PENINSULA GAMING CORP
EXHIBIT 10.17: 9/22/03 LOAN & SECURITY AGMT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>form10q_exh10-17bhr111403.txt
<DESCRIPTION>EXHIBIT 10.17: 9/22/03 LOAN & SECURITY AGMT
<TEXT>



                                                                   EXHIBIT 10.17
================================================================================



                           LOAN AND SECURITY AGREEMENT



                                  BY AND AMONG



                    THE OLD EVANGELINE DOWNS, L.L.C. ("OED")

                                       AND

             THE OLD EVANGELINE DOWNS CAPITAL CORP. ("OED CAPITAL")

                                  AS BORROWERS,



                                       AND

              EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  AS BORROWERS,


                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 AS THE LENDERS,



                                       AND

                           WELLS FARGO FOOTHILL, INC.

                    AS THE ARRANGER AND ADMINISTRATIVE AGENT



                         DATED AS OF SEPTEMBER 22, 2003



================================================================================


<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                                                                                             Page
                                                                                                             ----
<S>     <C>      <C>                                                                                           <C>

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

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

         1.2      Accounting Terms..............................................................................17

         1.3      Code..........................................................................................17

         1.4      Construction..................................................................................17

         1.5      Schedules and Exhibits........................................................................18

2.       LOAN AND TERMS OF PAYMENT..............................................................................18

         2.1      Advances......................................................................................18

         2.2      Repayment of Advances.........................................................................19

         2.3      Borrowing Procedures and Settlements..........................................................19

         2.4      Payments......................................................................................23

         2.5      [Intentionally Omitted].......................................................................25

         2.6      Interest:  Rates, Payments, and Calculations..................................................25

         2.7      [Intentionally Omitted].......................................................................26

         2.8      Crediting Payments............................................................................26

         2.9      Designated Account............................................................................26

         2.10     Maintenance of Loan Account; Statements of Obligations........................................27

         2.11     Fees..........................................................................................27

         2.12     [Intentionally Omitted].......................................................................28

         2.13     Registered Notes..............................................................................28

         2.14     Capital Requirements..........................................................................28

         2.15     Joint and Several Liability of Borrowers......................................................28

3.       CONDITIONS; TERM OF AGREEMENT..........................................................................31

         3.1      Conditions Precedent to Initial Extension of Credit...........................................31

         3.2      Conditions Subsequent to Initial Extension of Credit..........................................33

         3.3      Conditions Precedent to all Extensions of Credit..............................................33

         3.4      Term..........................................................................................33

         3.5      Effect of Termination.........................................................................34

         3.6      Early Termination by Borrowers................................................................34

4.       CREATION OF SECURITY INTEREST..........................................................................34

         4.1      Grant of Security Interest....................................................................34


                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                                                         Page
                                                                                                         ----

         4.2      Negotiable Collateral....................................................................34

         4.3      [Intentionally Omitted]..................................................................35

         4.4      Delivery of Additional Documentation Required............................................35

         4.5      Power of Attorney........................................................................35

         4.6      Right to Inspect.........................................................................35

         4.7      [Intentionally Omitted]..................................................................35

         4.8      Letter of Credit.........................................................................35

5.       REPRESENTATIONS AND WARRANTIES....................................................................36

         5.1      No Encumbrances..........................................................................36

         5.2      [Intentionally Omitted]..................................................................36

         5.3      [Intentionally Omitted]..................................................................36

         5.4      Equipment................................................................................36

         5.5      Location of Equipment....................................................................36

         5.6      [Intentionally Omitted]..................................................................36

         5.7      Location of Chief Executive Office; FEIN.................................................36

         5.8      Due Organization and Qualification; Subsidiaries.........................................36

         5.9      Due Authorization; No Conflict...........................................................37

         5.10     Litigation...............................................................................38

         5.11     No Material Adverse Change...............................................................38

         5.12     Fraudulent Transfer......................................................................38

         5.13     Employee Benefits........................................................................38

         5.14     Environmental Condition..................................................................38

         5.15     Brokerage Fees...........................................................................39

         5.16     Intellectual Property....................................................................39

         5.17     Leases...................................................................................39

         5.18     DDAs.....................................................................................39

         5.19     Complete Disclosure......................................................................39

         5.20     Indebtedness.............................................................................39

         5.21     Licenses and Permits.....................................................................39


                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                                                          Page
                                                                                                          ----

