of Default has occurred and is continuing, endorse such Borrower's name on
any Collection item that may come into Agent's possession,  (e) at any time that
an Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Borrower's  policies of insurance and make all  determinations
and decisions  with respect to such  policies of insurance,  and (f) at any time
that an Event of  Default  has  occurred  and is  continuing,  settle and adjust
disputes and claims respecting the Accounts, chattel paper, General Intangibles,
Real  Property  or other  Collateral  directly  with  Account  Debtors  or other
applicable third parties, for amounts and upon terms that Agent determines to be
reasonable,  and Agent may cause to be executed and  delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as each
Borrower's  attorney,  and each and every one of its  rights and  powers,  being
coupled with an interest,  is irrevocable until all of the Obligations have been
fully and finally  repaid and performed and the Lender  Group's  obligations  to
extend credit hereunder are terminated.

      4.6  RIGHT  TO  INSPECT.  Agent  and  each  Lender  (through  any of their
respective  officers,  employees,  or agents) shall have the right, from time to
time and during normal  business  hours  hereafter,  to inspect the Books and to
check, test, and appraise the Collateral,  operations and assets of Borrowers in
order to verify Borrowers'  financial condition or the amount,  quality,  value,
condition of, or any other matter relating to, the Collateral.

      4.7 CONTROL  AGREEMENTS.  Each  Borrower  agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and,  if to  another  securities  intermediary,  unless  each of the  applicable
Borrower,  Agent, and the substitute securities intermediary have entered into a
Control  Agreement.  No  arrangement  contemplated  hereby  or  by  any  Control
Agreement in respect of any  Securities  Accounts or other  Investment  Property
shall be modified by Borrowers  without the prior written consent of Agent. Upon
the  occurrence  and during the  continuance  of a Default or Event of  Default,
Agent may  notify  any  securities  intermediary  to  liquidate  the  applicable
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.

      4.8 FF&E  LETTER OF  CREDIT.  As  additional  credit  enhancement  for the
repayment of the FF&E Obligations to the Lenders, OED has caused the FF&E Letter
of Credit to be issued and  delivered  to Agent.  Agent  shall have the right to
draw upon the FF&E Letter of Credit in accordance  with its terms, in full or in
part (and to apply the proceeds  thereof to the FF&E

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<PAGE>

Obligations  or hold as cash  collateral,  at the  option of  Agent);  provided,
however,  that,  upon written request of OED, so long as (i) no Default or Event
of  Default  shall  then  exist,  and (ii) the  aggregate  amount  of  scheduled
principal payments (without giving effect to any prepayments required hereunder)
made to Agent with respect to the Term Loan equals or exceeds $3,200,000,  Agent
agrees to promptly deliver and release to OED the FF&E Letter of Credit.

5.    REPRESENTATIONS AND WARRANTIES.

            In order to induce  the Lender  Group to enter into this  Agreement,
each Borrower makes the following  representations  and warranties to the Lender
Group which shall be true, correct, and complete,  in all material respects,  as
of the date hereof, and shall be true,  correct,  and complete,  in all material
respects,  as of the  Closing  Date,  and at and as of the date of the making of
each Advance (or other extension of credit) made  thereafter,  as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such  representations  and  warranties  relate  solely to an earlier
date) and such  representations  and warranties  shall survive the execution and
delivery of this Agreement:

      5.1 NO  ENCUMBRANCES.  Each  Borrower  and its  Subsidiaries  has good and
indefeasible  title to their  personal  property  assets and good and marketable
title to their Real  Property,  including  the  Diamond Jo Vessels  and the Real
Property,  in each case free and clear of Liens except for  Permitted  Liens and
except for defects in title that do not  interfere in any material  respect with
its ability to conduct its business or to utilize such property for its intended
purpose.

      5.2 [INTENTIONALLY OMITTED].

      5.3 [INTENTIONALLY OMITTED].

      5.4 EQUIPMENT.  All of the Equipment  (other than any that may have become
obsolete or worn-out) is used or held for use in Borrowers'  business and is fit
for such purposes.

      5.5 LOCATION OF INVENTORY AND  EQUIPMENT.  The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party and are located only at
the locations identified on Schedule 5.5.

      5.6 INVENTORY  RECORDS.  Each Borrower keeps correct and accurate  records
itemizing  and  describing  the  type,  quality,  and  quantity  of its  and its
Subsidiaries' Inventory and the book value thereof.

      5.7 STATE OF  INCORPORATION;  LOCATION OF CHIEF  EXECUTIVE  OFFICE;  FEIN;
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.

            (a) The  jurisdiction  of  organization of each Borrower and each of
its Subsidiaries is set forth on Schedule 5.7.

            (b) The  chief  executive  office of each  Borrower  and each of its
Subsidiaries is located at the address indicated on Schedule 5.7.

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<PAGE>

            (c)  Each  Borrower's  and  each  of  its  Subsidiaries'   FEIN  and
organizational identification number, if any, are identified on Schedule 5.7.

            (d) As of the Closing Date,  Borrowers and their Subsidiaries do not
hold any commercial tort claims, except as set forth on Schedule 5.7.

      5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a)  Each  Borrower  is  duly  organized  and  existing  and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified  reasonably  could
be expected to have a Material Adverse Change.

            (b) Set  forth  on  Schedule  5.8(b),  is a  complete  and  accurate
description of the authorized Capital Stock of each Borrower,  by class, and, as
of the Closing  Date, a  description  of the number of shares of each such class
that are issued and  outstanding.  Other than as described  on Schedule  5.8(b),
there are no subscriptions,  options,  warrants, or calls relating to any shares
of each Borrower's Capital Stock,  including any right of conversion or exchange
under any outstanding  security or other  instrument.  No Borrower is subject to
any obligation  (contingent or otherwise) to repurchase or otherwise  acquire or
retire any  shares of its  Capital  Stock or any  security  convertible  into or
exchangeable for any of its Capital Stock.

            (c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries,  showing: (i) the jurisdiction
of their  organization;  (ii) the  number of shares of each  class of common and
preferred Capital Stock authorized for each of such Subsidiaries;  and (iii) the
number and the  percentage  of the  outstanding  shares of each such class owned
directly  or  indirectly  by the  applicable  Borrower.  All of the  outstanding
Capital Stock of each such  Subsidiary has been validly issued and is fully paid
and (if applicable) non-assessable.

            (d)  Except  as  set  forth  on  Schedule   5.8(c),   there  are  no
subscriptions,  options,  warrants,  or  calls  relating  to any  shares  of any
Borrower's  Subsidiaries'  Capital  Stock,  including any right of conversion or
exchange under any outstanding security or other instrument.  No Borrower or any
of its  respective  Subsidiaries  is subject to any  obligation  (contingent  or
otherwise)  to  repurchase  or  otherwise  acquire  or retire  any shares of any
Borrower's  Subsidiaries'  Capital  Stock or any  security  convertible  into or
exchangeable for any such Capital Stock.

            (e) Set forth on Schedule 5.8(e), is a complete and accurate list of
each Borrower's Restricted Subsidiaries and Unrestricted  Subsidiaries as of the
Closing Date.

      5.9 DUE AUTHORIZATION; NO CONFLICT.

            (a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this  Agreement  and the other Loan  Documents to which it is a
party  have been duly  authorized  by all  necessary  action on the part of such
Borrower.

            (b) As to each Borrower, the execution, delivery, and performance by
such Borrower of this  Agreement  and the other Loan  Documents to which it is a
party do not and will not (i) violate any provision of federal,  state, or local
law or regulation applicable to any

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<PAGE>

Borrower,  the Governing Documents of any Borrower,  or any order,  judgment, or
decree of any court or other  Governmental  Authority  binding on any  Borrower,
(ii) conflict  with,  result in a breach of, or  constitute  (with due notice or
lapse of time or both) a default  under any material  contractual  obligation of
any Borrower  (including any of the Senior Note  Documents),  (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties  or assets of any  Borrower,  other  than  Permitted  Liens,  or (iv)
require any approval of any Borrower's  members or  shareholders or any approval
or  consent of any  Person  under any  material  contractual  obligation  of any
Borrower.

            (c) The  execution,  delivery,  and  performance by such Borrower of
this  Agreement and the Loan Documents to which such Borrower is a party and the
exercise  by Agent of any  rights  or  remedies  in  respect  of any  Collateral
(whether specifically granted or created hereunder or created or provided for by
applicable law) do not and will not require any registration with,  consent,  or
approval  of,  or  notice  to,  or other  action  with or by,  any  Governmental
Authority or other  Person,  other than (i) the filing of financing  statements,
the Diamond Jo Ship Mortgage,  fixture filings,  and Mortgages and the execution
and delivery by the applicable  securities  intermediary or bank of each Control
Agreement,  (ii) any consent or approval  that has been  obtained and remains in
full force and effect and (iii)  with  respect to the  exercise  by Agent of any
rights or remedies in respect of any Collateral,  to the extent  authorizations,
consents or approvals are required by the applicable  Gaming  Authority or under
any intellectual  property license,  contract or agreement and to the extent any
actions are required to be performed by Agent.

            (d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents  contemplated  hereby
and thereby,  when executed and delivered by such Borrower,  will be the legally
valid  and  binding  obligations  of such  Borrower,  enforceable  against  such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable  principles or by bankruptcy,  insolvency,  reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.

            (e) The Agent's  Liens are  validly  created,  perfected,  and first
priority Liens, subject only to Permitted Liens.

      5.10  LITIGATION.  Other than those  matters  disclosed on Schedule  5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers,  threatened  against  Borrowers,  or any of  their  Subsidiaries,  as
applicable,  except for (a) matters that are fully covered by insurance (subject
to customary deductibles),  and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries,  as applicable,
reasonably could not be expected to result in a Material Adverse Change.

      5.11 NO MATERIAL  ADVERSE  CHANGE.  All financial  statements  relating to
Borrowers and the Guarantors that have been delivered by Borrowers to the Lender
Group  have  been  prepared  in  accordance  with GAAP  (except,  in the case of
unaudited financial  statements,  for the lack of footnotes and being subject to
year-end  audit  adjustments)  and  present  fairly  in all  material  respects,
Borrowers'  and  Guarantors'  financial  condition  as of the date  thereof  and
results of operations  for the period then ended.  There has not been a Material
Adverse  Change with respect to Borrowers  or  Guarantors  since the date of the
latest  financial  statements  submitted  to the  Lender  Group on or before the
Closing Date.

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      5.12 FRAUDULENT TRANSFER.

            (a) Borrowers and their  Subsidiaries,  on a consolidated basis, are
Solvent.

            (b) No transfer  of  property  is being made by any  Borrower or any
Subsidiary of a Borrower and no obligation is being  incurred by any Borrower or
any Subsidiary of a Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder,  delay, or
defraud either present or future creditors of Borrowers or their Subsidiaries.

      5.13 EMPLOYEE BENEFITS. None of Borrowers,  any of their Subsidiaries,  or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

      5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrowers'  knowledge,  none of Borrowers' or their Subsidiaries'  properties or
assets has ever been used by Borrowers, their Subsidiaries or by previous owners
or operators in the disposal of, or to produce,  store, handle,  treat, release,
or transport, any Hazardous Materials, where such production, storage, handling,
treatment,  release or transport was in violation,  in any material respect,  of
applicable  Environmental Law, (b) to Borrowers'  knowledge,  none of Borrowers'
nor their  Subsidiaries'  properties  or  assets  has ever  been  designated  or
identified  in any  manner  pursuant  to any  Environmental  Law as a  Hazardous
Materials  disposal  site,  (c) none of Borrowers nor any of their  Subsidiaries
have  received  notice  that a Lien  arising  under  any  Environmental  Law has
attached to any revenues or to any Real Property  owned or operated by Borrowers
or their  Subsidiaries,  and (d) none of Borrowers nor any of their Subsidiaries
have received a summons,  citation,  notice, or directive from the Environmental
Protection Agency or any other federal or state  governmental  agency concerning
any action or omission by any Borrower or any Subsidiary of a Borrower resulting
in the releasing or disposing of Hazardous Materials into the environment.

      5.15 BROKERAGE FEES.  Borrowers and their  Subsidiaries  have not utilized
the services of any broker or finder in  connection  with  Borrowers'  obtaining
financing from the Lender Group under this Agreement and no brokerage commission
or finders fee is payable by Borrowers in connection herewith.

      5.16  INTELLECTUAL  PROPERTY.  Each  Borrower  and  each  Subsidiary  of a
Borrower owns, or holds licenses in, all  trademarks,  trade names,  copyrights,
patents,  patent  rights,  and licenses that are necessary to the conduct of its
business as currently  conducted.  Attached  hereto as Schedule  5.16 is a true,
correct,  and complete  listing of all material  patents,  patent  applications,
trademarks,  trademark applications,  copyrights, and copyright registrations as
to  which  each  Borrower  or one  of its  Subsidiaries  is the  owner  or is an
exclusive licensee.

      5.17  LEASES.   Borrowers  and  their   Subsidiaries  enjoy  peaceful  and
undisturbed  possession under all leases material to their business and to which
they are parties or under which they are operating. All of such leases are valid
and  subsisting  and no material  default (after giving effect to any applicable
notice and cure periods) by Borrowers or their Subsidiaries  exists under any of
them.

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      5.18 DEPOSIT  ACCOUNTS.  Set forth on Schedule 5.18 are all of the Deposit
Accounts of each Borrower and each of its Subsidiaries,  including, with respect
to each  depository  (i) the name and address of such  depository,  and (ii) the
account numbers of the accounts maintained with such depository.

      5.19  COMPLETE  DISCLOSURE.  All  factual  information  (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan  Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction  contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of  Borrowers  or their  Subsidiaries  in  writing  to Agent or any
Lender will be, true and accurate,  in all material respects,  on the date as of
which such  information  is dated or certified and not incomplete by omitting to
state  any fact  necessary  to make  such  information  (taken  as a whole)  not
misleading  in any material  respect at such time in light of the  circumstances
under which such information was provided. On the Closing Date, the Closing Date
Projections  represent,  and as of the date on which any other  Projections  are
delivered to Agent, such additional  Projections represent Borrowers' good faith
best estimate of their and their  Subsidiaries'  its future  performance for the
periods covered thereby.

      5.20 INDEBTEDNESS.  Set forth on Schedule 5.20 is a true and complete list
of  all  Indebtedness  of  each  Borrower  and  each  Subsidiary  of a  Borrower
outstanding  immediately prior to the Closing Date that is to remain outstanding
after the Closing  Date and such  Schedule  accurately  reflects  the  aggregate
principal amount of such Indebtedness and the principal terms thereof.

      5.21 LICENSES AND PERMITS.

            (a)  (i) All  material  licenses  (including  all  necessary  Gaming
Licenses),  permits,  and consents and similar rights required from any federal,
state, or local  governmental body (including the Gaming  Authorities),  for the
ownership,  use, or  operation  of the  businesses  or  properties  now owned or
operated by each Borrower and each  Subsidiary of a Borrower,  have been validly
issued and are in full force and effect;  (ii) each Borrower and each Subsidiary
of a  Borrower  is in  compliance,  in all  material  respects,  with all of the
provisions thereof  applicable to it; and (iii) none of such licenses,  permits,
or  consents is the  subject of any  pending  or, to any  Borrower's  knowledge,
threatened  proceeding  for  the  revocation,   cancellation,   suspension,   or
non-renewal  thereof.  As of the Closing Date (and as of each subsequent date on
which a Borrower  delivers to Agent an updated schedule pursuant to Section 6.17
below),  set forth on Schedule  5.21 is a complete and accurate list of all such
licenses,  permits,  and consents  that are necessary  and  appropriate  for the
operation of the  businesses of each Borrower and each  Subsidiary of a Borrower
and such schedule identifies the date by which an application for the renewal of
such license,  permit, or consent must be filed and describes the status of each
such pending application.

            (b) Each Borrower and each Subsidiary of a Borrower has obtained (i)
all material licenses, permits, and consents necessary or appropriate to conduct
its  business  and  operations  and (ii) as of the Closing  Date,  all  required
approvals from the Gaming  Authorities of the transactions  contemplated  hereby
and by the other Loan Documents.

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<PAGE>

            (c)  Each  Borrower  and  each  Subsidiary  of a  Borrower  owns  or
possesses all patents,  trademarks,  trade names, copyrights,  and other similar
rights necessary for the conduct of business as now carried on or proposed to be
conducted, without any known conflict of the rights of others.

      5.22 SENIOR DEBT.  (a) This  Agreement is the New Revolving  Agreement (as
defined in the Intercreditor  Agreement),  (b) the Term Loan is a refinancing of
the obligations under the FF&E Credit Agreement (as defined in the Intercreditor
Agreement) and (c) all Obligations  constitute Credit Facility  Indebtedness (as
defined in the Intercreditor Agreement).

6.    AFFIRMATIVE COVENANTS.

            Each  Borrower  covenants  and  agrees  that,  so long as any credit
hereunder   shall  be  available  and  until  full  and  final  payment  of  the
Obligations,   Borrowers  shall  and  shall  cause  each  of  their   respective
Subsidiaries to do all of the following:

      6.1  ACCOUNTING  SYSTEM.  Maintain  a system of  accounting  that  enables
Borrowers to produce  financial  statements in accordance with GAAP and maintain
records pertaining to the Borrower  Collateral that contain  information as from
time to time reasonably may be requested by Agent.

      6.2 REPORTING.  Provide Agent and each Lender with the following documents
at the following times in form satisfactory to the Required Lenders:

================================================================================
Monthly (not later than the   (a) a  detailed  itemized  report  reflecting  the
15th day of each month)       prior months and  year-to-date  revenues  from the
                              Vessels,  racetrack,   off-track  betting  parlors
                              (including  video poker revenues) and out-of-state
                              satellite operations,
                              (b) a  detailed  itemized  report  reflecting  tax
                              payments  (including  real estate,  ad valorem and
                              gaming taxes) made during the prior month,

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<PAGE>

                              (c) a detailed  itemized report showing actual and
                              estimated Fixed Construction Costs and a statement
                              reflecting the construction related costs incurred
                              or reasonably expected to be incurred by Borrowers
                              in connection  with the Racino Project prior to or
                              through the  construction  completion date and any
                              variances thereof,
                              (d)  a  detailed   itemized   report  showing  the
                              following  items  by  Gaming  Property:   (i)  the
                              average  daily  dollar  amount of winnings for all
                              Gaming Equipment for such month,  (ii) the average
                              daily  number  of  customers  admitted  into  such
                              Gaming  Property  for such  month,  and  (iii) the
                              average   daily  dollar  amount  of  winnings  per
                              customer admitted for such month,
--------------------------------------------------------------------------------
Monthly (not later than       (e) a Borrowing  Base  Certificate  setting  forth
the 30th day of each          Combined  EBITDA  for  each  Borrower  and  Gaming
month)                        Property,
--------------------------------------------------------------------------------
As prepared or received       (f)  copies  of  each  report  in  respect  of any
                              Borrower's  business issued by a Gaming  Authority
                              or made by Borrower to a Gaming  Authority  within
                              15 days of their  respective  issuance  or  filing
                              date, and
--------------------------------------------------------------------------------
Upon request by Agent         (g) such other  reports as to the  Collateral,  or
                              the  financial  condition of  Borrowers  and their
                              Subsidiaries, as Agent may request.
================================================================================

            In addition,  each Borrower  agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.

      6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent and each
Lender:

            (a) as soon as  available,  but in any event within 30 days (45 days
in the case of a month that is the end of one of the first 3 fiscal  quarters in
a fiscal  year or 90 days in the case of a month  that is the end of the  fiscal
year)  after the end of each month  during each of  Parent's  fiscal  years (the
"Monthly Financial Report"),

                  (i) a company  prepared  consolidated  balance  sheet,  income
            statement,  and  statement  of cash flow  covering  Parent's and its
            Subsidiaries' operations during such period,

                  (ii) a certificate  signed by the chief  financial  officer of
            Parent to the effect that:

                        (A) the financial  statements  delivered  hereunder have
                  been prepared in accordance  with GAAP (except for the lack of
                  footnotes and being subject to year-end audit adjustments) and
                  fairly   present  in  all  material   respects  the  financial
                  condition of Parent and its Subsidiaries,

                        (B) the  representations  and  warranties  of  Borrowers
                  contained in this  Agreement and the other Loan  Documents are
                  true and correct in

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<PAGE>

                  all  material   respects  on  and  as  of  the  date  of  such
                  certificate,  as though made on and as of such date (except to
                  the extent that such  representations  and  warranties  relate
                  solely to an earlier date),

                        (C) there  does not exist any  condition  or event  that
                  constitutes  a Default or Event of Default  (or, to the extent
                  of any  non-compliance,  describing such  non-compliance as to
                  which he or she may have  knowledge and what action  Borrowers
                  have  taken,  are  taking,  or  propose  to take with  respect
                  thereto),

                        (D) each Borrower is in compliance  with its obligations
                  (including,  without limitation,  rental payment  obligations)
                  under each lease agreement relating to real property leased by
                  such Borrower (except for such defaults  described as required
                  pursuant to Section 6.3(a)(ii)(C)), and

                  (iii)  for each  month  that is the date on which a  financial
            covenant in Section 7.20 is to be tested,  a Compliance  Certificate
            demonstrating,  in reasonable detail,  compliance at the end of such
            period with the applicable  financial covenants contained in Section
            7.20,

            (b) as soon as available,  but in any event within 90 days after the
end of each of Parent's fiscal years,

                  (i) financial  statements of Parent and its  Subsidiaries  for
            each such  fiscal  year,  audited by  independent  certified  public
            accountants  reasonably  acceptable to Agent and certified,  without
            any  qualifications,  by such  accountants  to have been prepared in
            accordance with GAAP (such audited financial statements to include a
            balance sheet, income statement,  and statement of cash flow and, if
            prepared, such accountants' letter to management),

                  (ii) a certificate of such accountants  addressed to Agent and
            the Lender  stating that such  accountants  do not have knowledge of
            the existence of any Default or Event of Default under Section 7.20,

            (c) as soon as  available,  but in any  event no later  than 30 days
after  the  end  of  each  of  Parent's  fiscal  years,   copies  of  Borrowers'
Projections,  in form  and  substance  (including  as to  scope  and  underlying
assumptions) satisfactory to Agent, in its sole discretion,  for the forthcoming
fiscal year, month by month,  certified by the chief financial officer of Parent
as being such officer's good faith best estimate of the financial performance of
Borrowers and their Subsidiaries during the period covered thereby,

            (d) if and when filed by any Borrower,

                  (i) any filings or monthly  reports  submitted by any Borrower
            to  the  Louisiana  Regulatory  Authorities,   the  Iowa  Regulatory
            Authorities or any other Gaming Authority other than such filings or
            monthly reports submitted in the ordinary course of business,

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<PAGE>

                  (ii) any filings made by any Borrower with the SEC,

                  (iii) copies of Borrowers' federal income tax returns, and any
            amendments thereto, filed with the Internal Revenue Service, and

                  (iv) any other  information  that is provided by Parent to its
            shareholders in their capacities as shareholders generally,

            (e)  if and  when  filed  by any  Borrower  or any  Subsidiary  of a
Borrower  and as  requested  by  Agent,  satisfactory  evidence  of  payment  of
applicable  excise taxes in each  jurisdiction  in which (i) any Borrower or any
Subsidiary of a Borrower conducts business or is required to pay any such excise
tax, (ii) where any Borrower's or any Subsidiary of a Borrower's  failure to pay
any such  applicable  excise  tax would  result in a Lien on the  properties  or
assets of any  Borrower  or any  Subsidiary  of a  Borrower,  or (iii) where any
Borrower's or any Subsidiary of a Borrower's  failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,

            (f) as soon as a Borrower  has  knowledge  of any event or condition
that  constitutes  a  Default  or an  Event of  Default,  notice  thereof  and a
statement of the  curative  action that  Borrowers  propose to take with respect
thereto,

            (g) as soon as any Borrower has knowledge that the  construction  of
the Racino Project cannot be completed by Contractor, or has knowledge that such
Borrower cannot meet its obligations under the Fixed Price Contract or any other
construction  documents,  notice thereof and a statement of the curative  action
that Borrowers propose to take with respect thereto,

            (h) as soon as any Borrower  has  knowledge  thereof,  notice of any
proposed  legislation  or  administrative  action  specifically   affecting  any
Borrower's  or any  Subsidiary of a Borrower's  gaming  activities or the Racino
Project submitted to the floor for business before any Governmental Authority in
the state of Louisiana or Iowa (including the state legislature or any committee
thereof),

            (i) promptly  following the end of each fiscal  quarter during which
any Restricted  Payment was made pursuant to Section  7.11(3),  Borrowers  shall
deliver to Agent a  certificate  signed by the chief  financial  officer of each
Borrower  stating that each such  Restricted  Payment was  permitted and setting
forth the basis  upon  which the  calculations  required  by  Section  7.11 were
computed,  which  calculations  may be based upon the Company's latest available
internal financial statements, and

            (j) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrowers or their Subsidiaries.

            In addition to the financial statements referred to above, Borrowers
agree  (a)  to  deliver  (i)  financial   statements  for  Borrowers  and  their
Subsidiaries prepared on both a consolidated and consolidating basis (except for
audited  financial   statements)  and  (ii)  audited  financial  statements  for
Borrowers  and  their  Subsidiaries  to the  extent  available  and (b)  that no
Borrower,  or any  Subsidiary of a Borrower,  will have a fiscal year  different
from that of Parent.  Borrowers agree that their  independent  certified  public
accountants  are  authorized to  communicate  with Agent and to release to Agent
whatever financial information concerning

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<PAGE>

Borrowers or their Subsidiaries that Agent reasonably may request. Each Borrower
waives the right to assert a confidential relationship, if any, it may have with
any  accounting  firm or  service  bureau  in  connection  with any  information
requested by Agent pursuant to or in accordance with this  Agreement,  and agree
that Agent may contact  directly any such  accounting  firm or service bureau in
order to obtain such information.

      6.4 [INTENTIONALLY OMITTED].

      6.5 [INTENTIONALLY OMITTED].

      6.6  MAINTENANCE OF PROPERTIES.  Cause all material  properties  which are
owned or leased by Borrowers and their  Subsidiaries  and used in the conduct of
their business and the business of each of their  Subsidiaries  to be maintained
and kept in good condition,  repair and working order  (reasonable wear and tear
excepted) and supplied  with all necessary  equipment and shall cause to be made
all necessary  repairs,  renewals,  replacements,  betterments and  improvements
thereof,  all as in their  reasonable  judgment  may be  necessary,  so that the
business  carried on in connection  therewith  may be properly  conducted at all
times;  provided,  however,  that  nothing  in this  Section  6.6 shall  prevent
Borrowers  from  discontinuing  any  operation  or  maintenance  of any of  such
properties,  or disposing of any of them if such  discontinuance  or disposal is
(a) (i) in the judgment of the Managers of  Borrowers,  desirable in the conduct
of the business of such entity and (ii) would not have a material adverse effect
on the ability of Borrowers and their  Subsidiaries to satisfy their obligations
under this Agreement and other Loan  Documents,  and, to the extent  applicable,
(b) as otherwise permitted under Section 7.4 hereof.

      6.7 TAXES.  Cause all assessments and taxes,  whether real,  personal,  or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their  Subsidiaries or any of their respective assets to be paid in full, before
delinquency  or before the  expiration  of any extension  period,  except to the
extent  that the  validity of such  assessment  or tax shall be the subject of a
Permitted  Protest.  Borrowers  will and will cause their  Subsidiaries  to make
timely payment or deposit of all tax payments and withholding  taxes required of
them by applicable  laws,  including those laws concerning  F.I.C.A.,  F.U.T.A.,
state  disability,  and local,  state,  and federal income taxes, and will, upon
request,  furnish Agent with proof  satisfactory  to Agent  indicating  that the
applicable  Borrower  or  Subsidiary  of a Borrower  has made such  payments  or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each  jurisdictions in which any Borrower is required to pay any
such excise tax.

      6.8 INSURANCE.

            (a) At Borrowers' expense,  maintain insurance  respecting their and
their  Subsidiaries  assets wherever  located,  covering loss or damage by fire,
theft,  explosion,  and all other  hazards and risks as  ordinarily  are insured
against by other Persons  engaged in the same or similar  businesses.  Borrowers
also shall maintain business  interruption and  comprehensive  general liability
insurance,  as well as insurance  against  larceny,  embezzlement,  and criminal
misappropriation.  In addition to the  foregoing,  Borrowers  shall maintain the
following  insurance  with respect to the Real  Property:  (i) special causes of
loss  insurance  (formerly  known as all-risk  insurance),  flood and  sprinkler
leakage,  if applicable,  in an amount sufficient to prevent any Borrower or any
Subsidiary of a Borrower from being or becoming a co-insurer within the terms

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<PAGE>

of the policy or policies  providing  such  insurance,  and in any event for not
less than the full replacement value of the improvements and the fixtures to the
Real Property,  as reasonably  determined by Agent;  (ii) business  interruption
insurance for loss occasioned by the perils commonly insured in a special causes
of loss policy for a period  ending no earlier than the Maturity  Date and in an
aggregate  amount not less than the real estate taxes,  additional  interest and
other assessments for the Real Property and all other continuing expenses of the
Real Property including, without limitation, all payments required to be made by
any Borrower or any  Subsidiary of a Borrower  under the Leases;  (iii) worker's
compensation and employer's liability insurance,  subject to statutory limits or
better,  in respect of any work or other  operations  on, about or in connection
with the Real Property;  and (iv) such other  insurance with respect to the Real
Property in such amounts as Agent,  from time to time,  may  reasonably  request
against  such other  insurable  hazards  which are commonly  insured  against in
respect of property similar to the Real Property.

            (b) All such policies of insurance shall be in such amounts and with
such  insurance  companies as are  reasonably  satisfactory  to Agent.  All such
policies  of  insurance  relating  to  FF&E  Collateral  shall  cover  the  full
replacement cost of such Equipment.  The deductible under all insurance policies
covering FF&E Collateral shall not exceed $100,000 per occurrence in the case of
fire loss, and shall be the lowest commercially  available and reasonably priced
deductible in case of all other losses.  Borrowers  shall deliver  copies of all
such  policies,  any  renewals  thereof and  evidence of payment of the premiums
therefor  to  Agent,   together  with  a  satisfactory   lender's  loss  payable
endorsement  naming Agent as loss payee as its interests may appear with respect
to property  insurance or additional  insured with respect to liability policies
and, if appropriate,  a standard noncontributory  endorsement in favor of Agent.
Each policy of insurance or  endorsement  shall  contain a clause  requiring the
insurer  to give not less  than 10 days'  prior  written  notice to Agent in the
event of  cancellation,  material change or reduction in the coverage or amounts
of the policy for any reason  whatsoever.  In the event of any casualty  loss of
assets of any Borrower  constituting FF&E Collateral and assets not constituting
FF&E  Collateral,  Borrowers  shall allocate any deductible for such loss to the
assets not constituting  FF&E Collateral,  to the extent  practicable  under the
circumstances.

            (c) Borrowers  shall give Agent prompt  notice of the  occurrence of
any  loss  covered  by such  insurance  policies  or of any loss  relating  to a
condemnation  or taking by eminent  domain.  Borrowers  and Agent agree that the
right  to make  any  adjustment  of any  losses  covered  by  insurance  and the
distribution and application of monies received for such losses, condemnation or
eminent domain shall be as follows:

                  (i) In the  absence  of a Default or Event of  Default,  Agent
            shall have the  exclusive  right to adjust any losses  payable  with
            respect  to the  Collateral  under any such  insurance  policies  in
            excess of  $2,000,000  in the  aggregate,  without any  liability to
            Borrowers whatsoever in respect of such adjustments,  and any monies
            received  as  payment  for  any  loss  under  any  insurance  policy
            mentioned above with respect to the Collateral (other than liability
            insurance  policies) or as payment of any award or compensation  for
            condemnation  or  taking  by  eminent  domain  with  respect  to the
            Collateral,   may  be  retained  by  the  applicable   Borrower  for
            application to the cost of repairs,  replacements,  or restorations.
            Any such repairs,  replacements,  or restorations  shall be effected
            with reasonable promptness and shall be of a value at least equal to
            the value of

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<PAGE>

            the items of property destroyed prior to such damage or destruction.
            Borrowers  shall consult with Agent in connection with adjusting any
            losses  payable  with  respect  to the  Collateral  not in excess of
            $2,000,000.

                  (ii)  During the  existence  of a Default or Event of Default,
            Agent shall have the  exclusive  right to adjust any losses  payable
            with respect to the Collateral under any such insurance  policies in
            excess of $150,000  without any liability to Borrower  whatsoever in
            respect of such  adjustments,  and any monies in excess of  $150,000
            received  as  payment  for  any  loss  under  any  insurance  policy
            mentioned above with respect to the Collateral (other than liability
            insurance  policies) or as payment of any award or compensation  for
            condemnation  or  taking  by  eminent  domain  with  respect  to the
            Collateral,  shall  be  paid  over to  Agent  to be  applied  at the
            election of the Required  Lenders  either to the  prepayment  of the
            Obligations or shall be disbursed to Borrowers  under staged payment
            terms  reasonably  satisfactory to Agent for application to the cost
            of repairs, replacements, or restorations.

            (d)  Borrowers  shall  not,  and  shall not  suffer or permit  their
Subsidiaries to, take out separate or additional insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section  6.8,  unless Agent is included  thereon as named  insured with the loss
payable to Agent under a lender's loss payable endorsement or its equivalent and
such insurance designates that such insurance is providing coverage secondary to
the insurance required to be carried  hereunder.  Nothing contained herein shall
prohibit any Borrower or any  Subsidiary of a Borrower from holding or obtaining
an owner's  policy of title  insurance  covering  any Real  Property.  Borrowers
immediately  shall notify Agent  whenever such separate  insurance is taken out,
specifying  the  insurer  thereunder  and full  particulars  as to the  policies
evidencing the same,  and copies of such policies  promptly shall be provided to
Agent.

      6.9  LOCATION  OF  INVENTORY  AND  EQUIPMENT.  Keep  Borrowers'  and their
Subsidiaries'  Inventory  and  Equipment  only at the  locations  identified  on
Schedule 5.5; provided,  however,  that Borrowers may amend Schedule 5.5 so long
as such amendment  occurs by written notice to Agent not less than 30 days prior
to the date on which the  Inventory or Equipment is moved to such new  location,
so long as such new location is within the  continental  United  States,  and so
long as,  at the time of such  written  notification,  the  applicable  Borrower
provides any financing  statements or fixture  filings  necessary to perfect and
continue  perfected  the  Agent's  Liens on such assets  and,  if  requested  by
Required Lenders, also provides to Agent a Collateral Access Agreement.

      6.10 COMPLIANCE WITH LAWS.  Comply with the requirements of all applicable
laws, rules,  regulations,  and orders of any Governmental Authority,  including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.

      6.11 LEASES.  Pay when due all rents and other  amounts  payable under any
leases to which any  Borrower or any  Subsidiary  of a Borrower is a party or by
which any Borrower's or any Subsidiary of a Borrower's properties and assets are
bound, unless such payments are the subject of a Permitted Protest.

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<PAGE>

      6.12  BROKERAGE  COMMISSIONS.  Pay  any and all  brokerage  commission  or
finders fees incurred in connection with or as a result of Borrowers'  obtaining
financing  from the Lender  Group  under  this  Agreement.  Borrowers  agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers,  and each Borrower agrees to indemnify,
defend,  and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers'  obtaining  financing from the
Lender Group under this Agreement.

      6.13  EXISTENCE.  At all times  preserve and keep in full force and effect
each  Borrower's and each  Subsidiary of a Borrower's  valid  existence and good
standing and any rights and franchises material to their respective businesses.

      6.14 ENVIRONMENTAL.

            (a) Keep any  property  either  owned or operated by any Borrower or
any  Subsidiary of a Borrower free of any  Environmental  Liens or post bonds or
other  financial  assurances  sufficient to satisfy the obligations or liability
evidenced by such  Environmental  Liens, (b) comply,  in all material  respects,
with  Environmental  Laws and provide to Agent  documentation of such compliance
which Agent reasonably  requests,  (c) promptly notify Agent of any release of a
Hazardous  Material in any  reportable  quantity from or onto property  owned or
operated by any Borrower or any  Subsidiary  of a Borrower and take any Remedial
Actions required under any applicable Environmental Law to abate said release or
otherwise to come into  compliance with  applicable  Environmental  Law, and (d)
promptly  provide Agent with written notice within 10 days of the receipt of any
of the following:  (i) notice that an Environmental  Lien has been filed against
any of the real or personal  property of any  Borrower  or any  Subsidiary  of a
Borrower,  (ii)  commencement  of any  Environmental  Action or  notice  that an
Environmental  Action will be filed against any Borrower or any  Subsidiary of a
Borrower,  and (iii) notice of a violation,  citation,  or other  administrative
order which reasonably could be expected to result in a Material Adverse Change.

      6.15  DISCLOSURE  UPDATES.  Promptly and in no event later than 5 Business
Days  after  obtaining  knowledge  thereof,  (a)  notify  Agent  if any  written
information,  exhibit,  or report  furnished to the Lender Group  contained  any
untrue  statement  of a  material  fact or omitted  to state any  material  fact
necessary to make the  statements  contained  therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.

      6.16 GOVERNMENT  AUTHORIZATION.  Deliver to Agent, as soon as practicable,
and in any event  within 10 days  after the  receipt by such  Borrower  from any
Gaming Authority or other  Governmental  Authority having  jurisdiction over the
operations  of such  Borrower or any  Subsidiary  of such  Borrower or filing or
receipt  thereof by such Borrower or any  Subsidiary of such Borrower (a) copies
of any order or notice  of such  Gaming  Authority  or such  other  Governmental
Authority or court of competent jurisdiction which designates any Gaming License
or  other  material   franchise,   permit,  or  other   governmental   operating
authorization  of  such  Borrower  or any  Subsidiary  of such  Borrower  or any
application therefor, for a hearing or which refuses renewal or extension of, or
revokes or suspends the  authority of such  Borrower or any  Subsidiary  of such
Borrower to construct, own, manage, or operate its businesses, and (b) a

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copy of any competing  application filed with respect to any such Gaming License
or  other  authorization,  or  application  therefor,  of such  Borrower  or any
Subsidiary of such Borrower, or any citation,  notice of violation,  or order to
show cause issued by any Gaming Authority or other governmental authority or any
complaint filed by any Gaming Authority or other governmental authority which is
available to such Borrower or any Subsidiary of such Borrower.

      6.17  LICENSE  RENEWALS.  Commencing  on the date 6 months  following  the
Closing  Date and  continuing  every 6 months  thereafter,  deliver  to Agent an
updated Schedule 5.21 reflecting thereon,  as of the date of such delivery,  the
information described in Section 5.21.

      6.18  LICENSES  AND  PERMITS.   (a)  Ensure  that  all  material  licenses
(including all necessary  Gaming  Licenses),  permits,  and consents and similar
rights required from any federal,  state, or local  governmental body (including
the Gaming  Authorities) for the ownership,  use, or operation of the businesses
or properties  now owned or operated by each  Borrower and each  Subsidiary of a
Borrower  have been  validly  issued and are in full force and  effect,  and (b)
comply, in all material respects,  with all of the provisions thereof applicable
to it.

      6.19 SUBSIDIARY  GUARANTEES.  Cause (a) each Subsidiary of a Borrower that
is  formed  or  acquired  after  the  date  hereof  (other  than  any CFC) or is
determined to be a Restricted Subsidiary,  concurrently therewith, to (i) become
a Guarantor  hereunder  and execute  and  deliver to Agent a  supplement  to the
Subsidiary  Guaranty  pursuant to which such  Subsidiary  shall  unconditionally
guarantee all of the  Obligations in form and substance  acceptable to Agent and
(ii)  execute a  supplement  to the  Guarantor  Security  Agreement  in form and
substance  acceptable to Agent and such other agreements or documents  necessary
or requested by Agent, including, without limitation,  Mortgages with respect to
any Real  Property  of such  Subsidiary,  to grant  Agent a valid,  enforceable,
perfected Lien on the collateral  described  therein,  subject only to Permitted
Liens;  and (b) cause such Subsidiary to deliver to Agent an opinion of counsel,
in form  reasonably  satisfactory  to Agent,  that (i) such  guaranty,  security
agreement,  and other  agreements  and  documents  have  been  duly  authorized,
executed  and  delivered by such  Subsidiary  and (ii) such  guaranty,  security
agreement,  and such other agreements and documents  constitute a legal,  valid,
binding and  enforceable  obligation  of such  Subsidiary,  subject to customary
assumptions and exceptions,  including for bankruptcy,  fraudulent  transfer and
equitable   principles.   Concurrently  with  such  formation,   acquisition  or
determination,  such  Borrower  will  provide  to Agent a pledge  agreement  and
appropriate  certificates  and  powers  or  Uniform  Commercial  Code  financing
statements,  hypothecating all of the direct or beneficial ownership interest in
such  Subsidiary,  in form and substance  satisfactory  to Agent,  and all other
documentation,  in form and substance  satisfactory  to Agent,  including one or
more  opinions of counsel  satisfactory  to Agent,  which in Agent's  opinion is
appropriate  with  respect  to the  execution  and  delivery  of the  applicable
documentation referred to above. Any document, agreement, or instrument executed
or issued subject to this Section 6.19 shall be a Loan Document.

      6.20 COLLATERAL FOR FF&E OBLIGATIONS.  Use commercially reasonable efforts
to obtain  the  approval  of the  necessary  Gaming  Authorities,  no later than
September  15,  2004,  of (a) the  guaranty  by  Guarantors  and DJL of the FF&E
Obligations  and (b) the grant by Guarantors  and DJL of a security  interest in
the Collateral to secure prompt repayment of the FF&E Obligations.  In the event
Borrowers deliver,  in form and substance  satisfactory to Agent, (a) amendments
to this Agreement,  the Guarantor Security Agreement, the Mortgages, the Diamond

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Jo Ship  Mortgage  and, as requested by Agent,  any other Loan  Documents,  duly
executed by Borrowers and Guarantors, as applicable,  providing for the guaranty
of the FF&E Obligations by Guarantors and DJL and the granting by Guarantors and
DJL of a security  interest in the Collateral to secure prompt  repayment of the
FF&E Obligations,  and (b) opinions of counsel  (including,  without limitation,
admiralty counsel,  real estate counsel and regulatory  counsel) with respect to
such amendments, Agent and Required Lenders will enter into an amendment to this
Agreement deleting Section 7.20(c).

7.    NEGATIVE COVENANTS

            Each  Borrower  covenants  and  agrees  that,  so long as any credit
hereunder   shall  be  available  and  until  full  and  final  payment  of  the
Obligations,  Borrowers  will not and will not  permit  any of their  respective
Restricted Subsidiaries to do any of the following:

      7.1 INDEBTEDNESS.  Create, incur, assume, permit,  guarantee, or otherwise
become  or  remain,   directly  or  indirectly,   liable  with  respect  to  any
Indebtedness, except:

            (a)  Indebtedness  evidenced  by this  Agreement  and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;

            (b) Indebtedness set forth on Schedule 5.20;

            (c)  Indebtedness  represented by Capitalized  Lease  Obligations or
Purchase  Money  Obligations;  provided,  that  (x) no  Advances  hereunder  are
utilized for the purchase or lease of FF&E financed with such Indebtedness,  and
(y) the aggregate principal amount of such Indebtedness  outstanding at any time
does not exceed $7,500,000 for each Gaming Property;

            (d)  Indebtedness  solely in respect of appeal bonds,  surety bonds,
insurance  obligations or bonds,  and  performance  bonds,  and similar bonds or
obligations, all incurred in the ordinary course of business (including, without
limitation,  to maintain any license or permits) in  accordance  with  customary
industry practices;

            (e) Hedging Obligations  incurred to fix or hedge interest rate risk
with respect to any fixed or variable rate Indebtedness  otherwise  permitted by
this  Agreement;  provided,  that the  notional  principal  amount  of each such
Hedging  Obligation does not exceed the principal  amount of the Indebtedness to
which such Hedging Obligation relates;

            (f)  Indebtedness of any Borrower or any Restricted  Subsidiary owed
to and held by a Borrower that is unsecured and subordinated in right of payment
to the Obligations;  provided,  that any subsequent  issuance or transfer of any
Capital  Stock that results in any such  Restricted  Subsidiary  ceasing to be a
Restricted  Subsidiary,  or any transfer of such  Indebtedness  (other than to a
Borrower)  shall be deemed,  in each case, to constitute  the incurrence of such
Indebtedness by such Borrower or such Restricted Subsidiary, as the case may be;

            (g) Indebtedness  outstanding under (i) the Senior Note Documents in
an aggregate  principal amount outstanding not to exceed $233,000,000 at anytime
and (ii) the OED Note Documents in an aggregate principal amount outstanding not
to exceed $6,910,000 at anytime;

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            (h)  Indebtedness  arising  from  the  honoring  by a bank or  other
financial  institution  of a check,  draft or similar  instrument  inadvertently
(except in the case of daylight  overdrafts) drawn against insufficient funds in
the ordinary course of business;  provided such obligation shall not continue to
exist  more than 2  Business  Days  after the date the  applicable  Borrower  or
Subsidiary of a Borrower receives written notification;

            (i) the  accrual of  interest,  the  accretion  or  amortization  of
original issue discount and the payment of interest on any  Indebtedness  in the
form of additional Indebtedness with the same terms;

            (j)  Indebtedness   arising  from  agreements  for  indemnification,
adjustment of purchase  price or similar  obligations,  in each case incurred in
connection with the disposition of any business or assets of Borrowers or any of
the Restricted  Subsidiaries;  provided that the maximum aggregate  liability in
respect of all such  Indebtedness  shall at no time  exceed  the gross  proceeds
actually  received by  Borrowers  or the  applicable  Restricted  Subsidiary  in
connection with such disposition;

            (k)  Indebtedness  issued in exchange  for, or the proceeds of which
are substantially  contemporaneously  used to extend, repay, redeem,  discharge,
refinance, renew, replace, or refund (collectively,  "Refinance"),  Indebtedness
incurred  pursuant clause (b) or (g) above,  clause (l) below or this clause (k)
(the  "Refinancing  Indebtedness");  provided,  that (i) the principal amount of
such  refinancing   Indebtedness   does  not  exceed  the  principal  amount  of
Indebtedness  so  Refinanced  (plus  any  required  premiums  and  out-of-pocket
expenses  reasonably  incurred in connection  therewith),  (ii) the  Refinancing
Indebtedness  has a final  scheduled  maturity  that equals or exceeds the final
stated  maturity,  and a weighted  average life to maturity  that is equal to or
greater than the weighted average life to maturity,  of the  Indebtedness  being
refinanced,  (iii) the Refinancing  Indebtedness  ranks, in right of payment, no
more favorable to the  Obligations or applicable  Guaranty,  as the case may be,
than  the  Indebtedness  being  Refinanced  and any  subordination  terms of the
Refinancing  Indebtedness  must be at least as favorable to the Lenders as those
in the Indebtedness being refinanced,  and (iv) the Refinancing  Indebtedness is
not secured by a Lien on any asset that did not so secure the Indebtedness being
refinanced;

            (l) Indebtedness (including,  without limitation,  Acquired Debt) to
acquire  one or more  Gaming  Properties  if: (i) no Default or Event of Default
shall have  occurred  and be  continuing  at the time of, or would  occur  after
giving  effect  on a pro  forma  basis to such  incurrence;  (ii)  the  Interest
Coverage  Ratio for Borrowers'  most recently  ended 4 full fiscal  quarters for
which internal financial statements are available immediately preceding the date
on which such  additional  Indebtedness  is to be  incurred  (the "Four  Quarter
Reference  Period")  would  have  been  greater  than (x) 1.5 to 1.0 if the last
fiscal  quarter  in the Four  Quarter  Reference  Period is either  the first or
second fiscal quarter of 2004, (y) 1.75 to 1.0 if the last fiscal quarter in the
Four Quarter Reference Period is either in the third or fourth fiscal quarter of
2004 and (z) 2.0 to 1.0 otherwise,  in each case determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom),  as set forth
in the definition of Interest Coverage Ratio, as if such additional Indebtedness
had been incurred at the beginning of such 4-quarter period; and (iii) the final
stated  maturity of such  Indebtedness  is after the  Maturity  Date (except for
Purchase Money Obligations,  Capitalized Lease  Obligations,  or Acquired Debt);

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            (m) unsecured  Indebtedness  not otherwise  permitted by clauses (a)
through  (l) above in an  aggregate  principal  amount (or  accreted  value,  as
applicable) at any time outstanding  pursuant to this clause (m),  including all
Refinancing Indebtedness incurred to repay, redeem, discharge,  retire, defease,
refund,  refinance or replace any Indebtedness  incurred pursuant to this clause
(m), not to exceed $10,000,000;

            (n) Indebtedness permitted by Section 7.6; and

            (o)  Indebtedness  incurred  in  connection  with a Gaming  Property
Financing in an aggregate principal amount not to exceed  $15,000,000;  provided
that (i) Agent consents in writing prior to the incurrence of such  Indebtedness
and (ii) such  $15,000,000  amount  shall be  reduced  dollar-for-dollar  by the
amount of Acquired  Debt  secured by the assets of any Gaming  Property  (unless
such  Acquired  Debt could have been  incurred  under,  and  reduces  the amount
available under, clause (c) above).

      7.2  LIENS.  Create,  incur,  assume,  or  permit to  exist,  directly  or
indirectly,  any Lien on or with  respect  to any of its  assets,  of any  kind,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except for Permitted Liens (for purposes of this Section,  Permitted Liens shall
include Liens that are  replacements  of Permitted  Liens to the extent that the
original  Indebtedness is refinanced,  renewed, or extended under Section 7.1(k)
and so long as the replacement Liens only encumber those assets that secured the
refinanced, renewed, or extended Indebtedness).

      7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.

            (a)  Enter  into  any  merger,  consolidation,   reorganization,  or
recapitalization, or reclassify its Capital Stock; or

            (b)  Liquidate,   wind  up,  or  dissolve   itself  (or  suffer  any
liquidation or dissolution).

      Notwithstanding the foregoing,  nothing in this Section 7.3 shall prohibit
(i) the ability of Restricted Subsidiaries to enter into any merger with another
Restricted Subsidiary, (ii) the ability of a Restricted Subsidiary to enter into
any merger with a Borrower,  so long as (A) such Borrower shall survive any such
merger and (B) such Borrower shall assume,  in a manner  satisfactory  to Agent,
the obligations of such Restricted  Subsidiary under the Loan Documents to which
such Restricted Subsidiary was a party, (iii) the ability of a Borrower to enter
into any merger with another Borrower,  so long as the surviving  Borrower shall
assume,  in a manner  satisfactory  to  Agent,  the  obligations  of such  other
Borrower  under the Loan  Documents to which such other Borrower was a party and
(iv) the liquidation of Peninsula Gaming Capital Corporation.

      7.4 DISPOSAL OF ASSETS.

            (a) Make any sale, lease, exchange, or other disposition,  in one or
a series  of  related  transactions,  of all or any  portion  of the  assets  of
Borrowers  (other  than the sale or other  disposition  of  Equipment  that is a
Permitted  Disposition)  that  compose  the Ice  Harbor  Facility  or the Racino
Project;

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            (b) Make any Asset Sale other than Permitted Dispositions, provided,
however,  that an Asset Sale (other  than  Permitted  Dispositions)  may be made
(other than an Asset Sale  comprised  of any assets that  compose the Ice Harbor
Facility or the Racino Project) if:

                  (i) no Default or Event of Default  shall have occurred and be
            continuing or would result  therefrom (other than a Default or Event
            of Default  arising from an Asset Sale that is a  consequence  of an
            Event of Loss);

                  (ii)  such  Borrower  or  such   Restricted   Subsidiary,   as
            applicable,  receives consideration of not less than the fair market
            value,  as of the  time of such  Asset  Sale (as  determined  by the
            Manager of such Borrower or Restricted Subsidiary in good faith), of
            the assets  that are the  subject of such Asset Sale  (other than an
            Asset Sale that is a consequence of an Event of Loss);

                  (iii)  such  Borrower  or  such  Restricted   Subsidiary,   as
            applicable,  receives 75% of the  consideration  for such Asset Sale
            (other than an Asset Sale that is a consequence of an Event of Loss)
            in the form of either (A) cash or Cash Equivalents or the assumption
            by the transferee of liabilities  (other than  liabilities  that, by
            their terms,  are  subordinated to the Obligations) of such Borrower
            or  such  Restricted  Subsidiary,   as  applicable  (provided,  that
            following  such  Asset Sale  there is no  further  recourse  to such
            Borrower  or  its  Restricted  Subsidiaries  with  respect  to  such
            liabilities and provided, further, that the 75% limitation set forth
            in this  clause  (b)(iii) of this  paragraph  shall not apply to any
            proposed  Asset Sale for which an independent  certified  accounting
            firm has  certified to the Managers of the  applicable  Borrower and
            Agent that the  after-tax  cash portion of the  consideration  to be
            received by such  Borrower  or such  Restricted  Subsidiary  in such
            proposed  Asset  Sale is  equal  to or  greater  than  what  the net
            after-tax cash proceeds would have been had such proposed Asset Sale
            complied  with the 75%  limitation  set forth in this  clause (b) of
            this  paragraph)  or (B)  assets of the type  described  in  Section
            7.4(b)(iv)(A);

                  (iv)  within 360 days of such  Asset  Sale,  the Net  Proceeds
            thereof are (A)  invested in assets  related to the business of such
            Borrower or its  Restricted  Subsidiaries  (which,  in the case of a
            sale of a Gaming  Vessel (as that term is defined in the  Indenture)
            must be a Gaming Vessel having a fair market value, as determined by
            an independent appraisal, at least equal to the fair market value of
            the Gaming  Vessel being  replaced  immediately  preceding the Asset
            Sale),  (B)  applied  to repay  Indebtedness  under  Purchase  Money
            Obligations  secured  by the  assets  sold,  (C)  applied  to  repay
            Indebtedness  under this  Agreement  and to  permanently  reduce the
            Maximum Revolver Amount by the amount of Indebtedness so repaid,  or
            (D) any combination of clauses (A), (B), or (C); and

                  (v) the Net  Proceeds of any Asset Sale  involving an Event of
            Loss are paid over to Agent in conformance  with the requirements of
            Section 6.8(c) hereof;

            (c) Pending the final  application  of any Net Proceeds of any Asset
Sale in accordance with Section 7.4(b),  Borrowers shall apply such Net Proceeds
to the outstanding

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Obligations or retain such Net Proceeds (including,  without limitation, for the
purpose of investing  such Net Proceeds in Cash  Equivalents),  in each case, in
accordance with the terms hereof.