6.       AFFIRMATIVE COVENANTS.............................................................................40

         6.1      Accounting System........................................................................40

         6.2      Reporting................................................................................40

         6.3      Financial Statements, Reports, Certificates..............................................41

         6.4      [Intentionally Omitted]..................................................................43

         6.5      [Intentionally Omitted]..................................................................43

         6.6      Maintenance of Properties................................................................43

         6.7      Taxes....................................................................................43

         6.8      Insurance................................................................................44

         6.9      Location of Equipment....................................................................45

         6.10     Compliance with Laws.....................................................................45

         6.11     Leases...................................................................................45

         6.12     Brokerage Commissions....................................................................45

         6.13     Existence................................................................................45

         6.14     Environmental............................................................................46

         6.15     Disclosure Updates.......................................................................46

         6.16     Government Authorization.................................................................46

         6.17     License Renewals.........................................................................46

         6.18     Licenses and Permits.....................................................................46

7.       NEGATIVE COVENANTS................................................................................47

         7.1      Indebtedness.............................................................................47

         7.2      Liens....................................................................................48

         7.3      Restrictions on Fundamental Changes......................................................48

         7.4      Disposal of Assets.......................................................................48

         7.5      Change Name..............................................................................48

         7.6      Guarantee................................................................................48

         7.7      Nature of Business.......................................................................48

         7.8      Prepayments and Amendments...............................................................48

         7.9      Change of Control........................................................................49

         7.10     [Intentionally Omitted]..................................................................49


                                     -iii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                                                          Page
                                                                                                          ----

         7.11     Distributions; Management Fees...........................................................49

         7.12     Accounting Methods.......................................................................49

         7.13     Investments..............................................................................49

         7.14     Transactions with Affiliates.............................................................49

         7.15     Suspension...............................................................................50

         7.16     Compensation.............................................................................50

         7.17     Use of Proceeds..........................................................................50

         7.18     Change in Location of Chief Executive Office; Equipment with Bailees.....................50

         7.19     Securities Accounts......................................................................50

         7.20     Financial Covenants......................................................................50

8.       EVENTS OF DEFAULT.................................................................................51

9.       THE LENDER'S RIGHTS AND REMEDIES..................................................................54

         9.1      Rights and Remedies......................................................................54

         9.2      Remedies Cumulative......................................................................56

10.      TAXES AND EXPENSES................................................................................56

11.      WAIVERS; INDEMNIFICATION..........................................................................56

         11.1     Demand; Protest..........................................................................56

         11.2     The Lender Group's Liability for Collateral..............................................57

         11.3     Indemnification..........................................................................57

12.      NOTICES...........................................................................................57

13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER........................................................59

14.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS........................................................60

         14.1     Assignments and Participations...........................................................60

15.      AMENDMENTS; WAIVERS...............................................................................63

         15.1     Amendments and Waivers...................................................................63

         15.2     Replacement of Holdout Lender............................................................64

         15.3     No Waivers; Cumulative Remedies..........................................................64

16.      AGENT; THE LENDER GROUP...........................................................................65

         16.1     Appointment and Authorization of Agent...................................................65

         16.2     Delegation of Duties.....................................................................66


                                      -iv-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                                                            Page
                                                                                                            ----

         16.3     Liability of Agent.........................................................................66

         16.4     Reliance by Agent..........................................................................66

         16.5     Notice of Default or Event of Default......................................................66

         16.6     Credit Decision............................................................................67

         16.7     Costs and Expenses; Indemnification........................................................67

         16.8     Agent in Individual Capacity...............................................................68

         16.9     Successor Agent............................................................................68

         16.10    Lender in Individual Capacity..............................................................68

         16.11    Withholding Taxes..........................................................................69

         16.12    Collateral Matters.........................................................................71

         16.13    Restrictions on Actions by Lenders; Sharing of Payments....................................71

         16.14    Agency for Perfection......................................................................72

         16.15    Payments by Agent to the Lenders...........................................................72

         16.16    Concerning the Collateral and Related Loan Documents.......................................72

         16.17    Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
                  Reports and Information....................................................................73

         16.18    Several Obligations; No Liability..........................................................74

17.      GENERAL PROVISIONS..................................................................................74

         17.1     Effectiveness..............................................................................74

         17.2     Section Headings...........................................................................74

         17.3     Interpretation.............................................................................74

         17.4     Severability of Provisions.................................................................75

         17.5     Amendments in Writing......................................................................75

         17.6     Counterparts; Telefacsimile Execution......................................................75

         17.7     Revival and Reinstatement of Obligations...................................................75

         17.8     Integration................................................................................75

         17.9     Parent as Agent for Borrowers..............................................................75

         17.10    Non-Recourse Liability.....................................................................76

</TABLE>

                                       -v-
<PAGE>

                             EXHIBITS AND SCHEDULES

Exhibit A-1                 Form of Assignment and Acceptance
Exhibit C-1                 Form of Compliance Certificate

Schedule A-1                Agent's Account
Schedule C-1                Commitments
Schedule D-1                Designated Account
Schedule P-1                Permitted Liens
Schedule 5.5                Locations of Equipment
Schedule 5.7                Chief Executive Office; FEIN
Schedule 5.8(b)             Capitalization of Borrowers
Schedule 5.8(c)             Capitalization of Borrowers' Subsidiaries
Schedule 5.10               Litigation
Schedule 5.14               Environmental Matters
Schedule 5.16               Intellectual Property
Schedule 5.18               Demand Deposit Accounts
Schedule 5.20               Permitted Indebtedness
Schedule 5.21               Licenses and Permits
Schedule 7.17               Equipment to be Purchased



                                      -vi-
<PAGE>
                                                                  Execution Copy


                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of September 22, 2003 by and among,  on the one hand, the lenders  identified on
the  signature  pages  hereof  (such  lenders,  together  with their  respective
successors  and assigns,  are referred to  hereinafter  each  individually  as a
"Lender"  and  collectively  as  "Lenders"),   WELLS  FARGO  FOOTHILL,  INC.,  a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, THE OLD EVANGELINE DOWNS, L.L.C., a Louisiana
limited liability company ("Parent"),  THE OLD EVANGELINE DOWNS CAPITAL CORP., a
Delaware  corporation ("OED Capital"),  and each of Parent's other  wholly-owned
Subsidiaries  identified  on the  signature  pages  hereof  (such  Subsidiaries,
together  with  Parent  and  OED  Capital,  are  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:

         "Accounts"  means all of  Borrowers'  now owned or  hereafter  acquired
right,  title,  and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.

         "Additional Documents" has the meaning set forth in Section 4.4.

         "Administrative Borrower" has the meaning set forth in Section 16.10.

         "Advance"  means any  Tranche A Advance or any  Tranche B Advance,  and
"Advances" means all Tranche A Advances and all Tranche B Advances.

         "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 Stock,  by contract,  or
otherwise.

         "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).

<PAGE>

         "Agent's  Liens" means the Liens  granted by Borrowers 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.

         "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
Administrative Borrower.

         "Availability Termination Date" means March 1, 2004.

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

         "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 Margin" means two and one-half percentage points (2.50%).

         "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 six 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 each  Borrower's  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
Borrower'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).

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


                                       -2-
<PAGE>

         "Borrowing" means a borrowing hereunder of an Advance.

         "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.

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

         "Capitalized  Lease Obligation"  means any Indebtedness  represented by
obligations under a Capital Lease.

         "Cash  Collateral and  Disbursement  Agreement" means that certain Cash
Collateral and Disbursement Agreement,  dated as of February 25, 2003, among the
Indenture Trustee,  U.S. Bank National  Association,  as Disbursement Agent, the
Construction Consultant and Borrowers.