      7.5 CHANGE NAME.  Change any  Borrower's or any Subsidiary of a Borrower's
name, FEIN,  corporate structure,  or identity,  or add any new fictitious name;
provided,  however, that a Borrower or a Subsidiary of a Borrower may change its
name upon at least 30 days' prior  written  notice by such  Borrower to Agent of
such  change  and so long as,  at the time of such  written  notification,  such
Borrower or such Subsidiary provides any financing statements or fixture filings
necessary to perfect and continue perfected Agent's Liens.

      7.6  GUARANTEE.  Guarantee  or  otherwise  become in any way  liable  with
respect to the  obligations  of any third Person  except (a) by  endorsement  of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent, (b) guarantees constituting Investments
permitted  under Section 7.13, (c)  guarantees of obligations  arising under the
Senior Note Documents by Borrowers and their Restricted  Subsidiaries;  provided
that (i) any such Restricted Subsidiary shall have guaranteed the Obligations in
accordance  with Section 6.19;  and (ii) any lien securing such guarantee of the
obligations  under the Senior Note  Documents  shall be  subordinate to any lien
securing  such  guarantee  of the  Obligations  on the  terms  set  forth in the
Intercreditor  Agreement,  (d) guarantees  constituting  Indebtedness  permitted
under  Section 7.1 and (e)  guarantees  of  Subsidiaries  of  Indebtedness  of a
Borrower or Restricted Subsidiary permitted under Section 7.1.

      7.7 NATURE OF  BUSINESS.  Directly or  indirectly  engage to any  material
extent in any line or lines of business  activity other than that which,  in the
reasonable  good faith  judgment  of the  Managers  of  Borrowers,  is a Related
Business.

      7.8 PREPAYMENTS AND AMENDMENTS.

            (a) Except in  connection  with a  refinancing  permitted by Section
7.1(k), make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value,  any  Indebtedness  of a Borrower  or a  Subsidiary
prior to any scheduled principal payment,  sinking fund payment or other payment
at the  stated  maturity  thereof;  other  than  (i) the  Obligations,  (ii) the
obligations  secured by the mortgage granted by OED to the seller of the parcels
of Warner  Land  encumbering  such  parcels  and (iii)  the  obligations  of OED
evidenced by that certain note payable to  International  Game Technology in the
principal amount outstanding as of December 31, 2003, of $548,940, and

            (b) (i) Directly or indirectly,  amend, modify, alter,  increase, or
change any of the terms or conditions of any of the Senior Note Documents in any
manner that would (A) have the effect of (1) increasing principal, interest, fee
or other payment  obligations  thereunder,  (2) adding additional  collateral or
other  guarantors  (other  than as  contemplated  as of the Closing  Date),  (3)
shortening  the  maturity or  increasing  the  amortization  of the  obligations
thereunder, (4) making the covenants,  defaults or other provisions thereof more
burdensome,  or  (5)  altering  the  subordination  provisions  thereof  or  (B)
otherwise have a material adverse effect on the interests of the Lender Group or
(ii) directly or indirectly, amend, modify, alter, increase or change any of the
terms or conditions of the Management Agreements,  the Fixed Price Contract, the
Lease, the Ice Harbor Parking Agreement or any Governing Documents of a Borrower
or its

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Subsidiary  in any  manner  that  would make the  covenants,  defaults  or other
provisions thereof more burdensome on any Borrower or any Guarantor or otherwise
have a material adverse effect on the interests of the Lender Group.

      7.9 CHANGE OF CONTROL.  Cause, permit, or suffer,  directly or indirectly,
any Change of Control.

      7.10  OPERATION OF DIAMOND JO VESSELS.  At any time operate the Diamond Jo
Vessels outside the navigation  limits of the insurance  carried pursuant to the
Diamond Jo Ship Mortgage.

      7.11 RESTRICTED PAYMENTS. Make any Restricted Payment unless:

            (a) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof, and

            (b) immediately after giving effect to such Restricted  Payment on a
pro forma basis,  the Interest  Coverage Ratio for the  immediately  preceding 4
fiscal  quarter  period  for  which  internal  financial  statements  have  been
delivered to Agent would not have been less than 2.0:1.0, and

            (c) such Restricted Payment (the value of any such payment, if other
than cash,  being  determined  in good faith by the  Managers of  Borrowers  and
evidenced  by a  resolution  set  forth in a  certificate  signed  by the  chief
financial officer of Borrowers delivered to Agent),  together with the aggregate
of all other  Restricted  Payments made after the Closing Date, is less than the
sum of:

                  (i) 50% of the sum of Combined  Net Income  plus the  Combined
            Non-Cash  Charges   described  in  clauses  (ii)  and  (iv)  of  the
            definition  of  Combined  Non-Cash  Charges of  Borrowers  and their
            Restricted  Subsidiaries  to the extent  deducted  in  computed  Net
            Income  of the  applicable  Borrower  for the  period  (taken as one
            accounting  period)  from the  beginning  of the first  full  fiscal
            quarter  immediately  following  the Closing Date to the end of such
            Borrower's  most recently  ended fiscal  quarter for which  internal
            financial  statements  are available at the time of such  Restricted
            Payment  (or,  if such  Combined  Net  Income  for such  period is a
            deficit, 100% of such deficit), plus

                  (ii) 100% of the  aggregate  net cash  proceeds (or of the net
            cash proceeds received upon the conversion of non-cash proceeds into
            cash) received by the  applicable  Borrower from (x) the issuance or
            sale,  other  than to a  Subsidiary,  of  Equity  Interests  of such
            Borrower (other than Disqualified  Capital Stock) and (y) any equity
            contribution  from a holder of such Borrower's  Capital Stock (other
            than a Subsidiary),  in each case,  after the Closing Date and on or
            prior to the time of such Restricted Payment, plus

                  (iii) 100% of the  aggregate  net cash proceeds (or of the net
            cash proceeds received upon the conversion of non-cash proceeds into
            cash) received by the applicable Borrower from the issuance or sale,
            other than to a Subsidiary,  of any convertible or exchangeable debt
            security of such Borrower that has been  converted or exchanged into
            Equity Interests of the applicable Borrower (other

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<PAGE>

            than Disqualified Capital Stock) pursuant to the terms thereof after
            the  Closing  Date and on or  prior  to the time of such  Restricted
            Payment (including any additional net cash proceeds received by such
            Borrower upon such conversion or exchange), plus

                  (iv) the aggregate Return from Unrestricted Subsidiaries after
            the  Closing  Date and on or  prior  to the time of such  Restricted
            Payment.

Notwithstanding the foregoing, nothing in this Section will prohibit:

            (1) the  payment  of any  dividend  within 60 days after the date of
      declaration thereof, if at said date of declaration such payment would not
      have been prohibited by the provisions of this Agreement;

            (2) the redemption, purchase, retirement or other acquisition of any
      Equity  Interests of any Borrower in exchange  for, or out of the proceeds
      of, the  substantially  concurrent  sale (other than to a Subsidiary)  of,
      other Equity Interests of such Borrower (other than  Disqualified  Capital
      Stock);

            (3) with respect to each tax year or portion thereof that a Borrower
      qualifies  as a Flow  Through  Entity  and so long as clause  (a) above is
      satisfied,  the payment of Permitted  Tax  Distributions  (whether paid in
      such tax year or portion thereof,  or any subsequent tax year);  provided,
      that (A) prior to the first payment of Permitted Tax Distributions  during
      any particular  calendar year such Borrower provides a certificate  signed
      by the chief financial  officer of such Borrower and an Opinion of Counsel
      to the effect  that it and each other  Flow  Through  Entity in respect of
      which such  distributions  are being made qualify as Flow Through Entities
      for  Federal  income tax  purposes  and for the states in respect of which
      such  distributions  are being made for such tax year or portion  thereof,
      (B) at the time of such  distribution,  the most recent audited  financial
      statements of the applicable  Borrower for periods including such tax year
      or portion  thereof  provided to Agent provide that such Borrower and each
      Subsidiary   of  the   applicable   Borrower  in  respect  of  which  such
      distributions  are being made was treated as a Flow Through Entity for the
      period of such financial  statements,  and (C) in the case of the portion,
      if  any,  of  any  Permitted  Tax  Distribution  that  is  proposed  to be
      distributed  for a particular  taxable  period or portion  thereof,  which
      portion of such  Permitted  Tax  Distribution  is  attributable  to a Flow
      Through Entity that is not a Restricted  Subsidiary,  such portion of such
      proposed  Permitted Tax  Distribution  shall be limited to the Excess Cash
      Distribution  Amount for  Taxes;

            (4)  distributions  or  payments  to any  Excluded  Person for or in
      respect  of  (i)  tax  preparation,   accounting,   licensure,  legal  and
      administrative fees and expenses,  including travel and similar reasonable
      expenses,  incurred on behalf of Borrowers or their respective  Restricted
      Subsidiaries  or in connection  with PGP's ownership of Borrowers or their
      respective  Restricted  Subsidiaries,  consistent with industry  practice,
      (ii) so long as clause (a) above is satisfied,  distributions pursuant to,
      and in  accordance  with,  the  Management  Agreements as permitted by the
      Management Fees Subordination  Agreement,  and (iii) so long as clause (a)
      above is satisfied,  the payment of reasonable and customary directors' or
      managers'  fees to, and  indemnity  provided on behalf of, the

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<PAGE>

      Managers of PGP, Parent and Borrowers,  and reimbursement of customary and
      reasonable  travel and  similar  expenses  incurred on behalf of Parent or
      Borrowers in the ordinary course of business; provided, that the aggregate
      amount payable to PGP or any other Excluded Person or Affiliate, excluding
      any  payments  permitted  by  Section  7.16,  pursuant  to the  Management
      Agreements  or  any  employment,   consulting  or  similar  agreements  or
      arrangements  for any fiscal year shall not exceed the lesser of (A) 4.00%
      of Combined  EBITDA for the  immediately  preceding  fiscal  year,  or (B)
      $4,000,000;

            (5) so long as clause (a) above is  satisfied,  (i) the  repurchase,
      redemption  or other  retirement  or  acquisition  of Equity  Interests of
      Borrowers or any  Restricted  Subsidiary  from its  employees,  members or
      managers (or their heirs or estates) or employees, members or managers (or
      their  heirs  or  estates)  of the  Restricted  Subsidiaries  or (ii)  any
      dividend,   distribution  or  other  payment  to  PGP  to  enable  PGP  to
      repurchase, redeem, or otherwise retire or acquire Equity Interests of PGP
      from any of its employees, members or managers (or their heirs or estates)
      or  employees,  members or managers  (or their heirs or estates) of any of
      their  respective  subsidiaries,  in the  case of  each  of the  preceding
      clauses  (i) and  (ii)  upon  the  death,  disability  or  termination  of
      employment  or pursuant to the terms of any  subscription,  stock  option,
      stockholder or other agreement or plan in effect on the Closing Date in an
      aggregate  amount  pursuant  to this  clause  (5) to all  such  employees,
      members or managers (or their heirs or estates) not to exceed  $750,000 in
      any twelve month period on and after the Closing Date (provided,  however,
      that any amounts not used in any such twelve  month  period may be carried
      forward to the next succeeding twelve month period until used);

            (6)  the  redemption  and  repurchase  of any  Equity  Interests  of
      Borrowers or any of the Restricted  Subsidiaries to the extent required by
      any Gaming Authority;

            (7) so long as clause (a) above is  satisfied,  Borrower may redeem,
      purchase,  retire,  or otherwise acquire for value up to $4,000,000 of its
      Seller Preferred, plus interest accrued thereon;

            (8) so  long  as  clause  (a)  above  is  satisfied,  any  dividend,
      distribution or other payment by any of the Restricted Subsidiaries on its
      Equity  Interests  that is paid pro  rata to all  holders  of such  Equity
      Interests; and

            (9) so long as  clause  (a)  above is  satisfied  and the  aggregate
      amount of Excess  Availability  plus cash and Cash Equivalents  subject to
      satisfactory  Control  Agreements,   after  giving  effect  to  each  such
      Restricted  Payment,  is at least  $10,000,000,  Restricted  Payments  not
      otherwise  permitted by this Section  7.11 in an aggregate  amount  during
      each  fiscal  year not to exceed  for the  fiscal  year  ending  (i) 2004,
      $7,500,000,  (ii) 2005,  $3,750,000  plus the unused portion of the amount
      available  under clause (9)(i),  if any, (iii) 2006,  $3,750,000  plus the
      unused portion of the available under clause  (9)(ii),  if any, (iv) 2007,
      the unused portion of the amount available under clause (9)(iii),  if any,
      and (v) 2008,  the unused  portion of the amount  available  under  clause
      (9)(iv), if any.

      7.12  ACCOUNTING  METHODS.  Modify or change  their  fiscal  year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into,  modify,  or terminate any agreement  currently  existing,  or at any time
hereafter  entered into with any third

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<PAGE>

party  accounting  firm or  service  bureau  for the  preparation  or storage of
Borrowers' or their  Subsidiaries'  accounting  records  without said accounting
firm or service  bureau  agreeing to provide  Agent  information  regarding  the
Collateral or Borrowers' and their Subsidiaries' financial condition.

      7.13  INVESTMENTS.  Except for  Permitted  Investments  or for  Securities
Accounts,  directly or indirectly,  make or acquire any Investment, or incur any
liabilities  (including  contingent  obligations)  for or in connection with any
Investment;  provided, however, that Borrowers and their Restricted Subsidiaries
shall not have Permitted  Investments in deposit accounts or Securities Accounts
in excess of  $250,000  outstanding  at any one time  unless  such  Borrower  or
Restricted Subsidiary, as applicable, and the applicable securities intermediary
or bank have entered into Control Agreements or similar  arrangements  governing
such  Permitted   Investments,   as  Agent  shall  determine  in  its  Permitted
Discretion,  to  perfect  (and  further  establish)  the  Agent's  Liens in such
Permitted Investments.

      7.14  TRANSACTIONS  WITH AFFILIATES.  Directly or indirectly sell,  lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any  property  or  assets  from,   or  enter  into  any   contract,   agreement,
understanding,  loan,  advance or  guaranty  with,  or for the  benefit  of, any
Affiliate  of  Borrowers  or any of the  Restricted  Subsidiaries  (each  of the
foregoing, an "Affiliate Transaction"), except for:

            (a) Except as provided in clause (d) below,  Affiliate  Transactions
entered into in the ordinary course of business that,  together with all related
Affiliate  Transactions,  have an aggregate  value of not more than  $1,000,000;
provided,  that such  transactions are conducted in good faith and on terms that
are no less  favorable to such  Borrower or the relevant  Restricted  Subsidiary
than those that would have been  obtained in a  comparable  transaction  at such
time by such Borrower or such  Restricted  Subsidiary on an  arm's-length  basis
from a Person  that is not an  Affiliate  of such  Borrower  or such  Restricted
Subsidiary;

            (b) Except as provided in clause (d) below,  Affiliate  Transactions
entered into in the ordinary course of business that,  together with all related
Affiliate  Transactions,  have an aggregate  value of not more than  $5,000,000;
provided, that (i) a majority of the disinterested Managers of such Borrower or,
if none, a  disinterested  committee  appointed by the Managers of such Borrower
for such purpose,  determine that such  transactions are conducted in good faith
and on  terms  that  are no less  favorable  to such  Borrower  or the  relevant
Restricted  Subsidiary  than those that would have been obtained in a comparable
transaction  at such time by such Borrower or such  Restricted  Subsidiary on an
arm's-length  basis from a Person that is not an Affiliate  of such  Borrower or
such Restricted  Subsidiary and (ii) prior to entering into such transaction the
applicable  Borrower shall have  delivered to Agent a certificate  signed by the
chief financial officer of such Borrower certifying to such effect;

            (c) Except as provided in clause (d) below,  Affiliate  Transactions
entered into in the ordinary course of business for which a Borrower delivers to
Agent an opinion issued by an accounting,  appraisal or investment  banking firm
of  national  standing  (other  than  Jefferies  & Company,  Inc.  or any of its
Affiliates)  as to the  fairness of such  transaction  to such  Borrower or such
Restricted Subsidiary from a financial point of view; or

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<PAGE>

            (d) Affiliate  Transactions  entered into with Jeffries & Co., Inc.;
provided,  that (i) a majority of the Managers of such Borrower  determine  that
such  transactions  are  conducted  in good  faith and on terms that are no less
favorable to such Borrower or the relevant Restricted Subsidiary than those that
would  have  been  obtained  in a  comparable  transaction  at such time by such
Borrower or such Restricted  Subsidiary on an  arm's-length  basis from a Person
that is not an Affiliate of such Borrower or such  Restricted  Subsidiary,  (ii)
such terms are fully  disclosed to Agent,  and (iii) prior to entering into such
transaction the applicable  Borrower shall have delivered to Agent a certificate
signed  by the  chief  financial  officer  of such  Borrower  certifying  to the
foregoing.

            Notwithstanding  the foregoing,  the following will be deemed not to
be Affiliate  Transactions:  (i) transactions  between or among Borrowers and/or
any or all of the Restricted Subsidiaries, (ii) Restricted Payments permitted by
Section 7.11, (iii) reasonable and customary compensation  (including directors'
fees)  paid to,  and  indemnity  and  customary  employee  benefit  arrangements
(including  directors'  and  officer's  liability  insurance)  provided  for the
benefit of, any  director,  officer,  employee or consultant of Borrowers or any
Restricted  Subsidiary,  or Manager  of PGP,  in each case  entered  into in the
ordinary  course of  business  and for  services  provided  to  Borrowers,  such
Restricted Subsidiary or PGP,  respectively,  as determined in good faith by the
Managers of the  applicable  Borrower,  (iv) any agreement or  arrangement as in
effect  on the  Closing  Date  among  Borrowers  and/or  one or more  Restricted
Subsidiaries,  on the one hand, and any officers or Managers  thereof and/or any
Affiliates of such  Borrower,  on the other hand, as set forth on Schedule 7.14,
as amended, supplemented or otherwise modified with the prior written consent of
Agent, and any transactions contemplated thereby and (v) Permitted Investments.

      7.15  SUSPENSION.  Suspend  or go out of a  substantial  portion  of their
business.

      7.16  COMPENSATION.  Pay  annual  fees and  meeting  fees (a) to M.  Brent
Stevens in excess of  $175,000  in the  aggregate  for each  Gaming  Property in
fiscal  year  2004 or  increase  any such  fees  paid  during  any  fiscal  year
thereafter by more than 15% over such fees paid in the preceding fiscal year and
(b) in any  fiscal  year to any other  director  in excess  of  $100,000  in the
aggregate  or, once such fees paid to any such  director  equal  $100,000 in the
aggregate for a fiscal year, increase any such fees paid to such director during
any fiscal year thereafter by more than 15% over such fees paid in the preceding
fiscal year.

      7.17 USE OF  PROCEEDS.  Use the proceeds of the Advances and the Term Loan
for any  purpose  other than (a) on the Closing  Date,  to (i) repay in full (w)
DJL's obligations under the Loan and Security  Agreement dated February 23, 2001
between DJL and Wells Fargo Foothill,  (x) OED's  obligation  under the Loan and
Security  Agreement dated June 24, 2003,  among OED, OED Capital and Wells Fargo
Foothill,  (y)  OED and OED  Capital's  obligations  under  the  Equipment  Loan
Agreement  and (z)  certain  other  Indebtedness  of OED and  DJL,  and (ii) pay
transactional  fees,  costs,  and  expenses  incurred  in  connection  with this
Agreement and such refinancings,  the other Loan Documents, and the transactions
contemplated hereby and thereby,  and (b) thereafter,  for working capital needs
and capital  expenditures of Borrowers  consistent with the terms and conditions
hereof, for its lawful and permitted purposes.

      7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES. Relocate its chief executive office to a new location without such
Borrower

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<PAGE>

providing to Agent (a) 5 days' prior written  notification  thereof and (b) upon
request  of Agent,  a  Collateral  Access  Agreement  with  respect  to such new
location.  The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee,  warehouseman,  or similar  party  without  Agent's  prior
written consent.

      7.19 SECURITIES  ACCOUNTS.  Except as otherwise permitted by Section 7.13,
establish or maintain any Securities  Account unless Agent shall have received a
Control Agreement in respect of such Securities Account. Borrowers agree not to,
and shall not permit any of the Restricted  Subsidiaries to, transfer assets out
of any  Securities  Account;  provided,  however,  that,  so long as no Event of
Default has occurred and is continuing or would result therefrom,  Borrowers and
the Restricted  Subsidiaries  may use such assets (and the proceeds  thereof) to
the extent not prohibited by this Agreement.

      7.20 FINANCIAL COVENANTS.

            (a) MINIMUM COMBINED EBITDA. Fail to maintain an aggregate amount of
Combined EBITDA plus, for the relevant  period,  the premiums paid in connection
with the April 2004  repurchase of a portion of the notes issued pursuant to the
OED Indenture and the April 2004  redemption of the notes issued pursuant to the
PGC Indenture,  measured on a fiscal quarter-end basis, of at least the required
amount  set forth in the  following  table  for the  period  set forth  opposite
thereto;

--------------------------------------------------------------------------------
     APPLICABLE AMOUNT                                      PERIOD
================================================================================
        $10,000,000             6 fiscal month period ended June 30, 2004
--------------------------------------------------------------------------------
        $20,000,000             9 fiscal month period ended September 30, 2004
--------------------------------------------------------------------------------
        $32,500,000             12 fiscal month period ended December 31, 2004
--------------------------------------------------------------------------------
        $35,000,000             12 fiscal month period ended March 31, 2005, and
                                each fiscal quarter ended thereafter
--------------------------------------------------------------------------------

            (b)  CAPITAL  EXPENDITURES.   (i)  Except  as  provided  in  Section
7.20(b)(ii), make capital expenditures (other than capital expenditures incurred
to complete  construction of the Racino Project) in any fiscal year in excess of
the amount set forth in the  following  table for the period set forth  opposite
thereto:

--------------------------------------------------------------------------------
     APPLICABLE AMOUNT                                      PERIOD
================================================================================
        $7,000,000              Fiscal year 2004
--------------------------------------------------------------------------------
$6,000,000 plus the Capital     Fiscal year 2005 and each fiscal year thereafter
 Expenditure Carry Forward
         Amount
--------------------------------------------------------------------------------

                  (ii)  However,   in  addition  to  the  capital   expenditures
            permitted by Section 7.20(b)(i),  so long as the aggregate amount of
            Excess  Availability  plus  cash and  Cash  Equivalents  subject  to
            satisfactory Control Agreements, after

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<PAGE>

            giving  effect  to  each  such  capital  expenditure,  is  at  least
            $10,000,000,  Borrowers may make capital  expenditures in the amount
            set forth below for the projects described with respect thereto:

                        (A) $3,000,000 to purchase the building  adjacent to the
                  Ice Harbor Facility currently owned by a third party;

                        (B) $3,000,000 to develop a recreational vehicle park at
                  the Racino Project racetrack; and

                        (C)  $7,000,000 to develop an outdoor event venue at the
                  Racino Project racetrack.

            (c) OED EBITDA.  OED shall fail to maintain an  aggregate  amount of
OED EBITDA plus, for the relevant  period,  the premium paid in connection  with
the April 2004  repurchase of a portion of the notes issued  pursuant to the OED
Indenture,  measured on a fiscal  quarter-end  basis,  of at least the  required
amount  set forth in the  following  table  for the  period  set forth  opposite
thereto:

--------------------------------------------------------------------------------
     APPLICABLE AMOUNT                                    PERIOD
================================================================================
        $4,168,000            4 fiscal month period ended June 30, 2004
--------------------------------------------------------------------------------
        $7,294,000            7 fiscal month period ended September 30, 2004
--------------------------------------------------------------------------------
        $12,504,000           10 fiscal month period ended December 31, 2004
--------------------------------------------------------------------------------
        $20,006,400           12 fiscal month period ended March 31, 2005
--------------------------------------------------------------------------------
        $20,044,800           12 fiscal month period ended June 30, 2005
--------------------------------------------------------------------------------
        $20,083,200           12 fiscal month period ended September 30, 2005
--------------------------------------------------------------------------------
        $20,121,600           12 fiscal month period ended December 31, 2005
--------------------------------------------------------------------------------
        $20,160,000           12 fiscal month period ended March 31, 2006
--------------------------------------------------------------------------------

      7.21 MANAGEMENT  AGREEMENTS.  Enter into any Management  Agreement without
delivering  to  Agent  (a) a  subordination  agreement,  in form  and  substance
satisfactory to Agent,  executed by the parties to such Management Agreement and
(b) a copy of such fully executed Management Agreement.