         "Cash  Equivalents"  means (a) marketable direct  obligations issued or
unconditionally  guaranteed by the United States or issued by any agency thereof
and  backed by the full  faith and  credit of the  United  States,  in each case
maturing  within 1 year from the date of  acquisition  thereof,  (b)  marketable
direct  obligations  issued by any state of the United  States or any  political
subdivision  of any such state or any public  instrumentality  thereof  maturing
within  1 year  from  the  date  of  acquisition  thereof  and,  at the  time of
acquisition,  having the highest rating  obtainable  from either S&P or Moody's,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof  and,  at the time of  acquisition,  having a rating  of A-1 or P-1,  or
better,  from S&P or  Moody's,  and (d)  certificates  of  deposit  or  bankers'
acceptances  maturing within 1 year from the date of acquisition  thereof either
(i)  issued by any bank  organized  under the laws of the  United  States or any
state  thereof  which  bank  has a rating  of A or A2,  or  better,  from S&P or
Moody's,  or (ii)  certificates of deposit less than or equal to $100,000 in the
aggregate  issued by any other bank  insured by the  Federal  Deposit  Insurance
Corporation.

         "Change of Control" means the  occurrence of any of the following:  (1)
during any period of two  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 (1) if
during such  two-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; (2) 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;  (3) Borrowers adopt a plan of  liquidation;  (4) 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 Parent and the Subsidiaries, in


                                       -3-
<PAGE>

each case,  taken as a whole,  to any Person other than Parent,  a Subsidiary or
the Excluded Persons,  or (5) the first day on which Parent fails to own 100% of
the issued and  outstanding  Stock of OED Capital.  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 September 22, 2003.

         "Closing Date Business  Plan" means the set of Projections of Borrowers
for the 3 year period  following the Closing Date (on a year by year basis,  and
for the 1 year period following the Closing Date, 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  the  Tranche  A  Collateral  and  the  Tranche  B
Collateral.

         "Collateral  Access Agreement" means a landlord waiver,  bailee letter,
or acknowledgement agreement of any lessor, warehouseman,  processor, consignee,
or other  Person in  possession  of,  having a Lien  upon,  or having  rights or
interests in the Equipment,  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) of
Borrowers.

         "Commitment"  means,  with  respect  to  each  Lender,  its  Tranche  A
Commitment,  its Tranche B Commitment,  or its Total Commitment,  as the context
requires,  and, with respect to all Lenders, their Tranche A Commitments,  their
Tranche B 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 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.

         "Construction  Consultant"  means ABACUS Project  Management,  Inc., an
Arizona corporation.

         "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 a bank with respect to a DDA.

         "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.


                                       -4-
<PAGE>


         "DDA" means any checking or other demand deposit account  maintained by
any Borrower.

         "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,  at the
interest  rate then  applicable  to Advances  (inclusive of the Base Rate Margin
applicable thereto).

         "Designated Account" means that certain DDA of Administrative  Borrower
identified on Schedule D-1.

         "Designated  Account Bank" means Bank One, N.A.,  whose address is P.O.
Box 3248, Lafayette, LA 70502 and whose ABA number is 065400137.

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

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

         "EBITDA"  means,  with respect to any fiscal  period,  Parent'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.

         "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
Administrative Borrower, 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


                                       -5-
<PAGE>

of  Environmental  Laws or releases of Hazardous  Materials from (a) any assets,
properties,  or businesses of any Borrower or any  predecessor in interest,  (b)
from  adjoining  properties or  businesses,  or (c) from or onto any  facilities
which received Hazardous  Materials generated by any Borrower or any predecessor
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 Borrowers,  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 all of  Borrowers'  now owned or hereafter  acquired
right, title, and interest with respect to equipment,  machinery, machine tools,
motors, furniture,  furnishings,  fixtures, vehicles (including motor vehicles),
tools,  parts,  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.

         "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
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  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 is a member under IRC
Section  414(m),  or (d) solely for purposes of Section 302 of ERISA and Section
412 of the

                                      -6-
<PAGE>

IRC,  any  Person  subject  to ERISA  that is a party to an  arrangement  with a
Borrower and whose  employees  are  aggregated  with the employees of a Borrower
under IRC Section 414(o).

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

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

         "Excluded  Person" means (a) PGC; (b) PGP; (c) PGP  Investors;  (d) OED
Acquisition,  (e) M. Brent  Stevens,  Michael S.  Luzich  and any  Affiliate  or
Manager  of PGP,  PGC,  PGP  Investors,  M. Brent  Stevens or Michael S.  Luzich
(collectively, the "Existing Holders"), (f) 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 (g)  any
partnership,  the sole general  partners of which consist solely of the Existing
Holders and members of the immediate facility 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.

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

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

         "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 any other  agency  with
authority to regulate  any gaming or racing  operation  (or  proposed  gaming or
racing  operation)  owned,   managed  or  operated  by  Parent  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  Parent  or  any of its
Subsidiaries conduct business or propose to conduct business (including, without
limitation,  all

                                      -7-

<PAGE>

such  licenses  granted  by  the  Louisiana  Regulatory  Authorities),  and  all
applicable liquor licenses.

         "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.

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

         "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  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 February 25, 2003,
among the Borrowers and the Indenture Trustee as in effect on such date.

         "Indenture  Accounts" means (a) Collateral  Accounts (as defined in the
Indenture) and (b) the Excess Cash Flow Account (as defined in the Indenture).

         "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.

                                      -8-


<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.

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

         "Inventory" means all Borrowers' now owned or hereafter acquired right,
title, and interest with respect to inventory,  including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor,  goods that are furnished by a Borrower  under a contract of
service, and raw materials,  work in process, or materials used or consumed in a
Borrower's business.

         "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 Stock,  and any other items
that are or would be classified as  investments  on a balance sheet  prepared in
accordance with GAAP.

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

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

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

         "Lender  Group  Expenses"  means all (a) costs or  expenses  (including
taxes,  and insurance  premiums)  required to be paid by a Borrower under any of
the Loan Documents that are paid 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,  including,  fees or  charges  for  photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien,  litigation,  and UCC 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  (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

                                      -9-


<PAGE>

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 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 that certain  Letter of Credit issued in favor
of Agent  by Wells  Fargo in a face  amount  of  $3,200,000.00,  and in form and
substance acceptable to the Lender Group.

         "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  Disbursement  Letter,  the
Letter of Credit, the Fee Letter, the Officers' Certificate, the Management Fees
Subordination Agreement,  the Intercompany  Subordination Agreement, 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 and 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.

         "Management   Agreement"   means  that  certain  Amended  and  Restated
Management  Services  Agreement  dated as of February  25,  2003 among PGC,  OED
Acquisition and Parent as in effect as of such date.

                                      -10-


<PAGE>


         "Management Fees Subordination Agreement" means that certain Management
Fees  Subordination  Agreement,  dated as of the Closing Date,  among Borrowers,
Agent,  OED Acquisition and PGC, 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 taken as a whole, (b) a material
impairment  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 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.

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

         "Miscellaneous   Indebtedness"   means  Indebtedness  (other  than  the
Obligations,  the Obligations (as defined in the Revolving Loan Agreement) under
the Revolving  Loan  Agreement and Permitted  Gaming  Equipment  Purchase  Money
Indebtedness,  but including  Capitalized  Lease  Obligations),  in an aggregate
amount outstanding at any one time not in excess of $7,500,000.

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

         "Negotiable Collateral" means all of Borrowers' now owned and hereafter
acquired right, title, and interest with respect to 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 Proceeds"  means all proceeds of any sale or disposition of assets
net of commissions and other reasonable and customary  transaction  costs,  fees
and expenses properly attributable to such transaction and payable by a Borrower
in connection therewith (in each case, paid to non-Affiliates).

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

         "Obligations" means all loans,  Advances,  debts,  principal,  interest
(including any interest  that,  but for the  provisions of the Bankruptcy  Code,
would have accrued),  liabilities  (including all amounts  charged to Borrowers'
Loan Account pursuant hereto),  obligations,  fees, 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

                                      -11-
<PAGE>

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  Acquisition"  means OED  Acquisition,  LLC,  a  Delaware  limited
liability company.

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

         "Officers'  Certificate"  means the  representations  and warranties of
officers  form  submitted by Agent to  Administrative  Borrower,  together  with
Borrowers'  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).