8.    EVENTS OF DEFAULT.

            Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

      8.1. If Borrowers fail to pay (a) Obligations  constituting principal when
due and payable,  or when declared due and payable,  or (b) any other portion of
the Obligations  (including  interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have

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<PAGE>

accrued on such amounts),  fees and charges due the Lender Group,  reimbursement
of Lender Group Expenses,  or other amounts  constituting  Obligations) within 3
days  of the  date  such  Obligation  described  in this  clause  (b) is due and
payable, or when declared due and payable;

      8.2. (a) If  Borrowers  fail or neglect to perform,  keep,  or observe any
term, provision,  condition,  covenant, or agreement:  (i) contained in Sections
6.2 (Reporting), 6.3 (Financial Statements, Reports, Certificates), 6.7 (Taxes),
6.10 (Compliance with Laws),  6.11 (Leases),  6.12 (Brokerage  Commissions),  or
6.13 (Existence) of this Agreement and such failure  continues for a period of 5
Business  Days from the earlier of (A) notice by Agent to  Borrowers  or (B) the
date Borrowers knew or should have known of its occurrence; or (ii) contained in
Sections 6.1 (Accounting System), 6.6 (Maintenance of Properties), 6.9 (Location
of  Inventory  and  Equipment),  or  6.14  (exclusive  of  clause  (d)  thereof)
(Environmental)  of this Agreement and such failure continues for a period of 15
Business  Days from the earlier of (A) notice by Agent to  Borrowers  or (B) the
date Borrowers knew or should have known of its occurrence;  or (b) if Borrowers
or their  Subsidiaries  or the Guarantors  fail or neglect to perform,  keep, or
observe any other term, provision,  condition,  covenant, or agreement contained
in this  Agreement  or any  material  term,  provision,  condition,  covenant or
agreement  contained in any of the other Loan  Documents  (giving  effect to any
grace periods, cure periods, or required notices, if any, expressly provided for
in such other Loan  Documents);  in each case,  other than any term,  provision,
condition,  covenant,  or agreement that is the subject of another  provision of
this  Section 8, in which  event such other  provision  of this  Section 8 shall
govern;

      8.3. If any material portion of any Borrower's or any of its Subsidiaries'
assets is  attached,  seized,  subjected to a writ or distress  warrant,  levied
upon, or comes into the possession of any third Person;

      8.4.  If an  Insolvency  Proceeding  is  commenced  by  Parent,  any other
Guarantor, any Borrower or any of its Subsidiaries;

      8.5. If an Insolvency  Proceeding is commenced  against Parent,  any other
Guarantor,  any Borrower,  or any of its Subsidiaries,  and any of the following
events occur: (a) Parent, the applicable  Borrower or the Subsidiary consents to
the  institution  of the  Insolvency  Proceeding  against  it, (b) the  petition
commencing  the  Insolvency  Proceeding  is not  timely  controverted,  (c)  the
petition commencing the Insolvency Proceeding is not dismissed within 60 days of
the date of the filing thereof; provided,  however, that, during the pendency of
such period,  Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of their  obligation to extend credit  hereunder,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the  properties  or assets of, or to operate  all or any  substantial
portion of the business of, Parent, any Borrower or any of its Subsidiaries,  or
(e) an order for relief shall have been entered therein;

      8.6. If any Borrower or any of its  Subsidiaries is enjoined,  restrained,
or in any way  prevented  by court order from  continuing  to conduct all or any
material  part of its business  affairs for a period of 5  consecutive  Business
Days;

      8.7. If notices of Lien,  levy, or  assessment  in an aggregate  amount in
excess of $750,000 are filed of record with respect to any  Borrower's or any of
its Subsidiaries'  properties or assets by the United States, or any department,
agency, or instrumentality thereof, or by any

                                       94
<PAGE>

state, county, municipal, or governmental agency, or if any taxes or debts owing
at any  time  hereafter  to any  one or more of  such  entities  becomes  a Lien
exceeding the foregoing aggregate limitation,  whether choate or otherwise, upon
any Borrower's or any of its Subsidiaries'  properties or assets and the same is
not paid before the earlier of 30 days after the date it first arises or 15 days
prior to the date on which such asset is subject to being forfeited;

      8.8.  If a judgment  or  judgments  for the  payment of money  (other than
judgments as to which a reputable insurance company has accepted full liability)
is or are entered by a court of competent  jurisdiction  against any Borrower or
any of its  Subsidiaries  and such  judgment or judgments  remain  undischarged,
unbonded,  or unstayed for a period of 60 days after entry;  provided,  that the
aggregate amount of all such judgments exceeds $1,000,000;

      8.9. If there is a default under any  Indebtedness  of any Borrower or any
of its  Subsidiaries  in excess of $1,000,000 and such default (a) occurs at the
final maturity of the obligations  thereunder,  or (b) results in a right by the
other party  thereto,  irrespective  of whether  exercised,  to  accelerate  the
maturity  of  the  applicable   Borrower's  or  its  Subsidiaries'   obligations
thereunder,  to terminate such  agreement,  or to refuse to renew such agreement
pursuant to an automatic renewal right therein;

      8.10.  If any  Borrower  or any of its  Subsidiaries  makes any payment on
account of  Indebtedness  that has been  contractually  subordinated in right of
payment to the payment of the Obligations,  except to the extent such payment is
permitted  by the  terms  of the  subordination  provisions  applicable  to such
Indebtedness;

      8.11. If any misstatement or misrepresentation  exists now or hereafter in
any warranty,  representation,  statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries,  or any officer, employee, agent, or director of
any Borrower or any of its Subsidiaries;

      8.12.  If the  obligation  of any  Guarantor  under  any  guaranty  of the
Obligations  or other  third  Person  under any Loan  Document  is  rendered  or
declared unenforceable or terminated by operation of law or by such Guarantor or
third Person thereunder;

      8.13. If this Agreement or any other Loan Document that purports to create
a Lien,  shall,  for any reason,  fail or cease to create a valid and  perfected
and,  except to the  extent  permitted  by the terms  hereof or  thereof,  first
priority  Lien on or  security  interest  in the  Collateral  covered  hereby or
thereby;

      8.14.  Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower or any  Subsidiary  of a Borrower,  or a proceeding
shall be commenced by any Borrower or any  Subsidiary  of a Borrower,  or by any
Governmental  Authority having  jurisdiction over any Borrower or any Subsidiary
of a Borrower,  seeking to establish the invalidity or unenforceability thereof,
or any Borrower shall deny that any Borrower or any Subsidiary of a Borrower has
any liability or obligation purported to be created under any Loan Document;

      8.15.  If there is an "Event of  Default"  under (and as  defined  in) the
Indenture; or if there is an event of default under any of the other Senior Note
Documents, the OED Note

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Documents or any Management  Agreement  (other than as a result of a restriction
herein or under any other Loan Document);

      8.16.  If  any  Governmental  Authority  (including  the  Louisiana  state
legislature)  restricts  the ability of any Borrower to operate,  or  restricts,
limits or  prohibits  any  Borrower  from  operating,  its  gaming  business  as
conducted on the Closing Date or operating the Racino  Project or the Ice Harbor
Facility in the manner  contemplated  on the Closing  Date and such  restriction
results in a Material Adverse Change;

      8.17.  If Agent fails to receive  evidence of, on or prior to December 31,
2004,  the  completion of  construction  of the facility for the conduct of live
horse racing at the Racino Project location and the  establishment of a schedule
of live race meetings at the Racino Project location;

      8.18. If, for a period of 5 consecutive  Business Days, any Borrower fails
to  keep  in  full  force  and  effect,  suffers  the  termination,  revocation,
forfeiture, nonrenewal or suspension of, or suffers a material adverse amendment
to, any material Gaming License, franchise, registration, qualification, finding
of  suitability  or other  approval  or  authorization  required  to enable such
Borrower to own, operate,  or otherwise conduct or manage its gaming businesses,
including the riverboat,  dockside or land based gaming activities at Borrower's
Ice Harbor  Facility or the gaming  activities  at the Racino  Project,  and any
other location  where a Borrower  conducts such gaming  business  (other than in
connection  with a voluntary  surrender of DJL's  certificate  of  inspection to
cruise in  exchange  for a permit  for  permanently  moored  status of  dockside
gaming);

      8.19. If, for a period of 5 consecutive  Business  Days, any  Governmental
Authority terminates,  suspends,  amends, revokes, repeals or fails to renew any
law, license, franchise, registration,  qualification, finding of suitability or
other  approval or  authorization  required to enable any Borrower or any of its
Subsidiaries  to own,  operate,  or  otherwise  conduct  or  manage  its  gaming
businesses, including the riverboat, dockside or land based gaming activities at
Borrower's Ice Harbor  Facility or the gaming  activities at the Racino Project,
and any other location where a Borrower conducts such gaming business; or

      8.20.  If the FF&E Letter of Credit  expires or is not renewed at least 30
days prior to its expiry date prior to release by Agent  pursuant to Section 4.8
hereof.

9.    AGENT'S RIGHTS AND REMEDIES.

      9.1 RIGHTS AND REMEDIES.

            (a) Upon the occurrence, and during the continuation, of an Event of
Default,  the Required  Lenders (at their  election but without  notice of their
election and without  demand) may authorize and instruct  Agent to do any one or
more of the following on behalf of the Lender Group (and Agent,  acting upon the
instructions of the Required Lenders,  shall do the same on behalf of the Lender
Group), all of which are authorized by Borrowers:

                  (i)  Declare  all  Obligations,   whether  evidenced  by  this
            Agreement,  by  any of  the  other  Loan  Documents,  or  otherwise,
            immediately due and payable;

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                  (ii) Cease advancing  money or extending  credit to or for the
            benefit of  Borrowers  under this  Agreement,  under any of the Loan
            Documents,  or under any other agreement  between  Borrowers and the
            Lender Group;

                  (iii)  Terminate  this  Agreement  and any of the  other  Loan
            Documents  as to any future  liability or  obligation  of the Lender
            Group,  but  without  affecting  any of  the  Agent's  Liens  in the
            Collateral and without affecting the Obligations;

                  (iv)  Settle or  adjust  disputes  and  claims  directly  with
            Account  Debtors for  amounts  and upon terms which Agent  considers
            advisable,  and in such cases,  Agent will  credit the Loan  Account
            with  only the net  amounts  received  by Agent in  payment  of such
            disputed Accounts after deducting all Lender Group Expenses incurred
            or expended in connection therewith;

                  (v) Cause  Borrowers to hold all  returned  Inventory in trust
            for Agent, segregate all returned Inventory from all other assets of
            Borrowers or in Borrowers'  possession and conspicuously  label said
            returned Inventory as the property of Agent;

                  (vi) Without notice to or demand upon any Borrower,  make such
            payments and do such acts as Agent considers necessary or reasonable
            to protect its security  interests in the Collateral.  Each Borrower
            agrees to assemble  the  Personal  Property  Collateral  if Agent so
            requires,  and to make the Personal Property Collateral available to
            Agent at a place  that  Agent  may  designate  which  is  reasonably
            convenient to both parties.  Each Borrower authorizes Agent to enter
            the premises where the Personal Property  Collateral is located,  to
            take and maintain possession of the Personal Property Collateral, or
            any part of it, and to pay,  purchase,  contest,  or compromise  any
            Lien that in  Agent's  determination  appears to  conflict  with the
            Agent's  Liens  and to  pay  all  expenses  incurred  in  connection
            therewith  and to charge  Borrowers'  Loan  Account  therefor.  With
            respect to any of Borrowers' owned or leased premises, each Borrower
            hereby  grants  Agent a license  to enter  into  possession  of such
            premises  and to  occupy  the  same,  without  charge,  in  order to
            exercise  any of the  Lender  Group's  rights or  remedies  provided
            herein, at law, in equity, or otherwise;

                  (vii)  Without  notice  to any  Borrower  (such  notice  being
            expressly  waived),  and without  constituting  a  retention  of any
            collateral in satisfaction  of an obligation  (within the meaning of
            the  Code),  set off and  apply to the  Obligations  any and all (i)
            balances and deposits of any Borrower held by the Lender  Group,  or
            (ii)  Indebtedness  at any time  owing to or for the  credit  or the
            account of any Borrower held by the Lender Group;

                  (viii)  Hold,  as cash  collateral,  any and all  balances and
            deposits of any Borrower held by the Lender Group to secure the full
            and final repayment of all of the Obligations;

                  (ix) Ship, reclaim, recover, store, finish, maintain,  repair,
            prepare  for  sale,  advertise  for  sale,  and sell (in the  manner
            provided for herein) the Personal

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            Property Collateral.  Each Borrower hereby grants to Agent a license
            or other  right to use,  without  charge,  such  Borrower's  labels,
            patents, copyrights, trade secrets, trade names, trademarks, service
            marks, and advertising  matter, or any property of a similar nature,
            as it pertains to the Personal  Property  Collateral,  in completing
            production  of,  advertising  for sale,  and  selling  any  Personal
            Property  Collateral and such  Borrower's  rights under all licenses
            and all  franchise  agreements  shall  inure to the  Lender  Group's
            benefit;

                  (x) Sell the Personal  Property  Collateral at either a public
            or  private  sale,  or  both,  by way of one or  more  contracts  or
            transactions,  for  cash or on  terms,  in such  manner  and at such
            places  (including  Borrowers'  premises)  as  Agent  determines  is
            commercially  reasonable.  It is not  necessary  that  the  Personal
            Property Collateral be present at any such sale;

                  (xi) Give notice of the  disposition of the Personal  Property
            Collateral as follows:

                        (A) Agent shall give  Borrowers  (for the benefit of the
                  applicable Borrower) a notice in writing of the time and place
                  of public  sale,  or,  if the sale is a  private  sale or some
                  other  disposition  other than a public  sale is to be made of
                  the Personal  Property  Collateral,  then the time on or after
                  which the private sale or other disposition is to be made; and

                        (B) The notice shall be personally  delivered or mailed,
                  postage  prepaid,  to  Borrowers as provided in Section 12, at
                  least 10 days  before the  earliest  time of  disposition  set
                  forth in the notice;  no notice needs to be given prior to the
                  disposition of any portion of the Personal Property Collateral
                  that is perishable  or threatens to decline  speedily in value
                  or that is of a type customarily sold on a recognized market;

                  (xii) On behalf of the Lender  Group,  credit bid and purchase
            at any public sale; and

                  (xiii)  Seek the  appointment  of a receiver or keeper to take
            possession  of all or any  portion of the  Collateral  or to operate
            same and,  to the  maximum  extent  permitted  by law,  may seek the
            appointment  of such a receiver  without  the  requirement  of prior
            notice or a hearing.

            (b) The  Lender  Group  shall  have all other  rights  and  remedies
available  to it at law or in equity or  pursuant  to any other  Loan  Documents
(including  the  right to draw,  in full or in part,  under  the FF&E  Letter of
Credit).

            (c) Borrowers hereby acknowledge and agree that the notice described
in  Section   9.1(a)(xi)(B),   when  given,   shall   constitute   a  reasonable
"authenticated  notification of disposition" within the meaning of Section 9-611
of the Uniform Commercial Code, as in effect from time to time in any applicable
jurisdiction.

            (d) Agent or any other member of the Lender Group may be a purchaser
of any or all of the Collateral at any public or, to the extent  permitted under
the Code, private sale

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in accordance with the Code and Agent,  as secured party for and  representative
of the Lender  Group,  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 sale made in  accordance  with the Code, to use and
apply any of the  Obligations  of such  Borrower  as a credit on  account of the
purchase price for any  Collateral  payable by Agent at such sale. To the extent
provided under the Code or other applicable law, each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of any  Borrower  and  Borrower  hereby  waives  (to  the  extent  permitted  by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the  future  have  under  any rule of law or  statute  now
existing or hereafter  enacted until payment in full of the  Obligations.  Agent
shall not be obligated to make any sale of  Collateral  regardless  of notice of
sale having been given.  Agent may adjourn any public or private  sale from time
to time by  announcement  at the time and place fixed  therefor and by notice to
the applicable  Borrower,  and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Borrower hereby waives any
claims  against  Agent arising by reason of the fact that the price at which any
Collateral  may have been  sold at such a  private  sale was less than the price
which might have been obtained at a public sale, even if Agent accepts the first
offer received and does not offer such Collateral to more than one offeree. Each
Borrower further agrees that a breach of any of the covenants  contained in this
Section 9.1 will cause  irreparable  injury to Agent, that Agent has no adequate
remedy at law in respect of such  breach and,  as a  consequence,  that each and
every covenant  contained in this Section 9.1 shall be specifically  enforceable
against such Borrower,  and such Borrower hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense  that no  default  has  occurred  giving  rise to the  Obligations
becoming  due and  payable  prior to their  stated  maturities.  Nothing in this
Section 9.1 shall in any way alter the rights of Agent under this Agreement.

            (e) Agent  may sell the  Collateral  following  the  occurrence  and
during the  continuance of an Event of Default  without giving any warranties as
to the  Collateral.  Agent may  specifically  disclaim  or  modify,  in its sole
discretion,  any  warranties  of title or the  like as to any  Collateral.  This
procedure   will  not  be   considered  to  adversely   affect  the   commercial
reasonableness  of any sale of any of the Collateral.  Agent may comply with any
applicable state or federal law requirements in connection with a disposition of
the  Collateral and  compliance  will not be considered to adversely  affect the
commercial  reasonableness of any sale of the Collateral.  Leasing and licensing
of Collateral by Agent to third Persons are types of sales permitted hereunder.

            (f) If Agent sells any of the  Collateral of any Borrower on credit,
the  Obligations  of such Borrower will be credited only with payments  actually
made by the purchaser and received by Agent and applied to the  indebtedness  of
the purchaser. In the event the purchaser fails to pay for the Collateral, Agent
may resell the Collateral.

            (g) Agent shall have no obligation to marshal any of the Collateral.

            (h)  All  amounts   and   proceeds   (including   checks  and  other
instruments) received by any Borrower in respect of amounts due to such Borrower
in respect of the Collateral or any portion thereof following the occurrence and
during the continuance of an Event of Default shall be received in trust for the
benefit  of  Agent  hereunder,  shall be  segregated  from  other  funds of such
Borrower  and  shall  be  forthwith  paid  over  or  delivered  (subject  to the

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Intercreditor  Agreement to the extent then in effect) to Agent in the same form
as so received (with any necessary  endorsement)  to be held as cash  Collateral
and applied as provided by Section  2.4(b)  following the  occurrence and during
the  continuance  of an Event of Default.  Upon demand from Agent  following the
occurrence and during the  continuance of an Event of Default,  Borrowers  shall
not  adjust,  settle or  compromise  the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.

            (i) Each Borrower agrees that, upon the occurrence of and during the
continuance of an Event of Default and at Agent's  request,  such Borrower will,
and will cause each  Restricted  Subsidiary  of such  Borrower  to (and,  by its
execution and delivery of a Subsidiary  Guaranty or a joinder  thereto,  each of
such  Borrower's  Restricted  Subsidiaries  agrees  to),  immediately  file such
applications  for approval and shall take all other and further actions required
by Agent to obtain such  approvals or consents of regulatory  authorities as are
necessary to transfer  ownership  and control to Agent,  of the Gaming  Licenses
held by it, or its interest in any Person  holding any such Gaming  License.  To
enforce the provisions of this Section 9.1(i), Agent is empowered to request the
appointment  of a  receiver  from any  court  of  competent  jurisdiction.  Such
receiver  shall be instructed to seek from the  applicable  Gaming  Authority an
involuntary transfer of control of any Gaming License for the purpose of seeking
a bona fide  purchaser to whom  control will  ultimately  be  transferred.  Each
Borrower hereby agrees to authorize,  and to cause each Restricted Subsidiary of
such  Borrower to authorize  (and, by its execution and delivery of a Subsidiary
Guaranty or a joinder  thereto,  each  Restricted  Subsidiary  of such  Borrower
agrees to authorize) such an involuntary transfer of control upon the request of
the receiver so appointed and, if any Borrower or any such Restricted Subsidiary
shall  refuse to  authorize  the  transfer,  its approval may be required by the
court. Upon the occurrence and continuance of an Event of Default, each Borrower
shall further use its reasonable best efforts to assist in obtaining approval of
the applicable  Gaming  Authority,  if required,  for any action or transactions
contemplated  by this Agreement or the Loan Documents,  including,  preparation,
execution,  and filing with the applicable Gaming Authority of the assignor's or
transferor's  portion of any  application  or  applications  for  consent to the
assignment of any Gaming License or transfer of control necessary or appropriate
under the applicable  Gaming  Authority's  rules and regulations for approval of
the transfer or assignment of any portion of the  Collateral,  together with any
Gaming  License or other  authorization.  Each  Borrower  acknowledges  that the
assignment or transfer of Gaming Licenses is integral to Agent's  realization of
the value of the Collateral, that there is no adequate remedy at law for failure
by any Borrower to comply with the  provisions  of this Section  9.1(i) and that
such failure  would not be  adequately  compensable  in damages,  and  therefore
agrees that the agreements  contained in this Section 9.1(i) may be specifically
enforced;

            (j) Any  deficiency  in the payment of the  Obligations  that exists
after disposition of the Personal Property  Collateral as provided above will be
paid  immediately  by  Borrowers.  Any  deficiency  in the  payment  of the FF&E
Obligations  that exists after  disposition  of the FF&E  Collateral as provided
above will be paid immediately by OED. Any excess that exists after  disposition
of the  Personal  Property  Collateral  will be returned,  without  interest and
subject to the rights of third Persons, by Agent to Borrowers; and

            (k) In the event  Agent  elects to commence  foreclosure  proceeding
under Louisiana law, Agent may cause such Personal Property  Collateral,  or any
part or parts  thereof,

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to be  immediately  seized and sold,  whether  in term of court or in  vacation,
under ordinary or executory  process,  in accordance with  applicable  Louisiana
law, to the highest bidder for cash, with or without  appraisement,  and without
the  necessity of making  additional  demand upon or notifying  Borrowers or any
Person or placing Borrowers or any Person in default, all of which are expressly
waived.   For  purposes  of  foreclosure   under  Louisiana   executory  process
procedures,  each Borrower  confesses  judgment and  acknowledges to be indebted
unto  and in  favor  of Agent  up to the  full  amount  of the  Obligations,  in
principal,  interest,  costs,  expenses,  attorneys'  fees  and  other  fees and
charges.  To the extent permitted under applicable  Louisiana law, each Borrower
additionally  waives: (a) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws
with regard to appraisal upon judicial sale; (b) the demand and 3 days' delay as
provided under Articles 2639 and 2721 of the Louisiana Code of Civil  Procedure;
(c) the  notice of  seizure  as  provided  under  Articles  2293 and 2721 of the
Louisiana Code of Civil Procedure; (d) the 3 days' delay provided under Articles
2331  and  2722 of the  Louisiana  Code of Civil  Procedure;  and (e) all  other
benefits  provided under  Articles 2331,  2722 and 2723 of the Louisiana Code of
Civil Procedure and all other articles not specifically  mentioned above. Should
it  become   necessary  for  Agent  to  foreclose  under  this  Agreement,   all
declarations  of fact,  which are made  under an  authentic  act before a Notary
Public in the presence of 2 witnesses,  by a Person  declaring such facts to lie
within his or her knowledge, shall constitute authentic evidence for purposes of
executory  process  and  also  for  purposes  of La.  R.S.  9:3509.1,  La.  R.S.
9:3504(D)(6) and La. R.S. 10:9-629, as applicable.  In addition to the foregoing
rights and remedies,  Agent may elect to effect the seizure and  disposition  of
the Personal Property Collateral pursuant to any procedures as may be authorized
by Louisiana law from time to time.

            All rights, remedies, and powers provided in this Agreement relative
to the Collateral may be exercised only to the extent that the exercise  thereof
does not violate any applicable  mandatory  provision of the  applicable  gaming
laws,  rules,  and regulations  enacted by the applicable  Gaming Authority (the
"Applicable  Gaming Laws") and all provisions of this Agreement  relative to the
Collateral are intended to be subject to all applicable  mandatory provisions of
the Applicable  Gaming Laws and to be limited solely to the extent  necessary to
not render the provisions of this Agreement invalid or  unenforceable,  in whole
or in part.  Agent will timely apply for and receive all  required  approvals of
the  applicable  Gaming  Authority for the sale or other  disposition  of Gaming
Equipment  regulated  by  Applicable  Gaming  Laws  (including  any such sale or
disposition  of Gaming  Equipment  consisting of slot  machines,  gaming tables,
cards,  dice,  gaming  chips,  player  tracking  systems,  and all other "gaming
devices" (as such term or words of like import referring  thereto are defined in
the Applicable  Gaming Laws), and "associated  equipment" (as such term or words
of like import referring thereto are defined in the Applicable Gaming Laws).

      9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement,  the other Loan  Documents,  and all other  agreements  shall be
cumulative.  The Lender  Group  shall have all other  rights  and  remedies  not
inconsistent  herewith as  provided  under the Code,  by law,  or in equity.  No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the  Lender  Group of any  Event of  Default  shall be deemed a
continuing  waiver.  No delay by the Lender  Group  shall  constitute  a waiver,
election, or acquiescence by it.

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10.   TAXES AND EXPENSES.

            If any Borrower fails to pay any monies (whether taxes, assessments,
insurance  premiums,  or, in the case of leased  properties or assets,  rents or
other amounts payable under such leases) due to third Persons,  or fails to make
any  deposits  or furnish  any  required  proof of payment  or  deposit,  all as
required under the terms of this Agreement,  then, Agent, in its sole discretion
and without  prior notice to any Borrower,  may do any or all of the  following:
(a) make payment of the same or any part  thereof,  (b) set up such  reserves in
Borrowers'  Loan  Account as Agent deems  necessary  to protect the Lender Group
from the exposure created by such failure,  or (c) in the case of the failure to
comply with Section 6.8 hereof,  obtain and maintain  insurance  policies of the
type  described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent.  Any such amounts paid by Agent shall constitute  Lender
Group  Expenses and any such payments  shall not  constitute an agreement by the
Lender  Group to make  similar  payments in the future or a waiver by the Lender
Group of any Event of Default  under this  Agreement.  Agent need not inquire as
to, or contest the validity of, any such  expense,  tax, or Lien and the receipt
of the  usual  official  notice  for the  payment  thereof  shall be  conclusive
evidence that the same was validly due and owing.

11.   WAIVERS; INDEMNIFICATION.

      11.1 DEMAND;  PROTEST.  Each Borrower  waives demand,  protest,  notice of
protest,  notice of  default or  dishonor,  notice of  payment  and  nonpayment,
nonpayment at maturity, release, compromise,  settlement,  extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.

      11.2 THE LENDER GROUP'S  LIABILITY FOR  COLLATERAL.  Each Borrower  hereby
agrees that: (a) so long as the Lender Group complies with its  obligations,  if
any,  under  the  Code,  Agent  shall  not in any way or  manner  be  liable  or
responsible for: (i) the safekeeping of the Collateral,  (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause,  (iii) any
diminution  in the value  thereof,  or (iv) any act or default  of any  carrier,
warehouseman,  bailee,  forwarding  agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

      11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and hold
the  Agent-Related  Persons,  the  Lender-Related  Persons  with respect to each
Lender,  each  Participant,  and each of their respective  officers,  directors,
employees,   agents,  and  attorneys-in-fact  (each,  an  "Indemnified  Person")
harmless (to the fullest  extent  permitted by law) from and against any and all
claims, demands, suits, actions,  investigations,  proceedings, and damages, and
all  reasonable  attorneys fees and  disbursements  and other costs and expenses
actually  incurred in  connection  therewith  (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against,  imposed
upon,  or  incurred by any of them (a) in  connection  with or as a result of or
related to the execution, delivery, enforcement,  performance, or administration
of  this  Agreement,  any of  the  other  Loan  Documents,  or the  transactions
contemplated  hereby or  thereby,  and (b) with  respect  to any  investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the  proceeds  of the  credit  provided  hereunder  (irrespective  of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing,

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collectively,  the  "Indemnified  Liabilities").  The  foregoing to the contrary
notwithstanding,  Borrowers shall have no obligation to any  Indemnified  Person
under this Section 11.3 with respect to any  Indemnified  Liability that a court
of competent  jurisdiction  finally  determines  to have resulted from the gross
negligence or willful  misconduct of such  Indemnified  Person.  This  provision
shall  survive  the  termination  of this  Agreement  and the  repayment  of the
Obligations.   If  any  Indemnified  Person  makes  any  payment  to  any  other
Indemnified  Person  with  respect  to an  Indemnified  Liability  as  to  which
Borrowers  were  required to indemnify the  Indemnified  Person  receiving  such
payment,   the  Indemnified  Person  making  such  payment  is  entitled  to  be
indemnified   and  reimbursed  by  Borrowers  with  respect   thereto.   WITHOUT
LIMITATION,  THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO  INDEMNIFIED  LIABILITIES  WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED  PERSON OR OF ANY
OTHER PERSON.