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

         "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 of 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  under the
Tranche A Commitment or Tranche B Commitment,  as applicable, in an amount equal
to the Net Proceeds for such Collateral,  (b) sales by any Borrower of Inventory
to buyers in the ordinary  course of business,  (c) the use or transfer of money
or Cash Equivalents by  Administrative  Borrower or its Subsidiaries in a manner
that  is not  prohibited  by the  terms  of this  Agreement  or the  other  Loan
Documents, and (d) the licensing by Administrative Borrower or its Subsidiaries,
on  a  non-exclusive  basis,  of  patents,  trademarks,  copyrights,  and  other
intellectual property rights in the ordinary course of business.

         "Permitted Gaming Equipment Purchase Money Indebtedness" means Purchase
Money Indebtedness incurred from time to time to acquire Gaming Equipment (other
than the Collateral) in the ordinary  course of business in an aggregate  amount
outstanding at any time not in excess of the sum of (a) $9,000,000, plus (b) the
aggregate  principal  amount of the Advances  hereunder  which have been repaid;
provided, however, (i) no such Indebtedness shall be used to finance any portion
of the Equipment  being  financed by an Advance  hereunder,  and (ii) the Gaming
Equipment  acquired with the proceeds of such Indebtedness shall not be attached
or affixed to or installed on any of the Collateral.

                                      -12-


<PAGE>


         "Permitted Investments" means (a) investments in Cash Equivalents,  (b)
investments  in  negotiable  instruments  for  collection,  (c) advances made in
connection  with  purchases  of goods or  services  in the  ordinary  course  of
business, (d) investments by any Borrower in any other Borrower provided that if
any such investment is in the form of Indebtedness, such Indebtedness investment
shall be subject to the terms and conditions of the  Intercompany  Subordination
Agreement,  and (e)  Permitted  Investments  as  that  term  is  defined  in the
Indenture or Restricted Payments permitted by Section 1.1 of the Indenture.

         "Permitted Lien" means:

         (a) Liens set forth on Schedule P-1;

         (b) Liens imposed by governmental authorities for taxes, assessments or
other charges not yet  delinquent  or that are being  contested in good faith by
appropriate  proceedings promptly instituted and diligently pursued, if adequate
reserves  with  respect  thereto are  maintained  on the books of  Borrowers  in
accordance with GAAP;

         (c) statutory Liens of carriers, warehousemen, mechanics, material men,
suppliers,  landlords, repairmen or other like Liens arising by operation of law
in  the  ordinary  course  of  business;   provided,  that  (1)  the  underlying
obligations  are not yet  delinquent,  or (2) such Liens are being  contested in
good faith by appropriate proceedings promptly instituted and diligently pursued
and  adequate  reserves  with  respect  thereto are  maintained  on the books of
Borrowers in accordance with GAAP;

         (d) Liens securing the performance of statutory obligations, surety and
appeal bonds,  performance bonds and other obligations of a like nature incurred
in the ordinary course of business;

         (e) easements,  rights-of-way,  zoning,  similar restrictions and other
similar  encumbrances  or title  defects  incurred  in the  ordinary  course  of
business  consistent with industry practices which,  singly or in the aggregate,
do not in any case  materially  detract from the value of the  property  subject
thereto (as such property is used by Borrowers) or materially interfere with the
ordinary conduct of the businesses of Borrowers;

         (f) Liens incurred or deposits made in the ordinary  course of business
to secure the obligations of Borrowers under workers' compensation, unemployment
insurance and other types of social security  legislation or otherwise to secure
statutory or  regulatory  obligations  of  Borrowers  in the ordinary  course of
business  consistent with past practice,  including to secure the performance of
tenders,  surety  and  appeal  bonds,  bids,  leases,   governmental  contracts,
performance and return-of-money  bonds and other similar obligations  (exclusive
in each case of obligations for the payment of borrowed money);  provided,  that
the  obligations  in connection  with which such Liens were incurred or deposits
made shall have been  incurred  in the  ordinary  course of  business  and shall
otherwise be permitted by this Agreement;

         (g) Liens securing the Obligations;


                                      -13-


<PAGE>

         (h) Liens  securing  Miscellaneous  Indebtedness  or  Permitted  Gaming
Equipment  Purchase  Money  Indebtedness  provided  that in each  case such Lien
attaches  only to the asset  purchased  or  acquired  with the  proceeds of such
Indebtedness; and

         (i) leases or subleases granted to other Persons in the ordinary course
of business not  materially  interfering  with the conduct of the  businesses of
Borrowers or  materially  detracting  from the value of the  relative  assets of
Borrowers;

         (j) Liens arising from precautionary  Uniform Commercial Code financing
statement  filings  regarding  operating leases entered into by Borrowers in the
ordinary course of business;

         (k) Liens  securing  permitted  refinancing  Indebtedness  incurred  in
compliance with this Agreement to refinance any Indebtedness that was secured by
Liens prior to such refinancing;

         (l) Liens in favor of the Indenture Trustee relative to the Senior Note
Documents;

         (m) Liens securing the obligations  under the Revolving Loan Agreement;
and

         (n) Liens upon specific  items of Inventory or other goods and proceeds
of any  Person  securing  such  Person's  obligations  in  respect  of  bankers'
acceptances  issued or created for the account of such Person to facilitate  the
purchase, shipment or storage of such Inventory or other goods.

         "Permitted  Protest" means the right of Administrative  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 Administrative  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.

         "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.

         "PGC" means Peninsula Gaming Company, LLC, a Delaware limited liability
company and the direct and sole manager of OED Acquisition.

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

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


                                      -14-


<PAGE>

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

         "Pro Rata Share"  means the  percentage  obtained by dividing  (i) such
Lender's Total Commitment,  by (ii) the aggregate amount of Total Commitments of
all Lenders; provided, however, that, in each case, in the event all Commitments
have been  terminated or reduced to zero,  Pro Rata Share shall be determined by
dividing (a) the aggregate  principal amount of such Lender's  Advances,  by (b)
the aggregate principal amount of all Advances outstanding at such time.

         "Purchase Money Indebtedness"  means Indebtedness  incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

         "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 and the improvements thereto.

         "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.

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

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

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

         "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.

         "Report" has the meaning set forth in Section 16.17.

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

         "Revolving  Loan  Agreement"  means  that  certain  Loan  and  Security
Agreement,  dated as of June 24, 2003,  by and among  Borrowers  and Wells Fargo
Foothill,  and the other  parties party thereto from time to time, as amended by
that certain  First  Amendment to Loan and Security

                                      -15-


<PAGE>


Agreement,  dated as of the Closing Date, as the same may be amended,  restated,
supplemented or otherwise modified from time to time.

         "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.

         "Senior Note Documents" means, collectively,  the Indenture, the Notes,
and the Collateral 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 Lender.

         "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).

         "Stock" means all shares, options, warrants, interests, participations,
or other equivalents  (regardless of how designated) of or in a Person,  whether
voting or nonvoting,  including  common  stock,  preferred  stock,  or any other
"equity  security"  (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).

         "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 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.

         "Taxes" has the meaning set forth in Section 16.5.

         "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.

         "Tranche A Advance" has the meaning set forth in Section 2.1(a).

         "Tranche  A  Collateral"  means  all of each  Borrower's  now  owned or
hereafter  acquired  right,  title and interest in and to (a) any and all Gaming
Equipment, the purchase of which was financed, in full or in part, with proceeds
of one or more Tranche A Advances,  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.

         "Tranche A Commitment" means with respect to each Lender, its Tranche A
Commitment,  and, with respect to all Lenders,  their Tranche A Commitments,  in
each case as

                                      -16-


<PAGE>


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

         "Tranche B Advance" has the meaning set forth in Section 2.1(b).

         "Tranche  B  Collateral"  means  all of each  Borrower'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, in full or in
part, with proceeds of one or more Tranche B Advances,  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.

         "Tranche B Commitment" means with respect to each Lender, its Tranche B
Commitment,  and, with respect to all Lenders,  their Tranche B 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 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.

         "Voidable Transfer" has the meaning set forth in Section 16.8.

         "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.

         "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.

         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  "Borrowers"  or 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.