12.   NOTICES.

            Unless otherwise provided in this Agreement,  all notices or demands
by Borrowers or Agent to the other  relating to this Agreement or any other Loan
Document  shall be in writing  and (except for  financial  statements  and other
informational  documents which may be sent by first-class mail, postage prepaid)
shall be personally  delivered or sent by registered or certified  mail (postage
prepaid, return receipt requested),  overnight courier, electronic mail (at such
email addresses as such Borrower or Agent, as applicable,  may designate to each
other in accordance herewith), or telefacsimile to Borrowers or to Agent, as the
case may be, at its address set forth below:

            If to any Borrower:        DIAMOND JO, LLC
                                       c/o Peninsula Gaming Partners, LLC
                                       400 E. Third Street, P.O. Box 1750
                                       Dubuque, Iowa 52004
                                       Attn:  Natalie Schramm
                                       Fax No.  (563) 690-2190

            and

                                       THE OLD EVANGELINE DOWNS, L.L.C.
                                       c/o Peninsula Gaming Partners, LLC
                                       11100 Santa Monica Boulevard, 10th Floor
                                       Los Angeles, California 90025
                                       Attn:  M. Brent Stevens
                                       Fax No.  (310) 914-6476

            with copies to:            MAYER, BROWN, ROWE & MAW LLP
                                       1675 Broadway
                                       New York, New York 10019
                                       Attn:  Ron Brody, Esq.
                                       Fax No.  (212) 262-1910

                                      103
<PAGE>

            If to Agent:               WELLS FARGO FOOTHILL, INC.
                                       2450 Colorado Avenue, Suite 3000W
                                       Santa Monica, California 90404
                                       Attn:  Business Finance Division Manager
                                       Fax No.  (310) 453-7413

            with copies to:            PAUL, HASTINGS, JANOFSKY &
                                           WALKER, LLP
                                       600 Peachtree Street, NE, Suite 2400
                                       Atlanta, Georgia 30308-2222
                                       Attn:  Cindy J. K. Davis, Esq.
                                       Fax No.  (404) 815-2424

            Agent and  Borrowers  may  change  the  address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection  with  enforcement  rights against the
Collateral  under the  provisions of the Code,  shall be deemed  received on the
earlier  of the date of actual  receipt or 3  Business  Days  after the  deposit
thereof in the mail. Each Borrower  acknowledges and agrees that notices sent by
the Lender Group in connection  with the exercise of enforcement  rights against
Collateral  under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered,  or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

            (a) THE  VALIDITY  OF THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS
(UNLESS  EXPRESSLY  PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,  INTERPRETATION, AND ENFORCEMENT
HEREOF AND  THEREOF,  AND THE RIGHTS OF THE  PARTIES  HERETO  AND  THERETO  WITH
RESPECT TO ALL MATTERS  ARISING  HEREUNDER OR  THEREUNDER  OR RELATED  HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE  LAWS OF THE  STATE OF NEW  YORK  WITHOUT  REGARD  TO THE  CONFLICT  OF LAWS
PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

            (b) THE  PARTIES  AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN
CONNECTION  WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND
LITIGATED  ONLY IN THE STATE AND  FEDERAL  COURTS  LOCATED  IN THE COUNTY OF NEW
YORK,  STATE OF NEW YORK  AND  EACH  SUCH  PARTY  HERETO  HERBY  SUBMITS  TO THE
JURISDICTION  OF EACH  SUCH  COURT,  PROVIDED,  HOWEVER,  THAT ANY SUIT  SEEKING
ENFORCEMENT  AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION,  IN THE  COURTS OF ANY  JURISDICTION  WHERE  AGENT  ELECTS TO BRING SUCH
ACTION OR WHERE SUCH  COLLATERAL OR OTHER  PROPERTY MAY BE FOUND.  BORROWERS AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER

                                      104
<PAGE>

APPLICABLE  LAW,  ANY RIGHT  EACH MAY HAVE TO ASSERT THE  DOCTRINE  OF FORUM NON
CONVENIENS  OR TO OBJECT TO VENUE TO THE  EXTENT  ANY  PROCEEDING  IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).

            (c)  BORROWERS  AND THE LENDER GROUP  HEREBY WAIVE THEIR  RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE  TRANSACTIONS  CONTEMPLATED  THEREIN,
INCLUDING  CONTRACT CLAIMS,  TORT CLAIMS,  BREACH OF DUTY CLAIMS,  AND ALL OTHER
COMMON LAW OR STATUTORY  CLAIMS.  BORROWERS AND THE LENDER GROUP  REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH  LEGAL  COUNSEL.  IN THE  EVENT  OF
LITIGATION,  A COPY OF THIS  AGREEMENT  MAY BE FILED AS A WRITTEN  CONSENT  TO A
TRIAL BY THE COURT.

14.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

      14.1 ASSIGNMENTS AND PARTICIPATIONS.

            (a) Any Lender may, with the written consent of Agent (provided that
no written  consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee),  and, so long as no Event
of Default then exists, Borrowers,  assign and delegate to one or more assignees
(each an "Assignee")  all, or any ratable part of all, of the  Obligations,  the
Commitments  and the other rights and  obligations of such Lender  hereunder and
under the other Loan Documents,  in a minimum amount of $5,000,000  (except that
such minimum  amount  shall not apply to an  Affiliate  of a Lender);  provided,
however, that Borrowers' consent shall not be unreasonably withheld, conditioned
or delayed;  and provided  further that that Borrowers and Agent may continue to
deal solely and  directly  with such Lender in  connection  with the interest so
assigned to an Assignee  until (i) written notice of such  assignment,  together
with payment  instructions,  addresses,  and related information with respect to
the  Assignee,  have been given to  Borrowers  and Agent by such  Lender and the
Assignee,  (ii) such Lender and its Assignee  have  delivered  to Borrowers  and
Agent an Assignment and Acceptance in form and substance  satisfactory to Agent,
and (iii) the assignor Lender or Assignee has paid to Agent for Agent's separate
account a processing fee in the amount of $5,000.  Anything  contained herein to
the  contrary  notwithstanding,  the consent of Agent shall not be required  and
payments  of any  fees  shall  not be  required  if (x)  such  assignment  is in
connection with any merger, consolidation,  sale, transfer, or other disposition
of all or any  substantial  portion of the  business or loan  portfolio  of such
Lender or (y) the  assignee  is an  Affiliate  (other than  individual(s))  of a
Lender. Anything contained herein to the contrary  notwithstanding,  Wells Fargo
Foothill  agrees  for the  benefit  of  Borrowers  that,  so long as no Event of
Default has occurred and is  continuing,  Wells Fargo Foothill shall retain more
than fifty  percent  (50%) of the  Obligations  and  commitment to make Advances
under  Section  2.1 of this  Agreement,  provided,  however,  that,  the minimum
retention of Obligations and commitment to make Advances shall not be applicable
if such  assignment  is in  connection  with any  merger,  consolidation,  sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of Wells Fargo Foothill.

                                      105
<PAGE>

            (b) From and after the date that Agent notifies the assignor  Lender
(with a copy to  Borrowers)  that it has  received  an executed  Assignment  and
Acceptance and payment of the above-referenced  processing fee, (i) 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 and
Acceptance,  shall have the rights and  obligations  of a Lender  under the Loan
Documents,  and (ii) the assignor  Lender  shall,  to the extent that rights and
obligations  hereunder and under the other Loan  Documents have been assigned by
it pursuant to such  Assignment  and  Acceptance,  relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations  under
this Agreement (and in the case of an Assignment and Acceptance  covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement  and the other Loan  Documents,  such Lender shall cease to be a party
hereto  and  thereto),  and such  assignment  shall  affect a  novation  between
Borrowers and the Assignee.

            (c) By executing and  delivering an Assignment and  Acceptance,  the
assigning  Lender  thereunder and the Assignee  thereunder  confirm to and agree
with each  other and the other  parties  hereto as  follows:  (1) other  than as
provided in such  Assignment  and  Acceptance,  such  assigning  Lender makes no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement or the execution,  legality,  validity,  enforceability,  genuineness,
sufficiency  or value of this  Agreement  or any other Loan  Document  furnished
pursuant hereto,  (2) such assigning Lender makes no  representation or warranty
and  assumes no  responsibility  with  respect  to the  financial  condition  of
Borrowers  or the  performance  or  observance  by  Borrowers  of  any of  their
obligations under this Agreement or any other Loan Document  furnished  pursuant
hereto,  (3)  such  Assignee  confirms  that  it has  received  a copy  of  this
Agreement,  together with such other  documents and information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and  Acceptance,  (4) such Assignee will,  independently  and without
reliance upon Agent,  such  assigning  Lender or any other Lender,  and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
this  Agreement,  (5) such Assignee  appoints and authorizes  Agent to take such
actions and to exercise  such powers under this  Agreement  as are  delegated to
Agent,  by the  terms  hereof,  together  with  such  powers  as are  reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

            (d)  Immediately  upon each  Assignee's  making its  processing  fee
payment under the Assignment and  Acceptance and receipt and  acknowledgment  by
Agent of such fully executed Assignment and Acceptance,  this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the  resulting  adjustment  of the  Commitments
arising therefrom.  The Commitments allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.

            (e) Any Lender may at any time,  with the written  consent of Agent,
sell to one or more commercial banks, financial  institutions,  or other Persons
not Affiliates of such Lender (a "Participant")  participating  interests in its
Obligations,  the Commitments, and the other rights and interests of that Lender
(the  "Originating  Lender")  hereunder  and  under  the  other  Loan  Documents
(provided that no written  consent of Agent shall be required in connection with
any  sale  of any  such  participating  interests  by a  Lender  to an  Eligible
Transferee);  provided,  however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this

                                      106
<PAGE>

Agreement  and the  other  Loan  Documents  and the  Participant  receiving  the
participating interest in the Obligations, the Commitments, and the other rights
and  interests  of the  Originating  Lender  hereunder  shall not  constitute  a
"Lender"  hereunder  or under  the  other  Loan  Documents  and the  Originating
Lender's  obligations  under this  Agreement  shall remain  unchanged,  (ii) the
Originating  Lender shall remain solely  responsible for the performance of such
obligations,  (iii)  Borrowers,  Agent,  and the Lenders shall  continue to deal
solely  and  directly  with  the  Originating  Lender  in  connection  with  the
Originating  Lender's rights and obligations  under this Agreement and the other
Loan  Documents,  (iv) no  Lender  shall  transfer  or grant  any  participating
interest under which the  Participant has the right to approve any amendment to,
or any consent or waiver  with  respect  to,  this  Agreement  or any other Loan
Document,  except to the extent  such  amendment  to, or consent or waiver  with
respect to this  Agreement  or of any other Loan  Document  would (A) extend the
final maturity date of the  Obligations  hereunder in which such  Participant is
participating,  (B) reduce  the  interest  rate  applicable  to the  Obligations
hereunder  in which such  Participant  is  participating,  (C)  release all or a
material  portion of the  Collateral,  the FF&E  Letter of Credit or  guaranties
(except to the extent expressly provided herein or in any of the Loan Documents)
supporting the Obligations hereunder in which such Participant is participating,
(D)  postpone  the  payment  of, or reduce the amount of, the  interest  or fees
payable to such Participant through such Lender, or (E) change the amount or due
dates of scheduled principal repayments or prepayments or premiums,  and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had
not sold such  participation,  except that,  if amounts  outstanding  under this
Agreement  are due and unpaid,  or shall have been declared or shall have become
due and payable upon the  occurrence  of an Event of Default,  each  Participant
shall be deemed to have the right of set-off  in  respect  of its  participating
interest  in amounts  owing  under this  Agreement  to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.  The rights of any Participant only shall be derivative  through
the  Originating   Lender  with  whom  such  Participant   participates  and  no
Participant  shall  have any  rights  under  this  Agreement  or the other  Loan
Documents or any direct rights as to the other Lenders,  Agent,  Borrowers,  the
Collateral,   the  FF&E  Letter  of  Credit  or  otherwise  in  respect  of  the
Obligations.  No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.

            (f) In  connection  with any such  assignment  or  participation  or
proposed  assignment or  participation,  a Lender may disclose all documents and
information  which  it now or  hereafter  may  have  relating  to  Borrowers  or
Borrowers' business.

            (g) Any  other  provision  in this  Agreement  notwithstanding,  any
Lender may at any time  create a  security  interest  in, or pledge,  all or any
portion of its  rights  under and  interest  in this  Agreement  in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14,  and such Federal Reserve Bank may
enforce  such  pledge  or  security  interest  in  any  manner  permitted  under
applicable law.

            (h) Subject to the last  sentence  of this  Section  14.1(h),  Agent
shall maintain, or cause to be maintained,  a register (the "Register") on which
it enters the name of a Lender as the registered  owner of each Advance,  as the
case may be, held by such Lender. A Registered Loan (and the Registered Note, if
any,  evidencing  the same) may be  assigned or sold in whole or in part only by
registration  of such  assignment or sale on the Register  (and each  Registered
Note shall  expressly so provide).  Subject to the last sentence of this Section
14.1(h), any assignment

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<PAGE>

or sale of all or part of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by  registration of such assignment or
sale on the Register,  together with the  surrender of the  Registered  Note, if
any,  evidencing  the  same  duly  endorsed  by  (or  accompanied  by a  written
instrument of assignment or sale duly executed by) the holder of such Registered
Note, whereupon,  at the request of the designated assignee(s) or transferee(s),
one or more new Registered Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the registration
of an assignment or sale of any  Registered  Loan (and the  Registered  Note, if
any,  evidencing  the same),  Borrowers,  Agent and the Lenders  shall treat the
Person in whose name such  Registered  Loan (and the  Registered  Note,  if any,
evidencing  the same) is  registered  as the owner  thereof  for the  purpose of
receiving  all  payments  thereon  and for all other  purposes,  notwithstanding
notice to the contrary.  In the case of an  assignment or delegation  covered by
Section 14.1(a)(y), the assigning Lender shall maintain a register comparable to
the Register on behalf of Agent.

            (i) In the event that a Lender sells  participations in a Registered
Loan,  such Lender shall  maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the "Participant  Register"). A
Registered  Loan (and the Registered  Note, if any,  evidencing the same) may be
participated in whole or in part only by registration of such  participation  on
the Participant  Register (and each Registered Note shall expressly so provide).
Any  participation  of such  Registered  Loan (and the Registered  Note, if any,
evidencing  the  same)  may  be  effected  only  by  the  registration  of  such
participation on the Participant Register.

      Notwithstanding  the foregoing,  to the extent required by applicable law,
(a) each Assignee or Participant shall be an "Institutional  Lender" (as defined
in La.  R.S.  27:3  (13)) or  otherwise  suitable  to the  Louisiana  Regulatory
Authorities,  and (b) each assignment or participation  pursuant to this Section
14.1 shall be subject to the  provisions of La. R.S.  42:2507 et seq.,  La. R.S.
27:27  and page 2 of the  "Conditions  for  Approval"  for OED set  forth by the
Louisiana  State Racing  Commission  on December 19,  2002,  including,  without
limitation, the notice requirements thereof.

      14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective  successors  and assigns of each of the parties;  provided,  however,
that Borrowers may not assign this  Agreement or any rights or duties  hereunder
without the Lenders' prior written consent and any prohibited  assignment  shall
be  absolutely  void ab initio.  No consent to  assignment  by the Lenders shall
release any Borrower from its Obligations. Each Lender may assign this Agreement
and the other Loan Documents and its rights and duties  hereunder and thereunder
pursuant to Section 14.1 hereof and,  except as expressly  required  pursuant to
Section  14.1  hereof,  no consent or  approval  by any  Borrower is required in
connection with any such assignment.

15.   AMENDMENTS; WAIVERS.

      15.1  AMENDMENTS  AND WAIVERS.  No amendment or waiver of any provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required  Lenders (or by Agent at the written  request
of the Required Lenders) and Borrowers and then any such waiver or consent shall
be  effective  only in the specific  instance  and for the specific  purpose for
which given; provided, however, that no such waiver, amendment, or

                                      108
<PAGE>

consent shall,  unless in writing and signed by all the Lenders affected thereby
and Borrowers and acknowledged by Agent, do any of the following:

            (a) increase or extend any Commitment of any Lender,

            (b) postpone or delay any date fixed by this  Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

            (c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,

            (d) change the  percentage  of the  Commitments  that is required to
take any action hereunder,

            (e) amend this Section or any provision of the  Agreement  providing
for consent or other action by all Lenders,

            (f) release  Collateral  other than as permitted by Section 16.12 or
release the FF&E Letter of Credit other than as permitted by Section 4.8,

            (g) change the definition of "Required Lenders",

            (h) contractually subordinate any of the Agent's Liens,

            (i)  release any  Borrower  from any  obligation  for the payment of
money, or

            (j) amend any of the provisions of Section 16.

and,  provided  further,  however,  that no amendment,  waiver or consent shall,
unless in  writing  and  signed by Agent or Swing  Lender,  affect the rights or
duties of Agent or Swing  Lender,  as  applicable,  under this  Agreement or any
other Loan Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent,  termination,  or release of, or with respect to, any provision
of  this  Agreement  or  any  other  Loan  Document  that  relates  only  to the
relationship of the Lender Group among themselves,  and that does not affect the
rights  or  obligations  of  Borrowers,  shall  not  require  consent  by or the
agreement of Borrowers.

      Notwithstanding  the foregoing,  to the extent required by applicable law,
amendments  pursuant to this Section 15.1 shall be subject to the consent and/or
approval of the relevant Gaming Authorities.

      15.2 REPLACEMENT OF HOLDOUT LENDER.

            If any  action to be taken by the  Lender  Group or Agent  hereunder
requires the unanimous consent,  authorization, or agreement of all Lenders, and
a  Lender  ("Holdout  Lender")  fails  to give its  consent,  authorization,  or
agreement,  then Agent, upon at least 5 Business Days' prior irrevocable  notice
to the Holdout Lender,  may  permanently  replace the Holdout Lender with one or
more substitute Lenders (each, a "Replacement  Lender"),  and the Holdout Lender

                                      109
<PAGE>

shall have not right to refuse to be replaced hereunder.  Such notice to replace
the Holdout Lender shall specify an effective date for such  replacement,  which
date shall not be later  than 15  Business  Days  after the date such  notice is
given.

            Prior to the effective date of such replacement,  the Holdout Lender
and each  Replacement  Lender  shall  execute  and  deliver  an  Assignment  and
Acceptance Agreement,  subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk  Participation  Liability)  without  any premium or penalty of any kind
whatsoever.  If the Holdout  Lender  shall refuse or fail to execute and deliver
any  such  Assignment  and  Acceptance  prior  to the  effective  date  of  such
replacement,  the Holdout  Lender shall be deemed to have executed and delivered
such Assignment and  Acceptance.  The replacement of any Holdout Lender shall be
made in  accordance  with the  terms of  Section  14.1.  Until  such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and  obligations of the Holdout Lender  hereunder and under
the other Loan Documents,  the Holdout Lender shall remain obligated to make the
Holdout  Lender's Pro Rata Share of Advances and to purchase a participation  in
each  Letter of  Credit,  in an amount  equal to its Pro Rata  Share of the Risk
Participation Liability of such Letter of Credit.

      15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right,  remedy,  or option  under this  Agreement or any other Loan
Document,  or delay by Agent or any Lender in exercising the same,  will operate
as a waiver thereof.  No waiver by Agent or any Lender will be effective  unless
it is in writing,  and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion  shall  affect or diminish  Agent's and each
Lender's  rights  thereafter to require  strict  performance by Borrowers of any
provision  of this  Agreement.  Agent's  and each  Lender's  rights  under  this
Agreement and the other Loan  Documents  will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

16.   AGENT; THE LENDER GROUP.

      16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints Wells Fargo Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably  authorizes Agent to
take such action on its behalf under the  provisions of this  Agreement and each
other Loan  Document and to exercise  such powers and perform such duties as are
expressly  delegated  to Agent by the terms of this  Agreement or any other Loan
Document,  together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express  conditions  contained  in this Section 16.
The  provisions of this Section 16 are solely for the benefit of Agent,  and the
Lenders,  and Borrowers shall have no rights as a third party beneficiary of any
of the  provisions  contained  herein.  Any provision to the contrary  contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities,  except those expressly set forth
herein,  nor shall  Agent have or be deemed to have any  fiduciary  relationship
with any Lender, and no implied covenants, functions, responsibilities,  duties,
obligations or  liabilities  shall be read into this Agreement or any other Loan
Document or otherwise  exist against Agent;  it being  expressly  understood and
agreed  that the use of the word  "Agent" is for  convenience  only,  that Wells
Fargo  Foothill is merely the  representative  of the Lenders,  and only has the
contractual duties set forth herein.  Except as expressly  otherwise provided in
this Agreement,

                                      110
<PAGE>

Agent shall have and may use its sole  discretion  with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions  that Agent  expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan  Documents.  Without  limiting the
generality of the  foregoing,  or of any other  provision of the Loan  Documents
that provides rights or powers to Agent, the Lenders agree that Agent shall have
the right to exercise the following powers as long as this Agreement  remains in
effect:  (a) maintain,  in accordance  with its  customary  business  practices,
ledgers and records  reflecting the status of the  Obligations,  the Collateral,
the Collections of Borrowers and their  Subsidiaries,  and related matters,  (b)
execute  or  file  any and all  financing  or  similar  statements  or  notices,
amendments,  renewals,  supplements,  documents,  instruments,  proofs of claim,
notices and other written  agreements  with respect to the Loan  Documents,  (c)
make  Advances,  for itself or on behalf of the  Lenders as provided in the Loan
Documents,  (d) exclusively  receive,  apply,  and distribute the Collections of
Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain  such  bank  accounts  and cash  management  accounts  as  Agent  deems
necessary  and  appropriate  in  accordance  with  the  Loan  Documents  for the
foregoing  purposes  with  respect  to the  Collateral  and the  Collections  of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender  Group with  respect to  Borrowers,  the
Obligations,  the  Collateral,  the FF&E Letter of Credit,  the  Collections  of
Borrowers and their Subsidiaries or otherwise related to any of same as provided
in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate  for the  performance  and  fulfillment of its
functions and powers pursuant to the Loan Documents.

      16.2 DELEGATION OF DUTIES.  Agent may execute any of its duties under this
Agreement  or any  other  Loan  Document  by or  through  agents,  employees  or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining  to such  duties.  Agent  shall not be  responsible  for the
negligence  or misconduct  of any agent or  attorney-in-fact  that it selects as
long as such selection was made without gross negligence or willful misconduct.

      16.3 LIABILITY OF AGENT.  None of the  Agent-Related  Persons shall (i) be
liable  for any  action  taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be  responsible  in any manner to any of the  Lenders  for any  recital,
statement,  representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement  or in  any  other  Loan  Document,  or in  any  certificate,  report,
statement or other document referred to or provided for in, or received by Agent
under or in connection  with, this Agreement or any other Loan Document,  or the
validity,  effectiveness,  genuineness,  enforceability  or  sufficiency of this
Agreement or any other Loan Document,  or for any failure of any Borrower or any
other  party to any Loan  Document  to  perform  its  obligations  hereunder  or
thereunder.  No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the  observance  or  performance  of any of the
agreements  contained  in, or  conditions  of, this  Agreement or any other Loan
Document,  or to inspect the Books or  properties  of  Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.

      16.4  RELIANCE BY AGENT.  Agent  shall be  entitled to rely,  and shall be
fully  protected in relying,  upon any  writing,  resolution,  notice,  consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement  or other  document or  conversation  believed by

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it to be genuine  and  correct  and to have been  signed,  sent,  or made by the
proper  Person or  Persons,  and upon  advice and  statements  of legal  counsel
(including  counsel  to  Borrowers  or  counsel  to  any  Lender),   independent
accountants and other experts selected by Agent.  Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document  unless  Agent shall first  receive such advice or  concurrence  of the
Lenders as it deems appropriate and until such instructions are received,  Agent
shall act, or refrain from acting, as it deems advisable.  If Agent so requests,
it shall first be  indemnified  to its  reasonable  satisfaction  by the Lenders
against any and all  liability  and expense that may be incurred by it by reason
of taking or  continuing  to take any such  action.  Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in  accordance  with a request or consent of the Lenders
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all of the Lenders.

      16.5 NOTICE OF DEFAULT OR EVENT OF  DEFAULT.  Agent shall not be deemed to
have  knowledge or notice of the  occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses  required  to be paid to Agent for the account of the  Lenders,  except
with  respect to Events of Default of which Agent has actual  knowledge,  unless
Agent shall have received written notice from a Lender or Borrower  referring to
this Agreement,  describing  such Default or Event of Default,  and stating that
such notice is a "notice of default."  Agent promptly will notify the Lenders of
its  receipt of any such  notice or of any Event of  Default of which  Agent has
actual  knowledge.  If any  Lender  obtains  actual  knowledge  of any  Event of
Default,  such Lender  promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its  Participants,  if any.  Subject to Section  16.4,  Agent shall take such
action with  respect to such  Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9.

      16.6  CREDIT  DECISION.   Each  Lender   acknowledges  that  none  of  the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and  their  Subsidiaries  or  Affiliates,  shall be  deemed  to  constitute  any
representation  or warranty  by any  Agent-Related  Person to any  Lender.  Each
Lender represents to Agent that it has,  independently and without reliance upon
any  Agent-Related  Person and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document,  and all applicable  bank  regulatory laws relating to
the transactions  contemplated  hereby,  and made its own decision to enter into
this  Agreement and to extend credit to Borrowers.  Each Lender also  represents
that it will,  independently and without reliance upon any Agent-Related  Person
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  analysis,  appraisals  and  decisions in
taking or not taking action under this  Agreement and the other Loan  Documents,
and to make such investigations as it deems necessary to inform itself as to the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan  Document.  Except for  notices,  reports,  and other  documents
expressly  herein required to be furnished to the Lenders by Agent,  Agent shall
not have any duty or  responsibility  to provide  any Lender  with any credit or
other  information  concerning the business,  prospects,  operations,  property,
financial and other

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condition or  creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.

      16.7 COSTS AND EXPENSES;  INDEMNIFICATION.  Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the  performance  and  fulfillment of its  functions,  powers,  and  obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses,  costs of collection by outside collection agencies and auctioneer
fees and costs of security  guards or  insurance  premiums  paid to maintain the
Collateral,  whether or not Borrowers  are  obligated to reimburse  Agent or the
Lenders for such expenses pursuant to the Loan Agreement or otherwise.  Agent is
authorized  and  directed  to deduct  and  retain  sufficient  amounts  from the
Collections of Borrowers and their  Subsidiaries  received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to the Lenders.  In the event Agent is not reimbursed for such costs and
expenses from the  Collections of Borrowers and their  Subsidiaries  received by
Agent,  each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof.  Whether
or not the transactions  contemplated hereby are consummated,  the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so),  according  to  their  Pro  Rata  Shares,  from  and  against  any  and all
Indemnified Liabilities;  provided,  however, that no Lender shall be liable for
the  payment to any  Agent-Related  Person of any  portion  of such  Indemnified
Liabilities  resulting  solely from such  Person's  gross  negligence or willful
misconduct nor shall any Lender be liable for the  obligations of any Defaulting
Lender in failing to make an Advance  or other  extension  of credit  hereunder.
Without  limitation of the  foregoing,  each Lender shall  reimburse  Agent upon
demand for such Lender's  ratable share of any costs or  out-of-pocket  expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation,  execution, delivery, administration,  modification,  amendment, or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities  under, this Agreement,
any other Loan Document,  or any document contemplated by or referred to herein,
to the extent that Agent is not  reimbursed for such expenses by or on behalf of
Borrowers.  The  undertaking  in this Section  shall  survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

      16.8 AGENT IN INDIVIDUAL CAPACITY. Wells Fargo Foothill and its Affiliates
may make loans to, issue letters of credit for the account of,  accept  deposits
from,  acquire equity interests in, and generally engage in any kind of banking,
trust,  financial advisory,  underwriting,  or other business with Borrowers and
their  Subsidiaries  and  Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though Wells Fargo Foothill were not Agent
hereunder,  and, in each case, without notice to or consent of the other members
of the Lender  Group.  The other members of the Lender Group  acknowledge  that,
pursuant to such activities,  Wells Fargo Foothill or its Affiliates may receive
information  regarding Borrowers or their Affiliates and any other Person (other
than  the  Lender  Group)  party  to any  Loan  Documents  that  is  subject  to
confidentiality  obligations in favor of Borrowers or such other Person and that
prohibit the  disclosure  of such  information  to the Lenders,  and the Lenders
acknowledge that, in such  circumstances (and in the absence of a waiver of such
confidentiality  obligations,  which waiver Agent will use its  reasonable  best
efforts to obtain),  Agent  shall not be under any  obligation  to provide  such
information  to them.  The terms  "Lender"  and  "Lenders"  include  Wells Fargo
Foothill in its individual capacity.

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      16.9  SUCCESSOR  AGENT.  Agent may resign as Agent upon 45 days' notice to
the Lenders.  If Agent resigns under this Agreement,  the Required Lenders shall
appoint a successor  Agent for the Lenders.  If no successor  Agent is appointed
prior to the  effective  date of the  resignation  of Agent,  Agent may appoint,
after  consulting with the Lenders,  a successor  Agent. If Agent has materially
breached or failed to perform any  material  provision  of this  Agreement or of
applicable law, the Required  Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights,  powers,  and duties of the retiring  Agent and
the term  "Agent"  shall  mean such  successor  Agent and the  retiring  Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation  hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it  was  Agent  under  this  Agreement.  If  no  successor  Agent  has  accepted
appointment as Agent by the date which is 45 days  following a retiring  Agent's
notice of  resignation,  the retiring  Agent's  resignation  shall  nevertheless
thereupon  become  effective  and the Lenders shall perform all of the duties of
Agent  hereunder  until such time,  if any, as the  Lenders  appoint a successor
Agent as provided for above.

      16.10  LENDER  IN  INDIVIDUAL  CAPACITY.  Any  Lender  and its  respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from,  acquire equity  interests in and generally engage in any kind of
banking,  trust,  financial  advisory,   underwriting  or  other  business  with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender  Group) party to any Loan  Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that,  pursuant to such
activities,  such Lender and its respective  Affiliates may receive  information
regarding  Borrowers or their  Affiliates  and any other Person  (other than the
Lender  Group) party to any Loan  Documents  that is subject to  confidentiality
obligations  in favor of Borrowers  or such other  Person and that  prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such  circumstances  (and in the absence of a waiver of such  confidentiality
obligations,  which waiver such Lender will use its  reasonable  best efforts to
obtain),  such  Lender  not  shall be  under  any  obligation  to  provide  such
information to them. With respect to the Swing Loans and Agent  Advances,  Swing
Lender shall have the same rights and powers  under this  Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.

      16.11 WITHHOLDING TAXES.

            (a) If any Lender is a "foreign  corporation,  partnership or trust"
within the  meaning  of the IRC and such  Lender  claims  exemption  from,  or a
reduction of, U.S.  withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers,  to deliver to Agent and
Borrowers:

                  (i) if such Lender claims an exemption  from  withholding  tax
            pursuant to its portfolio interest exception, (a) a statement of the
            Lender,  signed  under  penalty of  perjury,  that it is not a (I) a
            "bank" as described in Section  881(c)(3)(A)  of the IRC, (II) a 10%
            shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
            or (III) a  controlled  foreign  corporation  described  in  Section
            881(c)(3)(C)  of the  IRC,  and (B) a  properly  completed  IRS Form
            W-8BEN,

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            before the first payment of any interest under this Agreement and at
            any other time reasonably requested by Agent or any Borrower;

                  (ii) if such Lender  claims an exemption  from, or a reduction
            of,  withholding  tax under a United  States tax treaty,  a properly
            completed  IRS Form W-8BEN  before the first payment of any interest
            under this Agreement and at any other time  reasonably  requested by
            Agent or any Borrower;

                  (iii) if such  Lender  claims  that  interest  paid under this
            Agreement is exempt from United States withholding tax because it is
            effectively connected with a United States trade or business of such
            Lender, 2 properly  completed and executed copies of IRS Form W-8ECI
            before the first payment of any interest is due under this Agreement
            and at any other time reasonably requested by Agent or any Borrower;

                  (iv) such other form or forms as may be required under the IRC
            or other laws of the United States as a condition to exemption from,
            or reduction of, United States withholding tax.

Such Lender  agrees  promptly  to notify  Agent and  Borrowers  of any change in
circumstances  which would  modify or render  invalid any claimed  exemption  or
reduction.

            (b)  If  any  Lender  claims   exemption   from,  or  reduction  of,
withholding  tax under a United  States tax treaty by providing  IRS Form W-8BEN
and  such  Lender  sells,  assigns,  grants a  participation  in,  or  otherwise
transfers  all or part of the  Obligations  of Borrowers  to such  Lender,  such
Lender agrees to notify Agent of the percentage  amount in which it is no longer
the beneficial  owner of Obligations of Borrowers to such Lender.  To the extent
of such percentage amount,  Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.

            (c) If any  Lender is  entitled  to a  reduction  in the  applicable
withholding  tax, Agent may withhold from any interest payment to such Lender an
amount  equivalent to the applicable  withholding  tax after taking into account
such reduction.  If the forms or other documentation  required by subsection (a)
of this  Section are not  delivered to Agent,  then Agent may withhold  from any
interest payment to such Lender not providing such forms or other  documentation
an amount equivalent to the applicable withholding tax.

            (d) If the IRS or any other  Governmental  Authority  of the  United
States  or other  jurisdiction  asserts  a claim  that  Agent  did not  properly
withhold tax from amounts paid to or for the account of any Lender  (because the
appropriate form was not delivered,  was not properly executed,  or because such
Lender failed to notify Agent of a change in  circumstances  which  rendered the
exemption from, or reduction of,  withholding tax ineffective,  or for any other
reason)  such Lender  shall  indemnify  and hold Agent  harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise,  including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable  to Agent  under  this  Section,  together  with all costs and  expenses
(including  attorneys  fees and  expenses).  The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.

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            (e) All payments  made by  Borrowers  hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by  applicable  law other than for Taxes (as defined  below).
All such  payments  will be made free and clear of,  and  without  deduction  or
withholding for, any present or future taxes,  levies,  imposts,  duties,  fees,
assessments or other charges of whatever nature now or hereafter  imposed by any
jurisdiction  (other than the United States) or by any political  subdivision or
taxing  authority  thereof or therein  (other  than of the United  States)  with
respect to such payments (but excluding,  any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender,  or (ii) to the extent
that  such  tax  results  from a  change  in the  circumstances  of the  Lender,
including a change in the residence,  place of organization,  or principal place
of business of the Lender, or a change in the branch or lending office of Lender
participating in the transactions set forth herein) and all interest,  penalties
or similar  liabilities  with  respect  thereto  (all such  non-excluded  taxes,
levies,  imposts,  duties, fees,  assessments or other charges being referred to
collectively as "Taxes").  If any Taxes are so levied or imposed,  each Borrower
agrees to pay the full amount of such Taxes, and such additional  amounts as may
be  necessary so that every  payment of all amounts due under this  Agreement or
under any note,  including  any amount paid pursuant to this Section 16.11 after
withholding  or deduction for or on account of any Taxes,  will not be less than
the amount provided for herein;  provided,  however, that Borrowers shall not be
required to increase any such amounts payable to Agent or any Lender (i) that is
not organized under the laws of the United States if such Person fails to comply
with the other  requirements  of this Section 16.11,  or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross  negligence.  Borrowers  will  furnish to Agent as promptly as possible
after  the date the  payment  of any Taxes is due  pursuant  to  applicable  law
certified copies of tax receipts evidencing such payment by Borrowers.

      16.12 COLLATERAL MATTERS.

            (a) The Lenders hereby  irrevocably  authorize  Agent, at its option
and in its sole  discretion,  to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations,  (ii)  constituting  property being sold or disposed of if a
release is required or desirable in  connection  therewith  and if each Borrower
certifies to Agent that the sale or disposition  is permitted  under Section 7.4
of this Agreement or the other Loan  Documents (and Agent may rely  conclusively
on any such certificate,  without further inquiry),  (iii) constituting property
in which no  Borrower  or its  Subsidiaries  owned any  interest at the time the
Agent's  Lien  was  granted  or at any  time  thereafter,  or (iv)  constituting
property leased to a Borrower or its Subsidiaries under a lease that has expired
or is terminated  in a transaction  permitted  under this  Agreement.  Except as
provided above,  Agent will not execute and deliver a release of any Lien on any
Collateral  without the prior written  authorization of (y) if the release is of
all or  substantially  all  of  the  Collateral,  all  of  the  Lenders,  or (z)
otherwise,  the Required  Lenders.  Upon request by Agent or any Borrower at any
time, the Lenders will confirm in writing Agent's  authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 16.12;
provided,  however, that (1) Agent shall not be required to execute any document
necessary to evidence  such  release on terms that,  in Agent's  opinion,  would
expose  Agent to liability or create any  obligation  or entail any  consequence
other  than the  release  of such  Lien  without  recourse,  representation,  or
warranty,  and (2) such release shall not in any manner  discharge,  affect,  or
impair the  Obligations or any Liens (other than those expressly being released)
upon (or obligations of Borrowers in respect of)

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all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

            (b) Agent shall have no obligation  whatsoever to any of the Lenders
to assure that the  Collateral  exists or is owned by Borrowers or is cared for,
protected,  or insured or has been  encumbered,  or that the Agent's  Liens have
been properly or  sufficiently or lawfully  created,  perfected,  protected,  or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care,  disclosure or fidelity,  or to
continue  exercising,  any of the  rights,  authorities  and  powers  granted or
available to Agent pursuant to any of the Loan  Documents,  it being  understood
and agreed that in respect of the  Collateral,  or any act,  omission,  or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate,  in its sole discretion given Agent's
own  interest in the  Collateral  in its capacity as one of the Lenders and that
Agent shall have no other duty or liability  whatsoever  to any Lender as to any
of the foregoing, except as otherwise provided herein.

      16.13 RESTRICTIONS ON ACTIONS BY THE LENDERS; SHARING OF PAYMENTS.

            (a) Each of the  Lenders  agrees  that it  shall  not,  without  the
express  consent  of Agent,  and that it  shall,  to the  extent it is  lawfully
entitled to do so, upon the request of Agent,  set off against the  Obligations,
any  amounts  owing by such  Lender to  Borrowers  or any  deposit  accounts  of
Borrowers  now or hereafter  maintained  with such  Lender.  Each of the Lenders
further  agrees that it shall not,  unless  specifically  requested  to do so by
Agent, take or cause to be taken any action,  including, the commencement of any
legal or equitable  proceedings,  to foreclose any Lien on, or otherwise enforce
any  security  interest  in, any of the  Collateral  the purpose of which is, or
could be, to give such  Lender any  preference  or  priority  against  the other
Lenders with respect to the Collateral.

            (b) If,  at any  time or  times  any  Lender  shall  receive  (i) by
payment,  foreclosure,  setoff, or otherwise,  any proceeds of Collateral or any
payments with respect to the  Obligations  arising  under,  or relating to, this
Agreement or the other Loan Documents,  except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this  Agreement,  or
(ii) payments from Agent in excess of such Lender's  ratable portion of all such
distributions  by Agent,  such Lender  promptly  shall (1) turn the same over to
Agent,  in kind, and with such  endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for  application to the Obligations in accordance with
the applicable provisions of this Agreement,  or (2) purchase,  without recourse
or warranty,  an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment  received shall be applied ratably
as among  the  Lenders  in  accordance  with  their Pro Rata  Shares;  provided,
however,  that if all or part of such excess payment  received by the purchasing
party is thereafter  recovered from it, those purchases of participations  shall
be rescinded in whole or in part, as applicable,  and the applicable  portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without  interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

      16.14 AGENCY FOR  PERFECTION.  Agent hereby  appoints each other Lender as
its agent (and each Lender hereby accepts such  appointment)  for the purpose of
perfecting the Agent's

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Liens in assets which, in accordance with Article 9 of the Code can be perfected
only by possession.  Should any Lender obtain possession of any such Collateral,
such Lender shall notify  Agent  thereof,  and,  promptly  upon Agent's  request
therefor  shall deliver such  Collateral to Agent or in accordance  with Agent's
instructions.

      16.15  PAYMENTS BY AGENT TO THE LENDERS.  All payments to be made by Agent
to the  Lenders  shall be made by bank wire  transfer  or  internal  transfer of
immediately  available funds pursuant to such wire transfer instructions as each
party may designate  for itself by written  notice to Agent.  Concurrently  with
each such  payment,  Agent shall  identify  whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.

      16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group  authorizes  and directs Agent to enter into this Agreement and
the other Loan  Documents  relating  to the  Collateral,  for the benefit of the
Lender  Group.  Each member of the Lender  Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating  to the  Collateral  and the  exercise by Agent of its powers set forth
therein  or  herein,  together  with  such  other  powers  that  are  reasonably
incidental thereto, shall be binding upon all of the Lenders.

      16.17 FIELD AUDITS AND EXAMINATION REPORTS;  CONFIDENTIALITY;  DISCLAIMERS
BY THE  LENDERS;  OTHER  REPORTS  AND  INFORMATION.  By becoming a party to this
Agreement, each Lender:

            (a) is deemed to have  requested  that Agent  furnish  such  Lender,
promptly after it becomes  available,  a copy of each field audit or examination
report  (each a "Report" and  collectively,  "Reports")  prepared by Agent,  and
Agent shall so furnish each Lender with such Reports,

            (b) expressly agrees and  acknowledges  that Agent does not (i) make
any  representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,

            (c)  expressly  agrees and  acknowledges  that the  Reports  are not
comprehensive  audits or examinations,  that Agent or other party performing any
audit or examination will inspect only specific information  regarding Borrowers
and will rely  significantly  upon the Books, as well as on  representations  of
Borrowers' personnel,

            (d)  agrees  to keep all  Reports  and  other  material,  non-public
information  regarding  Borrowers and their  Subsidiaries and their  operations,
assets, and existing and contemplated  business plans in a confidential  manner;
it being  understood  and agreed by Borrowers  that in any event such Lender may
make  disclosures  (a) to  counsel  for and  other  advisors,  accountants,  and
auditors to such Lender,  (b) reasonably  required by any bona fide potential or
actual  Assignee or Participant in connection  with any  contemplated  or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights  hereunder,  (c) of information that has become
public by disclosures  made by Persons other than such Lender,  its  Affiliates,
assignees,  transferees, or Participants, or (d) as required or requested by any
court,  governmental or administrative agency, pursuant to any subpoena or other
legal process,  or by any law, statute,  regulation,  or court order;  provided,

                                      118
<PAGE>

however,  that,  unless prohibited by applicable law,  statute,  regulation,  or
court order,  such Lender  shall  notify  Borrowers of any request by any court,
governmental  or  administrative  agency,  or pursuant to any  subpoena or other
legal  process  for  disclosure  of any  such  non-public  material  information
concurrent with, or where practicable, prior to the disclosure thereof, and

            (e) without  limiting the  generality  of any other  indemnification
provision  contained in this Agreement,  agrees:  (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in  connection  with  any  loans  or  other  credit   accommodations   that  the
indemnifying  Lender  has made or may  make to  Borrowers,  or the  indemnifying
Lender's  participation in, or the indemnifying  Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify,  defend and hold
Agent,  and any such other Lender  preparing a Report harmless from and against,
the claims,  actions,  proceedings,  damages, costs, expenses, and other amounts
(including,  attorneys  fees and  costs)  incurred  by Agent and any such  other
Lender  preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

In addition to the  foregoing:  (x) any Lender may from time to time  request of
Agent in  writing  that  Agent  provide  to such  Lender a copy of any report or
document  provided  by  Borrowers  to Agent that has not been  contemporaneously
provided by Borrowers to such Lender,  and, upon receipt of such request,  Agent
shall  provide a copy of same to such  Lender,  (y) to the extent  that Agent is
entitled,  under any  provision  of the Loan  Documents,  to request  additional
reports  or  information  from  Borrowers,  any Lender  may,  from time to time,
reasonably  request  Agent to exercise  such right as specified in such Lender's
notice to Agent,  whereupon  Agent  promptly  shall  request  of  Borrowers  the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from  Borrowers,  Agent promptly shall provide a copy of same to
such  Lender,  and (z) any time that Agent  renders  to  Borrowers  a  statement
regarding  the Loan Account,  Agent shall send a copy of such  statement to each
Lender.

      16.18 SEVERAL OBLIGATIONS;  NO LIABILITY.  Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in  favor  of  Agent  in its  capacity  as  such,  and not by or in favor of the
Lenders,  any and all  obligations  on the  part of  Agent  (if any) to make any
credit  available  hereunder  shall  constitute  the  several  (and  not  joint)
obligations  of the respective  Lenders on a ratable  basis,  according to their
respective  Commitments,  to make an amount of such  credit  not to  exceed,  in
principal amount,  at any one time  outstanding,  the amount of their respective
Commitments.  Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability  for, or in respect of, the business,
assets,  profits,  losses, or liabilities of any other Lender. Each Lender shall
be solely  responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required,  and no Lender
shall have any  obligation,  duty, or liability to any  Participant of any other
Lender.  Except as provided in Section 16.7, no member of the Lender Group shall
have any  liability  for the acts or any other  member of the Lender  Group.  No
Lender shall be  responsible to any Borrower or any other Person for any failure
by any  other  Lender  to  fulfill  its  obligations  to make  credit  available
hereunder,  nor to  advance  for it or on its  behalf  in  connection  with  its
Commitment,  nor to  take  any  other  action  on  its  behalf  hereunder  or in
connection with the financing contemplated herein.

                                      119
<PAGE>

17.   GENERAL PROVISIONS.

      17.1  EFFECTIVENESS.  This Agreement shall be binding and deemed effective
when executed by Borrowers,  Agent,  and each Lender whose signature is provided
for on the signature pages hereof.

      17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience  only.  Unless the contrary is compelled by the context,  everything
contained in each Section applies equally to this entire Agreement.

      17.3  INTERPRETATION.  Neither  this  Agreement  nor  any  uncertainty  or
ambiguity  herein shall be construed  against  Agent,  any Lender or  Borrowers,
whether  under any rule of  construction  or otherwise.  On the  contrary,  this
Agreement  has  been  reviewed  by  all  parties  and  shall  be  construed  and
interpreted  according  to the  ordinary  meaning  of the  words  used  so as to
accomplish fairly the purposes and intentions of all parties hereto.

      17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable  from every  other  provision  of this  Agreement  for the  purpose of
determining the legal enforceability of any specific provision.

      17.5  AMENDMENTS  IN  WRITING.  This  Agreement  only can be  amended by a
writing in accordance with Section 15.1.

      17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which,  when executed and delivered,  shall be deemed to be an original,
and all of which,  when taken  together,  shall  constitute but one and the same
Agreement.   Delivery  of  an  executed   counterpart   of  this   Agreement  by
telefacsimile  shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party delivering an executed  counterpart of
this  Agreement  by  telefacsimile  also  shall  deliver  an  original  executed
counterpart  of this  Agreement but the failure to deliver an original  executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing  shall apply to each other Loan Document  mutatis
mutandis.

      17.7  REVIVAL AND  REINSTATEMENT  OF  OBLIGATIONS.  If the  incurrence  or
payment of the  Obligations  by any Borrower or any Guarantor or the transfer to
Agent or any  Lender of any  property  should  for any  reason  subsequently  be
declared  to be void or  voidable  under any state or federal  law  relating  to
creditors'  rights,  including  provisions  of the  Bankruptcy  Code relating to
fraudulent conveyances,  preferences,  or other voidable or recoverable payments
of money or transfers of property (collectively,  a "Voidable Transfer"), and if
the Lender Group is required to repay or restore,  in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable  Transfer,  or the amount  thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses,  and attorneys fees of the Lender Group related thereto, the liability
of Borrowers and  Guarantors  automatically  shall be revived,  reinstated,  and
restored and shall exist as though such Voidable Transfer had never been made.

                                      120
<PAGE>

      17.8 INTEGRATION.  This Agreement, together with the other Loan Documents,
reflects  the  entire   understanding   of  the  parties  with  respect  to  the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

      17.9 COMBINED ADMINISTRATION.  Each Borrower hereby irrevocably authorizes
Agent to rely on any notices,  information or instructions given by any Borrower
hereunder  purportedly  on behalf of all  Borrowers.  It is understood  that the
handling of the Loan Account and Collateral of Borrowers in a combined  fashion,
as more fully set forth herein,  is done solely as an accommodation to Borrowers
in order to utilize the  collective  borrowing  powers of  Borrowers in the most
efficient  and  economical  manner and at their  request,  and that Lender Group
shall not incur  liability to any  Borrower as a result  hereof.  Each  Borrower
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful  operation
of each Borrower is dependent on the  continued  successful  performance  of the
integrated  group.  To induce  the Lender  Group to do so, and in  consideration
thereof,  each Borrower  hereby  jointly and severally  agrees to indemnify each
member of the Lender  Group and hold each  member of the Lender  Group  harmless
against any and all liability,  expense, loss or claim of damage or injury, made
against  the  Lender  Group by any  Borrower  or by any third  party  whosoever,
arising  from or incurred by reason of (a) the  handling of the Loan Account and
Collateral of Borrowers as herein  provided,  (b) the Lender Group's  relying on
any  instructions  of any Borrower,  or (c) any other action taken by the Lender
Group  hereunder or under the other Loan  Documents,  except that Borrowers will
have no liability to the relevant Agent Related Person or Lender-Related  Person
under this  Section  17.9 with  respect to any  liability  that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross  negligence  or  willful  misconduct  of  such  Agent-Related   Person  or
Lender-Related Person, as the case may be.

                           [SIGNATURE PAGE TO FOLLOW]

                                      121
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                      DIAMOND JO, LLC., a Delaware limited
                                      liability company

                                      By:  /s/  Natalie A. Schramm
                                         ---------------------------------------
                                      Title:  Chief Financial Officer

                                      THE OLD EVANGELINE DOWNS, L.L.C.,
                                      a Louisiana limited liability company

                                      By:  /s/  Natalie A. Schramm
                                         ---------------------------------------
                                      Title:  Chief Financial Officer

<PAGE>

                                      WELLS FARGO FOOTHILL, INC., a California
                                      corporation, as Agent and as Lender

                                      By:  /s/  Todd R. Nakamoto
                                         ---------------------------------------
                                      Title:  Vice President

<PAGE>

                                      HIGHBRIDGE/ZWIRN SPECIAL
                                      OPPORTUNITIES FUND, L.P., as a Lender

                                      By:  Highbridge/Zwirn Partners, LLC, its
                                           general partner

                                      By:   /s/  Perry A. Gruss
                                         ---------------------------------------
                                      Title:  Chief Financial OfficerEXHIBIT 10.20

                          GUARANTOR SECURITY AGREEMENT

      This GUARANTOR  SECURITY  AGREEMENT (this  "Agreement")  is as of June 16,
2004,  by each of the parties  listed on the  signature  page hereof,  and those
additional  entities that hereafter  become parties hereto by executing the form
of Supplement  attached  hereto as Annex 1, as Pledgors  (each a "Pledgor",  and
collectively,  the  "Pledgors"),  and Wells Fargo  Foothill,  Inc., a California
corporation,  as agent for the Lenders (as  defined in the  hereinafter  defined
Loan Agreement) ("Agent").

                              W I T N E S S E T H:

      WHEREAS,  The Old Evangeline Downs,  L.L.C., a Louisiana limited liability
company, and Diamond Jo, LLC (formerly known as Peninsula Gaming Company,  LLC),
a Delaware  limited  liability  company,  as borrowers  (each,  a "Borrower" and
collectively,  the  "Borrowers"),  Agent,  and the  Lenders  are parties to that
certain Loan and Security  Agreement dated as of even date herewith (as the same
may be amended, restated,  supplemented or otherwise modified from time to time,
the "Loan  Agreement";  capitalized  terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Loan Agreement),  pursuant
to which the Lender Group has agreed to extend credit to the Borrowers from time
to time pursuant to the terms and conditions thereof; and

      WHEREAS,  Pledgors are Affiliates of the  Borrowers,  and each Pledgor has
determined that it will realize  substantial  direct and indirect  benefits as a
result  of the  extension  of  credit  to the  Borrowers  pursuant  to the  Loan
Agreement,  and such  Pledgor's  execution,  delivery  and  performance  of this
Agreement are within such  Pledgor's  corporate or other purposes and are in the
best interests of such Pledgor; and

      WHEREAS,  it is a condition precedent to the execution and delivery of the
Loan  Agreement by the Lender Group and the extension of credit to the Borrowers
thereunder  that each Pledgor  execute and deliver  this  Agreement to Agent and
grant a security  interest  to Agent,  for the benefit of the Lender  Group,  in
order to ensure and secure the prompt  performance of all covenants,  agreements
and liabilities of the Borrowers and the Guarantors  (each, a "Loan Party",  and
collectively,  the "Loan  Parties")  under  the Loan  Documents  and the  prompt
repayment of any and all now existing or hereafter arising Obligations and other
obligations  of the Loan Parties under the Loan  Documents  (including,  without
limitation, any interest, fees or other charges in respect of the Loan Agreement
and the  other  Loan  Documents  that  would  accrue  but for the  filing  of an
Insolvency Proceeding with respect to any Borrower, whether or not such claim is
allowed in such Insolvency Proceeding) (other than the FF&E Obligations);

      NOW,  THEREFORE,  for and in  consideration of the recitals made above and
other good and valuable consideration,  the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:

      1.  Defined  Terms.  As used  in  this  Agreement,  "Books"  means  all of
Pledgors' now owned or hereafter  acquired  books and records  (including all of
its Records  indicating,  summarizing,  or evidencing its assets  (including the
Collateral) or liabilities, all of each

<PAGE>

Pledgor's  Records  relating to its or their  business  operations  or financial
condition,  and all of its or their goods or General Intangibles related to such
information).

      2. Grant of Security.  Each Pledgor hereby unconditionally grants, assigns
and pledges to Agent,  for the benefit of the Lender Group,  a continuing  first
priority  security  interest in and security  title to (together with a right of
setoff) all personal  property of such Pledgor  (hereinafter  referred to as the
"Security  Interest"),  including,  without  limitation,  all of such  Pledgor's
right, title and interest in and to each of the following,  whether now owned or
hereafter acquired (collectively, the "Collateral"):

            (a) all of its Accounts;

            (b) all of its Books;

            (c) all of its commercial tort claims described on Schedule 1;

            (d) all of its deposit accounts, including all DDAs;

            (e) all of its Equipment;

            (f) all of its General Intangibles;

            (g) all of its Inventory;

            (h) all of its Investment Property;

            (i) all of its judgments;

            (j) all of its Negotiable Collateral;

            (k)  all of  such  Pledgor's  money  or  other  assets  that  now or
hereafter come into the  possession,  custody,  or control of Agent or any other
member of the Lender Group; and

            (l)  all  of  the  proceeds  and  products,   whether   tangible  or
intangible,  of any of the foregoing,  including  proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles,   Inventory,   Investment  Property,  Negotiable  Collateral,  Real
Property,  money,  deposit  accounts,  or other tangible or intangible  property
resulting from the sale,  exchange,  collection,  or other disposition of any of
the  foregoing,  or any portion  thereof or interest  therein,  and the proceeds
thereof.

      Notwithstanding  the foregoing,  "Collateral" shall not include any of the
Excluded Assets.

      This  Agreement and the Security  Interest  created hereby secure the full
and  prompt  payment,   performance  and  satisfaction  of  (a)  all  covenants,
agreements and liabilities of the Borrowers under the Loan Documents and all now
existing or hereafter arising Obligations  (including,  without limitation,  any
interest,  fees and other charges in respect of the Loan Agreement and the other
Loan Documents that would accrue but for the filing of an Insolvency  Proceeding
with  respect to any  Borrower,  regardless  of whether such claim is allowed in
such

                                       2
<PAGE>

Insolvency  Proceeding  but  excluding  the  FF&E  Obligations),   and  (b)  the
obligations  of each  Guarantor  arising  from the Loan  Documents to which such
Guarantor is a party, whether direct or indirect, absolute or contingent, now or
hereafter  existing,  joint  or  several,  due  or to  become  due,  primary  or
secondary,  liquidated or  unliquidated,  or secured or  unsecured,  and however
acquired by Agent or any other  member of the Lender  Group,  together  with all
other now existing or hereafter arising Guaranteed  Obligations (as that term is
defined in the  Guaranties)  (all of the  foregoing  now  existing or  hereafter
arising   obligations   being  referred  to,   collectively,   as  the  "Secured
Obligations").  Agent's  Liens  in and to the  Collateral  shall  attach  to all
Collateral without further act on the part of Agent or Pledgors.

      3. Uniform Commercial Code Financing Statements; Further Assurances.

            (a) Each Pledgor authorizes Agent to file, transmit, or communicate,
as applicable, Uniform Commercial Code financing statements,  original financing
statements  in-lieu of  continuation  statements and  amendments  describing the
Collateral  as "all  personal  property  of debtor" or "all assets of debtor" or
words of similar  effect in order to perfect  Agent's  Security  Interest in the
Collateral  without  such  Pledgor's  signature,  to  the  extent  permitted  by
applicable  law;  provided,  however,  that Agent shall,  in each case,  clearly
identify Excluded Assets as excepted items, as applicable.

            (b) At any time upon the request of Agent,  Pledgors  shall  execute
and deliver,  or cause other Persons (including,  without  limitation,  those in
possession of any  Collateral) to execute and deliver,  all further  instruments
and  documents,  and  take all  further  action,  (i) to  perfect  and  continue
perfection of Agent's Security Interest in the Collateral  (whether now owned or
hereafter  arising or  acquired  or  tangible  or  intangible),  (ii) to create,
perfect and insure Liens in favor of Agent in any Real Property  acquired  after
the Closing  Date,  (iii) in order to consummate  fully all of the  transactions
contemplated  hereby and under the other Loan Documents and (iv) to enable Agent
to exercise  and enforce its rights and remedies  hereunder  with respect to any
Collateral.  Without  limiting the  generality  of the  foregoing,  each Pledgor
shall:

                  (i) execute and deliver,  or cause other  Persons  (including,
without  limitation,  those in  possession  of any  Collateral)  to execute  and
deliver, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements,  pledges, real
property  security  instruments,   assignments,  Collateral  Access  Agreements,
instruments,  powers of attorney, endorsements of certificates of title, and all
other  documents  (collectively,  the  "Additional  Documents")  that  Agent may
request  in  its  Permitted   Discretion,   in  form  and  substance  reasonably
satisfactory to Agent;

                  (ii) at any reasonable  time,  upon request by Agent,  exhibit
the Collateral for, and allow inspection of the Collateral by, Agent, or persons
designated by Agent; and

                  (iii) at Agent's reasonable request,  appear in and defend any
action or proceeding  that may affect  Agent's  security  interest in all or any
part of the Collateral.

                                       3
<PAGE>

            (c) To the maximum extent  permitted by applicable law, each Pledgor
authorizes  Agent to execute any such  Additional  Documents  in the  applicable
Pledgor's name and authorizes Agent to file such executed  Additional  Documents
in any  appropriate  filing  office.  Each  Pledgor  also  hereby  ratifies  its
authorization  for  Agent  to  have  filed  in any  jurisdiction  any  financing
statements  or  amendments  thereto  filed prior to the date hereof.  No Pledgor
shall  terminate,  amend or file a  correction  statement  with  respect  to any
Uniform  Commercial  Code financing  statement  filed pursuant to this Section 3
without Agent's prior written  consent,  which consent shall not be unreasonably
withheld.

            (d) In addition, on such periodic basis as Agent shall require, each
Pledgor  shall  (i)  provide  Agent  with  a  report  of  all  new   patentable,
copyrightable,  or trademarkable materials acquired or generated by such Pledgor
during the prior  period,  (ii) cause all patents,  copyrights,  and  trademarks
acquired  or  generated  by such  Pledgor  that are not already the subject of a
registration  with the  appropriate  filing office (or an  application  therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner  sufficient to impart  constructive  notice of such  Pledgor's  ownership
thereof  and  (iii)  cause to be  prepared,  executed,  and  delivered  to Agent
supplemental  schedules  to the  applicable  Loan  Documents  to  identify  such
patents,  copyrights,  and trademarks as being subject to the security interests
created thereunder.

            (e) In addition,  if any Pledgor  acquires any commercial tort claim
or judgment after the date hereof, such Pledgor shall promptly (but in any event
within 3  Business  Days  after  such  acquisition)  deliver  to Agent a written
description of such commercial tort claim or judgment, as applicable,  and shall
deliver  a  written  agreement,  in form and  substance  satisfactory  to Agent,
pursuant to which such Pledgor shall grant a perfected  security interest in all
of its  right,  title  and  interest  in and to such  commercial  tort  claim or
judgment, as applicable, to Agent, as security for the Secured Obligations.

            (f) In addition,  each Pledgor  shall  furnish to Agent from time to
time statements and schedules further  identifying and describing the Collateral
and such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.

      4.  Negotiable  Collateral and Chattel Paper.  Each Pledgor  covenants and
agrees  with  Agent that from and after the  Closing  Date and until the date of
termination of this Agreement in accordance with Section 24:

            (a) In  the  event  that  any  Collateral,  including  proceeds,  is
evidenced  by  or  consists  of  Negotiable   Collateral,   such  Pledgor  shall
immediately  notify Agent and, if and to the extent that  perfection or priority
of Agent's security  interest with respect to such Collateral is dependent on or
enhanced by  possession,  such Pledgor,  immediately  upon the request of Agent,
shall endorse and deliver physical  possession of such Negotiable  Collateral to
Agent;

            (b) Upon  request  by  Agent,  such  Pledgor  shall  take all  steps
reasonably  necessary to grant Agent control of all electronic  Chattel Paper in
accordance  with the Code and all  "transferable  records" as defined in each of
the Uniform Electronic  Transactions Act and the Electronic Signatures in Global
and National Commerce Act; and

                                       4
<PAGE>

            (c) In  the  event  such  Pledgor,  with  Agent's  consent,  retains
possession of any Chattel Paper or instruments otherwise required to be endorsed
and delivered to Agent  pursuant to Section 4(a),  all of such Chattel Paper and
instruments  shall be marked with the  following  legend:  "This writing and the
obligations evidenced or secured thereby are subject to the security interest of
Wells Fargo Foothill, Inc., as Agent".

      5.  Right  to  Inspect.  Agent  and  each  Lender  (through  any of  their
respective  officers,  employees,  or agents) shall have the right, from time to
time and during normal  business  hours  hereafter,  to inspect the Books and to
check, test, and appraise the Collateral in order to verify Pledgors'  financial
condition  or the amount,  quality,  value,  condition  of, or any other  matter
relating to, the Collateral.

      6.  Control  Agreements.  Each  Pledgor  agrees that it will not  transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
of the Loan Agreement and, if to another  securities  intermediary,  unless such
Pledgor,  Agent, and the substitute securities  intermediary have entered into a
Control  Agreement.  No  arrangement  contemplated  hereby  or  by  any  Control
Agreement in respect of any  Securities  Accounts or other  Investment  Property
shall be  modified by any Pledgor  without the prior  written  consent of Agent.
Upon the  occurrence and during the  continuance of Event of Default,  Agent may
notify any  securities  intermediary  to  liquidate  the  applicable  Securities
Account or any related Investment  Property maintained or held thereby and remit
the proceeds thereof to the Loan Account.

      7. Representations and Warranties. Each Pledgor represents and warrants to
Agent and the other members of the Lender Group as follows:

            (a) Such Pledgor is duly organized and existing and in good standing
under the laws of the  jurisdiction  of its  organization  and  qualified  to do
business in any state where the failure to be so qualified  reasonably  could be
expected to have a Material Adverse Change;

            (b) The execution, delivery, and performance by such Pledgor of this
Agreement  and the  Loan  Documents  to  which  it is a  party  have  been  duly
authorized by all necessary action on the part of such Pledgor;

            (c) The execution, delivery, and performance by such Pledgor of this
Agreement and the Loan  Documents to which it is a party do not and will not (i)
violate any provision of federal,  state, or local law or regulation  applicable
to any Pledgor, the Governing Documents of any Pledgor, or any order,  judgment,
or decree of any court or other  Governmental  Authority binding on any Pledgor,
(ii) conflict  with,  result in a breach of, or  constitute  (with due notice or
lapse of time or both) a default  under any material  contractual  obligation of
any  Pledgor  (including  any of the  Senior  Note  Documents  or the  OED  Note
Documents), (iii) result in or require the creation or imposition of any Lien of
any nature  whatsoever upon any properties or assets of any Pledgor,  other than
Permitted  Liens,  or (iv)  require  any  approval of any  Pledgor's  members or
shareholders  or any  approval  or  consent  of any  Person  under any  material
contractual obligation of any Pledgor;

            (d) (i) The execution,  delivery, and performance by each Pledgor of
this  Agreement and the Loan  Documents to which such Pledgor is a party and the
exercise by Agent

                                       5
<PAGE>

of any rights or remedies  in respect of any  Collateral  (whether  specifically
granted or created  hereunder or created or provided for by  applicable  law) do
not and will not require any  registration  with,  consent,  or approval  of, or
notice to, or other  action  with or by,  any  Governmental  Authority  or other
Person,  other than (i) the filing of financing statements and the execution and
delivery  by the  applicable  securities  intermediary  or bank of each  Control
Agreement,  (ii) any consent or approval  that has been  obtained and remains in
full force and effect and (iii)  with  respect to the  exercise  by Agent of any
rights or remedies in respect of any Collateral,  to the extent  authorizations,
consents or approvals are required by the applicable  Gaming  Authority or under
any intellectual  property license,  contract or agreement and to the extent any
actions are required to be performed by Agent;

            (e) This  Agreement  and the  other  Loan  Documents  to which  such
Pledgor is a party,  and all other  documents  contemplated  hereby and thereby,
when  executed and  delivered  by such  Pledgor,  will be the legally  valid and
binding  obligations  of such  Pledgor,  enforceable  against such  Pledgor,  in
accordance with their respective terms,  except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency,  reorganization,  moratorium,
or similar laws relating to or limiting creditors' rights generally;

            (f) Each Pledgor has good and indefeasible  title to the Collateral,
free and clear of Liens  except for  Permitted  Liens and except for  defects in
title that do not interfere in any material  respect with its ability to conduct
its business or to utilize such property for its intended purpose;

            (g) Upon the filing of Uniform Commercial Code financing  statements
in the  jurisdictions  set forth on  Schedule 2 attached  hereto,  the  Security
Interest in the Collateral  granted  hereunder  shall  constitute at all times a
valid first priority security interest, perfected with respect to all Collateral
for which the filing of the Uniform  Commercial  Code financing  statements is a
valid  method  of  perfection,  and,  assuming  timely  filing  of  continuation
statements,  vested  in  Agent,  in and upon the  Collateral,  free of any Liens
except for Permitted Liens;

            (h) Each Pledgor's (i) legal name as set forth on the public records
of such Pledgor's  jurisdiction of organization is as set forth on the signature
page hereof for such Pledgor,  (ii)  Organizational  I.D. Number and FEIN are as
set forth on Schedule 3 for such Pledgor,  and (iii) chief executive  office and
all other  locations of such Pledgor are as set forth on Schedule 4, and (iv) as
of the Closing  Date,  no Pledgor  holds any  commercial  tort claim,  except as
disclosed on Schedule 1;

            (i) All written information  supplied by any Pledgor 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;

            (j) All of the  Equipment  (other  than any  that  may  have  become
obsolete or worn-out)  is used or held for use in Pledgors'  business and is fit
for such purposes;

            (k) The  Inventory  and  Equipment  are not  stored  with a  bailee,
warehouseman,  or similar party and are located only at the locations identified
on Schedule 4;

                                       6
<PAGE>

            (l) Each Pledgor  keeps correct and accurate  records  itemizing and
describing the type,  quality,  and quantity of its Inventory and the book value
thereof;

            (m)  Peninsula  Gaming,  LLC  ("Parent")  does not (i) own or lease,
directly or indirectly,  any real, personal,  intangible or tangible property of
any nature  other than the Equity  Interests  of the  Borrowers,  (ii)  conduct,
transact or  otherwise  engage in any  business or  operations  other than those
incidental to the  ownership of such Equity  Interests of the Borrowers or (iii)
have any  material  obligations  or  liabilities  other  than under (1) the Loan
Documents and (2) the Senior Note Documents; and

            (n) The Old Evangeline  Downs Capital Corp. ("OED Capital") does not
(i) own or lease,  directly or  indirectly,  any real,  personal,  intangible or
tangible property of any nature,  (ii) conduct,  transact or otherwise engage in
any business or operations  other than in connection with and as required by the
OED Note Documents or (iii) have any material  obligations or liabilities  other
than under (1) the Loan Documents, (2) the OED Note Documents and (3) the Senior
Note Documents.

            The  warranties,  representations,  and agreements set forth in this
Agreement and the other Loan Documents to which each Pledgor is a party shall be
conclusively presumed to have been relied upon by Agent and the other members of
the Lender  Group and shall be  cumulative  and in addition to any and all other
warranties,  representations,  and  agreements  which each Pledgor  shall now or
hereinafter  give,  or cause to be given,  to  Agent.  The  representations  and
warranties herein shall be deemed to have been made by each Pledgor on each date
of each  borrowing  under the Loan Agreement on and as of such date of borrowing
as though made hereunder on and as of such date.

      8.  Incorporation  of  Representations,  Warranties  and  Covenants.  Each
Pledgor that is a  Subsidiary  of a Borrower  agrees that,  for purposes of this
Agreement,  all  of  the  representations,  warranties  and  covenants  made  by
Borrowers on behalf of or relating to each  "Subsidiary" in Sections 4, 5, 6 and
7 of the Loan Agreement shall be deemed  incorporated by reference into and made
an  express  part of this  Agreement,  as fully and  completely  as if set forth
expressly  herein,  and such Pledgor shall comply herewith and be bound thereby.
Each Pledgor  ratifies and affirms each  representation  and warranty  made with
respect to it or on its behalf by any Borrower in the Loan Agreement.

      9. Agent's Perfected First Priority Security Interest.  Each Pledgor shall
take or  cause to be  taken  such  acts and  actions  as shall be  necessary  or
appropriate  to ensure that the Security  Interest in the  Collateral  shall not
become subordinate or junior to the security  interests,  liens or claims of any
other Person  other than  Permitted  Liens,  and that the  Collateral  shall not
otherwise be or become subject to any Lien, except for Permitted Liens, it being
understood  that the  foregoing  shall  not  obligate  any  Pledgor  to file any
continuation statement.

      10. Parent and OED Capital.

            (a)   Parent   hereby   covenants   and  agrees  not  to  incur  any
Indebtedness,  grant any Liens or conduct,  transact or otherwise  engage in any
business or operations other than in

                                       7
<PAGE>

connection  with and as  required  by the Loan  Documents  and the  Senior  Note
Documents and those  incidental to the ownership of the Equity  Interests of the
Borrowers.

            (b) OED  Capital  hereby  covenants  and  agrees  not to  incur  any
Indebtedness,  grant any Liens or conduct,  transact or otherwise  engage in any
business or operations other than in connection with and as required by the Loan
Documents, the Senior Note Documents and the OED Note Documents.

      11.  Negative  Covenants.  Each  Pledgor  covenants  and agrees that until
payment in full of the Secured Obligations, it will not do any of the following:

            (a) Change its name, FEIN, corporate structure,  or identity, or add
any new fictitious name; provided,  however,  that a Pledgor may change its name
upon at least 30 days'  prior  written  notice by such  Pledgor to Agent of such
change and so long as, at the time of such  written  notification,  such Pledgor
provides any financing  statements or fixture  filings  necessary to perfect and
continue perfected Agent's security interests;

            (b) Relocate its chief executive  office to a new location,  in each
case without providing to Agent (i) at least 5 days' prior written  notification
thereof and (ii) upon  request of Agent,  a  Collateral  Access  Agreement  with
respect to such new location.  The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Agent's prior written consent;

            (c) deliver any document  evidencing  any  Equipment or Inventory to
any Person other than the issuer of such  document to claim the goods  evidenced
therefor, Agent or any other holder or representative of a holder of a Permitted
Lien;

            (d)  except  for  Permitted  Dispositions,  dispose  of any  item or
portion of the Collateral; or

            (e) acquire by  purchase  or  otherwise  any Real  Property  without
providing to Agent,  at or prior to the time of such  acquisition,  such Pledgor
provides  such  documents  as  requested  by Agent  pursuant  to  Section  3(b),
including,  without  limitation,   mortgagee  title  insurance  policies,  legal
descriptions  and, as applicable,  Collateral  Access Agreements with respect to
such Real  Property  and an opinion from counsel to such Pledgor with respect to
real estate matters in form and substance reasonably satisfactory to Agent.

      12. Personal Property. The parties intend that, to the extent permitted by
applicable law, the Collateral  shall remain personal  property  irrespective of
the manner of its attachment or affixation to realty.

      13. [Intentionally omitted.]

      14. Agent's Rights and Remedies.

            (a) Upon the occurrence and during the  continuation  of an Event of
Default, Agent, at the request of the Required Lenders, is hereby authorized to:

                                       8
<PAGE>

                  (i)  Settle  or  adjust  disputes  and  claims  directly  with
Pledgors'  Account Debtors of Accounts  constituting  Collateral for amounts and
upon terms  which Agent  considers  advisable,  and,  in such cases,  Agent will
credit the Loan Account  with only the net amounts  received by Agent in payment
of such disputed  Accounts after deducting all Lender Group Expenses incurred or
expended in connection therewith;

                  (ii)  Cause  each  Pledgor  to  hold  all  returned  Inventory
constituting  Collateral in trust for the Lender  Group,  segregate all returned
Inventory  constituting  Collateral  from all other assets of such Pledgor or in
such Pledgor's possession and conspicuously label said returned Inventory as the
property of the Lender Group;

                  (iii) Without notice to or demand upon each Pledgor, make such
payments and do such acts as Agent considers  necessary or reasonable to protect
its security  interests in the  Collateral.  Each Pledgor agrees to assemble the
Collateral if Agent so requires,  and to make the Collateral  available to Agent
at a place  that  Agent may  designate  that is  reasonably  convenient  to both
parties.  Each  Pledgor  authorizes  Agent  to  enter  the  premises  where  the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it,  and to pay,  purchase,  contest,  or  compromise  any Lien  that in
Agent's determination appears to conflict with the Liens of Agent and to pay all
expenses  incurred in  connection  therewith and to charge the  Borrowers'  Loan
Account therefor. With respect to any of any Pledgor's owned or leased premises,
each  Pledgor  hereby  grants Agent a license to enter into  possession  of such
premises and to occupy the same, without charge, in order to exercise any of the
Lender  Group's  rights or  remedies  provided  herein,  at law,  in equity,  or
otherwise;

                  (iv)  Without   notice  to  any  Pledgor  (such  notice  being
expressly  waived),  and without  constituting  a retention of any collateral in
full or partial  satisfaction of an obligation (within the meaning of the Code),
set off and  apply  to the  Secured  Obligations  any and all (i)  balances  and
deposits of such Pledgor held by the Lender Group,  or (ii)  Indebtedness at any
time  owing to or for the  credit or the  account  of such  Pledgor  held by the
Lender Group;

                  (v)  Hold,  as  cash  collateral,  any and  all  balances  and
deposits  of any Pledgor  held by the Lender  Group to secure the full and final
repayment of all of the Secured Obligations;

                  (vi) Ship, reclaim, recover, store, finish, maintain,  repair,
prepare  for sale,  advertise  for sale,  and sell (in the manner  provided  for
herein) the  Collateral.  Each Pledgor hereby grants to Agent a license or other
right to use, without charge, such Pledgor's labels, patents,  copyrights, trade
secrets, trade names, trademarks,  service marks, and advertising matter, or any
property  of a similar  nature,  as it  pertains to the  Security  Interest,  in
completing  production of,  advertising for sale, and selling any Collateral and
such  Pledgor's  rights under all licenses and all  franchise  agreements  shall
inure to the Lender Group's benefit;

                  (vii) Sell the  Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions,  for cash or on terms,
in such manner and at such places  (including  each Pledgor's or each Borrower's
premises) as Agent determines is commercially reasonable and it is not necessary
that the Collateral be present at any such sale;

                                       9
<PAGE>

                  (viii) Give notice of the  disposition  of the  Collateral  as
follows:

                        (A) Agent  shall give  Pledgors  (for the benefit of the
applicable  Pledgor) a notice in  writing of the time and place of public  sale,
or, if the sale is a private sale or some other  disposition other than a public
sale is to be made of the  Collateral,  the time on or after  which the  private
sale or other disposition is to be made; and

                        (B) the notice shall be personally  delivered or mailed,
postage  prepaid,  to each  Pledgor as  provided in Section 26, at least 10 days
before the earliest time of disposition set forth in the notice; no notice needs
to be given prior to the  disposition of any portion of the  Collateral  that is
perishable  or  threatens  to  decline  speedily  in  value or that is of a type
customarily sold on a recognized market;

                  (ix) Credit bid and purchase at any public sale;

                  (x) Seek the  appointment  of a  receiver  or  keeper  to take
possession  of all or any portion of the  Collateral  or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing; and

                  (xi) Have all other rights and remedies available at law or in
equity or pursuant to any other Loan Document.

            (b) Pledgors hereby  acknowledge and agree that the notice described
in  Section   14(a)(viii)(B),   when  given,   shall   constitute  a  reasonable
"authenticated  notification of disposition" within the meaning of Section 9-611
of the Uniform Commercial Code, as in effect from time to time in any applicable
jurisdiction.

            (c) Agent or any other member of the Lender Group may be a purchaser
of any or all of the Collateral at any public or, to the extent  permitted under
the Code,  private sale in accordance  with the Code and Agent, as secured party
for and representative of the Lender Group,  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 sale made in  accordance  with the
Code,  to use and apply any of the  Secured  Obligations  of such  Pledgor  as a
credit on account of the purchase price for any  Collateral  payable by Agent at
such sale. To the extent  provided under the Code or other  applicable law, each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any  Pledgor  and  Pledgor  hereby  waives (to the
extent  permitted  by  applicable  law) all rights of  redemption,  stay  and/or
appraisal  which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted until payment in full of the
Secured Obligations. Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given.  Agent may adjourn any public or
private  sale from  time to time by  announcement  at the time and  place  fixed
therefor and by notice to the  applicable  Pledgor,  and such sale may,  without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor  hereby  waives any claims  against  Agent arising by reason of the fact
that the price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
Agent  accepts the first offer  received and does not offer such  Collateral  to

                                       10
<PAGE>

more than one offeree.  Each Pledgor  further agrees that a breach of any of the
covenants  contained in this Section 14 will cause irreparable  injury to Agent,
that Agent has no  adequate  remedy at law in respect of such  breach  and, as a
consequence,  that each and every covenant contained in this Section 14 shall be
specifically  enforceable  against such Pledgor,  and such Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants  except for a defense that no default has occurred giving rise
to the  Secured  Obligations  becoming  due and  payable  prior to their  stated
maturities.  Nothing  in this  Section  14 shall in any way alter the  rights of
Agent under this Agreement.

            (d) Agent  may sell the  Collateral  following  the  occurrence  and
during the  continuance of an Event of Default  without giving any warranties as
to the  Collateral.  Agent may  specifically  disclaim  or  modify,  in its sole
discretion,  any  warranties  of title or the  like as to any  Collateral.  This
procedure   will  not  be   considered  to  adversely   affect  the   commercial
reasonableness  of any sale of any of the Collateral.  Agent may comply with any
applicable state or federal law requirements in connection with a disposition of
the  Collateral and  compliance  will not be considered to adversely  affect the
commercial  reasonableness of any sale of the Collateral.  Leasing and licensing
of Collateral by Agent to third Persons are types of sales permitted hereunder.

            (e) If Agent sells any of the  Collateral  of any Pledgor on credit,
the Secured  Obligations  of such  Pledgor will be credited  only with  payments
actually  made by the  purchaser  and  received  by  Agent  and  applied  to the
indebtedness  of the purchaser.  In the event the purchaser fails to pay for the
Collateral, Agent may resell the Collateral.

            (f) Agent shall have no obligation to marshal any of the Collateral.

            (g)  All  amounts   and   proceeds   (including   checks  and  other
instruments)  received by any Pledgor in respect of amounts due to such  Pledgor
in respect of the Collateral or any portion thereof following the occurrence and
during the continuance of an Event of Default shall be received in trust for the
benefit of Agent hereunder, shall be segregated from other funds of such Pledgor
and shall be  forthwith  paid over or  delivered to Agent in the same form as so
received  (with any necessary  endorsement)  to be held as cash  Collateral  and
applied as  provided  by  Section 19  following  the  occurrence  and during the
continuance  of an Event of  Default.  Upon  demand  from  Agent  following  the
occurrence and during the continuance of an Event of Default, Pledgors shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or  partly  any  obligor  with  respect  thereto  or allow any  credit or
discount thereon.

            (h) Each Pledgor agrees that,  upon the occurrence of and during the
continuance  of an Event of Default and at Agent's  request,  such  Pledgor will
immediately  file such  applications  for  approval and shall take all other and
further  actions  required  by Agent to obtain  such  approvals  or  consents of
regulatory  authorities  as are  necessary to transfer  ownership and control to
Agent of the Gaming  Licenses held by it, or its interest in any Person  holding
any such Gaming License.  To enforce the provisions of this Section 14(h), Agent
is  empowered  to  request  the  appointment  of a  receiver  from any  court of
competent  jurisdiction.  Such  receiver  shall be  instructed  to seek from the
applicable  Gaming  Authority an  involuntary  transfer of control of any Gaming
License for the purpose of seeking a bona fide purchaser to whom control

                                       11
<PAGE>

will ultimately be transferred.  Each Pledgor hereby agrees to authorize such an
involuntary  transfer of control  upon the request of the  receiver so appointed
and, if any Pledgor or any such Restricted  Subsidiary shall refuse to authorize
the transfer, its approval may be required by the court. Upon the occurrence and
continuance  of an  Event  of  Default,  each  Pledgor  shall  further  use  its
reasonable best efforts to assist in obtaining approval of the applicable Gaming
Authority,  if required,  for any action or  transactions  contemplated  by this
Agreement or the Loan Documents,  including,  without  limitation,  preparation,
execution,  and filing with the applicable Gaming Authority of the assignor's or
transferor's  portion of any  application  or  applications  for  consent to the
assignment of any Gaming License or transfer of control necessary or appropriate
under the applicable  Gaming  Authority's  rules and regulations for approval of
the transfer or assignment of any portion of the  Collateral,  together with any
Gaming  License  or other  authorization.  Each  Pledgor  acknowledges  that the
assignment or transfer of Gaming Licenses is integral to Agent's  realization of
the value of the Collateral, that there is no adequate remedy at law for failure
by any Pledgor to comply with the provisions of this Section 14(h) and that such
failure would not be adequately  compensable  in damages,  and therefore  agrees
that  the  agreements  contained  in  this  Section  14(h)  may be  specifically
enforced.

            (i) Any deficiency  that exists after  disposition of the Collateral
as provided above will be paid  immediately by Pledgors.  Any excess that exists
after  disposition  of the  Collateral  will be returned,  without  interest and
subject to the rights of third Persons, by Agent to Pledgors.

            (j) In the event  Agent  elects to commence  foreclosure  proceeding
under  Louisiana  law,  Agent may cause  such  Collateral,  or any part or parts
thereof,  to be  immediately  seized  and sold,  whether  in term of court or in
vacation,  under ordinary or executory  process,  in accordance  with applicable
Louisiana law, to the highest bidder for cash, with or without appraisement, and
without the necessity of making additional demand upon or notifying  Pledgors or
any  Person or  placing  Pledgors  or any  Person in  default,  all of which are
expressly waived. For purposes of foreclosure under Louisiana  executory process
procedures, each Pledgor confesses judgment and acknowledges to be indebted unto
and in  favor of Agent up to the full  amount  of the  Secured  Obligations,  in
principal,  interest,  costs,  expenses,  attorneys'  fees  and  other  fees and
charges.  To the extent permitted under  applicable  Louisiana law, each Pledgor
additionally  waives: (i) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws
with regard to appraisal upon judicial  sale;  (ii) the demand and 3 days' delay
as  provided  under  Articles  2639  and  2721 of the  Louisiana  Code of  Civil
Procedure;  (iii) the notice of seizure as provided under Articles 2293 and 2721
of the Louisiana Code of Civil Procedure;  (iv) the 3 days' delay provided under
Articles 2331 and 2722 of the  Louisiana  Code of Civil  Procedure;  and (v) all
other benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code
of Civil  Procedure and all other  articles not  specifically  mentioned  above.
Should it become  necessary  for Agent to foreclose  under this  Agreement,  all
declarations  of fact,  which are made  under an  authentic  act before a Notary
Public in the presence of 2 witnesses,  by a Person  declaring such facts to lie
within his or her knowledge, shall constitute authentic evidence for purposes of
executory  process  and  also  for  purposes  of La.  R.S.  9:3509.1,  La.  R.S.
9:3504(D)(6) and La. R.S. 10:9-629, as applicable.  In addition to the foregoing
rights and remedies,  Agent may elect to effect the seizure and  disposition  of
the Collateral  pursuant to any procedures as may be authorized by Louisiana law
from time to time.

                                       12
<PAGE>

            (k) All rights,  remedies,  and powers  provided  in this  Agreement
relative to the Collateral may be exercised only to the extent that the exercise
thereof does not violate any  applicable  mandatory  provision of the Applicable
Gaming Laws and all provisions of this Agreement  relative to the Collateral are
intended to be subject to all applicable  mandatory provisions of the Applicable
Gaming Laws and to be limited  solely to the extent  necessary to not render the
provisions  of this  Agreement  invalid or  unenforceable,  in whole or in part.
Agent will timely apply for and receive all required approvals of the applicable
Gaming Authority for the sale or other disposition of Gaming Equipment regulated
by Applicable  Gaming Laws  (including  any such sale or  disposition  of Gaming
Equipment consisting of slot machines, gaming tables, cards, dice, gaming chips,
player tracking  systems,  and all other "gaming devices" (as such term or words
of like import referring thereto are defined in the Applicable Gaming Laws), and
"associated  equipment" (as such term or words of like import referring  thereto
are defined in the Applicable Gaming Laws).

      15. Remedies Cumulative.  Each Pledgor agrees that the rights and remedies
of the Lender  Group under this  Agreement,  the other Loan  Documents,  and all
other agreements shall be cumulative.  Agent and the other members of the Lender
Group shall have all other  rights and  remedies  not  inconsistent  herewith as
provided under the Code, by law, or in equity.  Each Pledgor  further  expressly
agrees  that Agent  shall in no event be under any  obligation  to resort to any
Collateral  secured  hereby prior to exercising  any other rights that Agent may
have against such Pledgor or its property,  nor shall Agent be obliged to resort
to any other  collateral  or security for the Secured  Obligations  prior to any
exercise of Agent's rights against such Pledgor and its property  hereunder.  No
exercise  by Agent of one right or remedy  shall be deemed an  election,  and no
waiver by Agent of any Event of Default shall be deemed a continuing  waiver. No
delay by Agent shall constitute a waiver, election, or acquiescence by it.

      16. Agent's Right to Perform Contracts. Upon the occurrence and during the
continuation  of an Event of  Default,  Agent (or its  designee)  may proceed to
perform any and all of the obligations of any Pledgor contained in any contract,
lease or other  agreement and exercise any and all rights of any Pledgor therein
contained as fully as such Pledgor itself could.

      17.   Collection  of  Accounts,   General   Intangibles,   and  Negotiable
Collateral.  At any time after the occurrence and during the  continuation of an
Event of Default,  Agent or Agent's  designee may (a) notify Account  Debtors of
Accounts  constituting  Collateral  of any and all Pledgors  that the  Accounts,
Chattel Paper, or General Intangibles (other than the Excluded Assets) have been
assigned to Agent or that Agent has a security interest therein,  or (b) collect
the Accounts,  Chattel Paper,  or General  Intangibles  (other than the Excluded
Assets)  directly  and  charge the  collection  costs and  expenses  to the Loan
Account. Each Pledgor agrees that it will hold in trust for the Lender Group, as
the Lender Group's  trustee,  any  Collections  constituting  Collateral that it
receives  and  immediately  will  deliver  said  Collections  to  Agent in their
original form as received by the applicable Pledgor.

      18. Power of Attorney. Each Pledgor hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as such Pledgor's true and lawful  attorney,  with power to, from time
to time in its discretion, take any action and to execute any instrument that it
may deem  reasonably  necessary or advisable to accomplish  the purposes of this
Agreement, including, without limitation, the following: (a) if

                                       13
<PAGE>

such  Pledgor  refuses  to, or fails  timely to execute  and  deliver any of the
documents  described  in Section 3, sign the name of such  Pledgor on any of the
documents  described  in Section 3; and (b) at any time that an Event of Default
has occurred and is  continuing,  (i) sign such Pledgor's name on any invoice or
bill of lading  relating to the  Collateral,  drafts against  Account Debtors of
Accounts  constituting  Collateral,  or notices to Account  Debtors of  Accounts
constituting Collateral,  (ii) send requests for verification of Accounts to the
applicable Account Debtors,  (iii) endorse such Pledgor's name on any Collection
item that may come into the Lender Group's  possession,  (iv) make,  settle, and
adjust all claims  under  such  Pledgor's  policies  of  insurance  and make all
determinations  and decisions with respect to such policies of insurance and (v)
settle and adjust  disputes and claims  respecting  Accounts,  Chattel  Paper or
General  Intangibles  (other than the  Excluded  Assets)  directly  with Account
Debtors or other applicable third parties, for amounts and upon terms that Agent
determines  to be  reasonable,  and Agent may cause to be executed and delivered
any  documents  and  releases  that  Agent  determines  to  be  necessary.   The
appointment of Agent as each Pledgor's  attorney,  and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until the date
of termination of this Agreement in accordance with Section 24.

      19. Application of Proceeds.  After deducting all reasonable  expenses and
charges (including Agent's  attorneys' fees) of retaking,  keeping,  storing and
selling the Collateral,  Agent shall apply the proceeds in payment of any of the
Secured Obligations in the order of application set forth in the Loan Agreement.
Each  Pledgor  agrees  that if steps are taken by Agent to  enforce  its  rights
hereunder,  or to realize upon any of the Collateral,  such Pledgor shall pay to
Agent the amount of Agent's costs,  including  reasonable  attorneys'  fees, and
each  Pledgor's  obligation  to pay such amounts shall be deemed to be a part of
the Secured Obligations secured hereunder.

      20. The Lender  Group's  Liability  for  Collateral.  Each Pledgor  hereby
agrees that: (a) so long as Agent complies with its  obligations,  if any, under
the  Code,  the  Lender  Group  shall  not in any way or  manner  be  liable  or
responsible for: (i) the safekeeping of the Collateral,  (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause,  (iii) any
diminution  in the value  thereof,  or (iv) any act or default  of any  carrier,
warehouseman,  bailee,  forwarding  agency, or other Person; and (b) all risk of
loss,  damage,  or destruction of the Collateral  shall be borne by such Pledgor
and any loss,  damage or  destruction  of the  Collateral  shall not release any
Pledgor from its obligations hereunder.

      21. Indemnification.  Each Pledgor shall indemnify and hold harmless Agent
and each other member of the Lender Group and any other Person acting  hereunder
for all losses, costs, damages, fees and expenses whatsoever associated with the
exercise of the powers of attorney granted herein and shall release Agent,  each
other member of the Lender Group and any other Person acting  hereunder from all
liability  whatsoever  for the exercise of the foregoing  powers of attorney and
all actions taken  pursuant  thereto,  except,  in either event,  in the case of
gross  negligence or willful  misconduct by the Person seeking  indemnification.
This  provision  shall survive the  termination  of this  Agreement and the Loan
Agreement and the repayment of the Secured Obligations.

      22.  Agent's  Right to Immediate  Possession of  Collateral.  Each Pledgor
hereby  acknowledges  that the  Secured  Obligations  arise out of a  commercial
transaction and agrees that if an Event of Default shall occur, Agent shall have
the right to immediate possession without

                                       14
<PAGE>

notice or a hearing,  and hereby knowingly and intelligently  waives any and all
rights  it may have to any  notice  and  posting  of a bond by  Agent,  prior to
seizure by Agent, or any of its transferees,  assigns or successors in interest,
of the Collateral or any portion thereof.

      23. No Release or Waiver. No transfer or renewal, extension, assignment or
termination  of this  Agreement  or of the Loan  Agreement  or of any other Loan
Document, or of any instrument or document executed and delivered by any Pledgor
or any other obligor to Agent,  nor  additional  advances made by the Lenders to
the  Borrowers,  nor  the  taking  of  further  security,  nor the  retaking  or
re-delivery of the Collateral to any Pledgor by Agent nor any other act of Agent
or any other  member of the Lender  Group shall  release  any  Pledgor  from any
Secured  Obligation,  except a release or discharge executed in writing by Agent
in accordance with the Loan Agreement with respect to such Secured Obligation or
upon full payment and  satisfaction  of all Secured  Obligations as described in
Section 24 and  termination  of the Loan  Agreement and the  Commitments.  Agent
shall not, by any act,  delay,  omission or otherwise,  be deemed to have waived
any of its rights or  remedies  hereunder,  unless such waiver is in writing and
signed  by Agent in  accordance  with the Loan  Agreement  and then  only to the
extent  therein  set  forth.  A waiver  by Agent of any  right or  remedy on any
occasion  shall not be  construed  as a bar to the exercise of any such right or
remedy that it would otherwise have had on any other occasion.

      24.  Termination.  This  Agreement  shall  create  a  continuing  security
interest in the  Collateral  and shall  terminate only upon the final payment in
full in cash of the Secured  Obligations  (including  either (a) providing  cash
collateral  to be held by Agent for the benefit of the  Lenders  with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b)  causing  the  original  Letters  of Credit  to be  returned  to  Agent),
termination of the Loan Agreement and termination of the Commitments.

      25. Successors.  (a) This Agreement shall bind and inure to the benefit of
the respective  successors and assigns of each of the parties hereto  including,
without  limitation,  any receiver or trustee of a Pledgor;  provided,  however,
that no Pledgor  may assign  this  Agreement  or any rights or duties  hereunder
without  Agent's prior written  consent and any prohibited  assignment  shall be
absolutely  void ab initio.  No consent to assignment by Agent shall release any
Pledgor from its obligations to the Lender Group.

            (b) Agent and the other  members  of the Lender  Group  may,  to the
extent  permitted  under the Loan  Agreement  or any other Loan  Documents,  and
pursuant to the notice provisions,  as applicable,  thereunder,  sell, assign or
transfer all or any part of the Secured Obligations,  and in such event each and
every  permitted  assignee,  transferee,  or holder of all or any of the Secured
Obligations  shall  have  the  right  to  enforce  this  Agreement,  by  suit or
otherwise,  for the benefit of such permitted assignee,  transferee or holder as
fully as if such assignee, transferee or holder were herein by name specifically
given such  rights,  powers and  benefits.  In the event this  Agreement  or the
rights  hereunder  are so assigned by Agent,  the term  "Agent",  wherever  used
herein, shall be deemed to refer to and include any such assignee.

      26. Notices. Any notice, demand or other communication that Agent may wish
to give shall be served upon any Pledgor in the fashion  prescribed  for notices
and at the address for such  Pledgor in Section 14 of the Guaranty to which such
Pledgor is a party and the notice so

                                       15
<PAGE>

sent  shall be  deemed to be  served  as set  forth in the Loan  Agreement.  All
notices  or other  communication  to Agent  shall be  served  upon  Agent at its
address  set  forth in  Section  12 of the  Loan  Agreement  and in the  fashion
prescribed under Section 12 of the Loan Agreement.

      27. New  Subsidiaries.  Pursuant to, and subject to the terms of,  Section
6.19 of the Loan Agreement, the Borrowers may form any new Subsidiary or acquire
any direct or indirect  Subsidiary after the Closing Date so long as at the time
of such  formation  or  acquisition,  such new  Subsidiary  (other than any CFC)
enters into this  Agreement by  executing  and  delivering  in favor of Agent an
instrument  in the form of Annex 1  attached  hereto.  Upon  the  execution  and
delivery of Annex 1 by such new Subsidiary,  such new Subsidiary  shall become a
Pledgor  hereunder  with the same force and effect as if  originally  named as a
Pledgor  herein.  The  execution  and  delivery  of  any  instrument  adding  an
additional Pledgor as a party to this Agreement shall not require the consent of
any Pledgor  hereunder.  The rights and  obligations  of each Pledgor  hereunder
shall  remain in full force and effect  notwithstanding  the addition of any new
Pledgor hereunder.

      28.  Governing  Law. The  validity of this  Agreement,  the  construction,
interpretation,  and enforcement hereof and the rights of the parties hereto and
the  beneficiaries  hereof with  respect to all  matters  arising  hereunder  or
related  hereto  shall be  determined  under,  governed  by,  and  construed  in
accordance with the laws of the State of New York.

      29. Rights to  Collateral;  Change in Law. The parties  acknowledge  their
intent  that,  upon the  occurrence  and during the  continuance  of an Event of
Default,  Agent shall receive, to the fullest extent permitted by applicable law
and governmental  policy,  all rights necessary or desirable to access,  obtain,
use or sell the Collateral,  and to exercise all remedies  available to it under
this  Agreement,  the  Code,  or  other  applicable  law.  The  parties  further
acknowledge  and agree  that,  in the event of  changes  in law or  governmental
policy occurring subsequent to the date hereof that affect in any manner Agent's
rights  of access  to,  or use or sale of,  the  Collateral,  or the  procedures
necessary  to enable Agent to obtain such rights of access,  use or sale,  Agent
and Pledgors shall amend this Agreement in such manner as Agent shall request in
order to provide Agent such rights to the greatest  extent  possible  consistent
with applicable law and governmental policy.

      30. Severability of Provisions.  Each provision of this Agreement shall be
severable  from every  other  provision  of this  Agreement  for the  purpose of
determining the legal enforceability of any specific provision.

      31. Counterparts;  Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which,  when executed and delivered,  shall be deemed to be an original,
and all of which,  when taken  together,  shall  constitute but one and the same
agreement.   Delivery  of  an  executed   counterpart   of  this   Agreement  by
telefacsimile  shall be equally as effective as delivery of an original executed
counterpart of this Agreement.

      32. Modification.  Neither this Agreement nor any of its terms, provisions
or  conditions  may be  altered,  amended  or  modified  in any way,  except  as
specifically provided in a written instrument signed by an authorized officer of
Agent and Pledgors.

                                       16
<PAGE>

      33. Survival of Provisions. All representations,  warranties and covenants
of each Pledgor  contained  herein shall  survive the  execution and delivery of
this Agreement.

      34. Integration.  This Agreement,  together with the other Loan Documents,
reflects  the  entire   understanding   of  the  parties  with  respect  to  the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

      35. Section Headings.  Headings and numbers have been set forth herein for
convenience  only.  Unless the contrary is compelled by the context,  everything
contained in each Section applies equally to this entire Agreement.

      36. Agent.  The powers  conferred on Agent hereunder are solely to protect
its  interest  in the  Collateral  and shall not  impose  any duty upon Agent to
exercise any such powers.  Except for the safe custody of any  Collateral in its
actual  possession  and the  accounting  for moneys  actually  received by Agent
pursuant  hereto,  Agent shall have no duty with respect to the Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights  pertaining to any of the Collateral.  Each reference herein to
any right granted to, benefit conferred upon or power exercisable, exercised, or
action taken by Agent shall be deemed to be a reference to, or be deemed to have
been so taken, as the case may be, by Agent in its capacity as Agent pursuant to
the Loan  Agreement for the benefit of the Lender  Group,  all as more fully set
forth in the Loan Agreement.

               [Remainder of this page intentionally left blank.]

                                       17
<PAGE>

      IN WITNESS  WHEREOF,  the  undersigned  parties  hereto have executed this
Agreement by and through their duly authorized officers,  as of the day and year
first above written.

PLEDGOR:                               PENINSULA GAMING, LLC, a Delaware
                                       limited liability company

                                       By:  /s/  Natalie A. Schramm
                                          --------------------------------------
                                       Name:   Natalie A. Schramm
                                       Title:  Chief Financial Officer

                                       THE OLD EVANGELINE DOWNS CAPITAL
                                       CORP., a Delaware corporation

                                       By:  /s/  Natalie A. Schramm
                                          --------------------------------------
                                       Name:   Natalie A. Schramm
                                       Title:  Chief Financial Officer

<PAGE>

AGENT:                                 WELLS FARGO FOOTHILL, INC.,
                                       a California corporation, as agent

                                       By:  /s/  Todd R. Nakamoto
                                          --------------------------------------
                                       Name:   Todd R. Nakamoto
                                       Title:  Vice President

<PAGE>

                                     ANNEX 1

                                       to

                          GUARANTOR SECURITY AGREEMENT

                               FORM OF SUPPLEMENT

      THIS SUPPLEMENT NO. __ (this  "Supplement")  dated as of __________ to the
Guarantor Security  Agreement dated as of June ___, 2004 (as amended,  restated,
supplemented or otherwise modified from time to time, the "Security Agreement"),
by  each  of the  parties  listed  on the  signature  pages  thereto  and  those
additional entities that thereafter become parties thereto (each a "Pledgor" and
collectively,  the  "Pledgors")  and Wells Fargo  Foothill,  Inc.,  a California
corporation, as agent for the Lenders (as defined below) ("Agent").

                                   WITNESSETH:

      WHEREAS,  pursuant to that certain Loan and Security Agreement dated as of
June __, 2004 (as the same may be amended,  restated,  supplemented or otherwise
modified from time to time, the "Loan Agreement"), among Agent, the lenders from
time to time party thereto (the "Lenders") and The Old Evangeline Downs, L.L.C.,
a Louisiana  limited liability  company,  and Diamond Jo, LLC (formerly known as
Peninsula Gaming Company,  LLC), a Delaware limited  liability  company (each, a
"Borrower" and collectively, the "Borrowers"), the Lenders have agreed to extend
credit to the Borrowers  from time to time pursuant to the terms and  conditions
thereof; and

      WHEREAS,  capitalized  terms used herein and not otherwise  defined herein
shall have the meanings assigned to such terms in the Security Agreement, and if
not defined therein, in the Loan Agreement; and

      WHEREAS,  Pledgors  have entered  into the Security  Agreement in order to
induce  the  Lenders  to make  the  Loans  and  other  financial  accommodations
contained in the Loan Agreement and the other Loan Documents; and

      WHEREAS,  pursuant  to  Section  27 of the  Security  Agreement,  each new
Subsidiary of a Borrower  (whether by acquisition  or creation)  (other than any
CFC) must execute and deliver the Security  Agreement,  and the execution of the
Security Agreement by the undersigned new Pledgor or Pledgors (collectively, the
"New Pledgor") may be  accomplished by the execution of this Supplement in favor
of Agent; and

      WHEREAS, New Pledgor is a direct or indirect Subsidiary of a Borrower, and
New Pledgor has determined that it will realize  substantial direct and indirect
benefits as a result of the loans and other financial accommodations extended to
Borrowers pursuant to the Loan Agreement, and New Pledgor's execution,  delivery
and  performance  of this  Guaranty is within New  Pledgor's  corporate or other
purposes;

<PAGE>

      NOW,  THEREFORE,  for and in consideration of the foregoing and other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, the New Pledgor hereby agrees as follows:

      SECTION 1. In accordance  with Section 27 of the Security  Agreement,  the
New Pledgor,  by its  signature  below,  becomes a "Pledgor"  under the Security
Agreement  with the same force and effect as if  originally  named  therein as a
"Pledgor"  and the  New  Pledgor  hereby  (a)  agrees  to all of the  terms  and
provisions of the Security Agreement  applicable to it as a "Pledgor" thereunder
and (b) represents and warrants that the  representations and warranties made by
it as a "Pledgor"  thereunder are true and correct on and as of the date hereof.
In furtherance of the  foregoing,  the New Pledgor,  as security for the payment
and  performance  in full of the  Guaranteed  Obligations,  does  hereby  grant,
assign,  and pledge to Agent,  for the benefit of the Lender  Group,  a security
interest  in all  Collateral  of New  Pledgor,  and all  additions  thereto  and
replacements  thereof  and all other  property  of New  Pledgor  whether  now or
hereafter created, acquired or reacquired, to secure the full and prompt payment
of the Secured Obligations, including, without limitation, any interest thereon,
plus attorneys' fees and expenses if the Secured Obligations  represented by the
Security  Agreement are collected by law, through an  attorney-at-law,  or under
advice therefrom.  Each reference to a "Pledgor" in the Security Agreement shall
be deemed to include the New  Pledgor.  The Security  Agreement is  incorporated
herein by reference.

      SECTION 2. The New  Pledgor  represents  and  warrants  to Agent that this
Supplement  has  been  duly  executed  and  delivered  by the  New  Pledgor  and
constitutes its legal, valid and binding  obligation,  enforceable against it in
accordance with its terms,  except as  enforceability  thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws affecting  creditors'  rights  generally and general  principles of
equity (regardless of whether such  enforceability is considered in a proceeding
at law or in equity).

      SECTION 3. This  Supplement may be executed in any number of  counterparts
and by different parties on separate counterparts,  each of which, when executed
and delivered,  shall be deemed to be an original,  and all of which, when taken
together,  shall  constitute  but one and the  same  agreement.  Delivery  of an
executed  counterpart of this  Supplement by  telefacsimile  shall be equally as
effective as delivery of an original  executed  counterpart of this  Supplement.
Any party delivering an executed counterpart of this Supplement by telefacsimile
also shall deliver an original  executed  counterpart of this Supplement but the
failure  to  deliver  an  original  executed  counterpart  shall not  affect the
validity, enforceability, and binding effect of this Supplement.

      SECTION 4. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.

      SECTION  5.  The   validity   of  this   Supplement,   the   construction,
interpretation,  and enforcement hereof and the rights of the parties hereto and
the  beneficiaries  hereof with  respect to all  matters  arising  hereunder  or
related  hereto  shall be  determined  under,  governed  by,  and  construed  in
accordance with the laws of the State of New York.

<PAGE>

      IN WITNESS  WHEREOF,  the New Pledgor has duly executed this Supplement to
the Security Agreement as of the day and year first above written.

NEW PLEDGOR:                        [Name of New Pledgor]

Address: ________________________   By:_____________________________
         ________________________   Name:___________________________
         ________________________   Title:__________________________

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