         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,

                                      -17-


<PAGE>

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) TRANCHE A COMMITMENT.  Subject to the terms and  conditions of this
Agreement, each Lender agrees (severally,  not jointly or jointly and severally)
to make, from time to time prior to the Availability  Termination Date, a series
of term loans to Borrowers  (each,  a "Tranche A Advance" and  collectively  the
"Tranche A Advances") in an aggregate  amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of the Tranche A Commitment.  Each Tranche A
Advance  shall be made in  accordance  with such Lender's Pro Rata Share at such
times and in such  amounts as any  Borrower  may  request in  writing,  shall be
advanced  directly to the applicable vendor or Borrower and once borrowed may be
prepaid in whole or in part  without  penalty or premium at any time  during the
term of this  Agreement  upon 30 days prior  written  notice by such Borrower to
Agent,  all such prepaid amounts to be applied to the installments due on all of
the Tranche A Advances in the inverse order of their maturity.  Amounts borrowed
and repaid may not be reborrowed. The foregoing to the contrary notwithstanding,
(a) each requested  Tranche A Advance shall be in a principal amount of not less
than (i) $500,000, or (ii) such lesser amount as is the then unfunded balance of
the Tranche A Commitment,  (b) each Tranche A Advance shall be in an amount,  as
determined  by Agent,  not to exceed such  Borrower's  invoice  cost  (including
shipping,  freight,  and installation) with respect to new Gaming Equipment that
is to be  purchased in the  ordinary  course of business by a Borrower  with the
proceeds of such Tranche A Advance,  (c) the new Gaming  Equipment that is to be
acquired or that has been  purchased by Borrowers  must be for Gaming  Equipment
listed on  Schedule  7.17  hereto and be  otherwise  acceptable  to Agent in all
respects,  not be a fixture,  and not be intended to be affixed to real property
or to become  installed  in or affixed to other  goods,  and (d) no Lender shall
have any  obligation to fund any Tranche A Advance  hereunder to the extent that
the making thereof would cause the then outstanding amount of Tranche A Advances
to exceed the Tranche A Commitment.  All amounts outstanding under the Tranche A
Commitment shall constitute Obligations.

         (b) TRANCHE B COMMITMENT.  Subject to the terms and  conditions of this
Agreement, each Lender agrees (severally,  not jointly or jointly and severally)
to make, from time to time prior to the Availability  Termination Date, a series
of term loans to Borrowers  (each,  a "Tranche B Advance" and  collectively  the
"Tranche B Advances") in an aggregate  amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of the Tranche B Commitment.  Each

                                      -18-

<PAGE>


Tranche B Advance shall be made in accordance  with such Lender's Pro Rata Share
at such times and in such amounts as any Borrower may request in writing,  shall
be advanced  directly to the applicable vendor or Borrower and once borrowed may
be prepaid in whole or in part without penalty or premium at any time during the
term of this  Agreement  upon 30 days prior  written  notice by such Borrower to
Agent,  all such prepaid amounts to be applied to the installments due on all of
the Tranche B Advances in the inverse order of their maturity.  Amounts borrowed
and repaid may not be reborrowed. The foregoing to the contrary notwithstanding,
(a) each requested  Tranche B Advance shall be in a principal amount of not less
than (i) $500,000, or (ii) such lesser amount as is the then unfunded balance of
the Tranche B Commitment,  (b) each Tranche B Advance shall be in an amount,  as
determined by Agent, not to exceed  fifty-five  percent (55%) of such Borrower's
invoice cost (including shipping, freight, and installation) hereto with respect
to new Equipment that is to be purchased in the ordinary course of business by a
Borrower with the proceeds of such Tranche B Advance, (c) the new Equipment that
is to be acquired or that has been  purchased  by  Borrowers  must either be for
Equipment listed on Schedule 7.17 hereto and be otherwise acceptable to Agent in
all  respects,  not be a  fixture,  and not be  intended  to be  affixed to real
property or to become  installed in or affixed to other goods, and (d) no Lender
shall have any obligation to fund any Tranche B Advance  hereunder to the extent
that the making  thereof  would cause the then  outstanding  amount of Tranche B
Advances to exceed the Tranche B Commitment.  All amounts  outstanding under the
Tranche B Commitment shall constitute Obligations.

         2.2  REPAYMENT  OF  ADVANCES.  All  outstanding  Tranche A Advances and
Tranche B  Advances  shall be  repayable  in 48 equal  monthly  installments  of
principal,  commencing on March 1, 2004, and continuing on the first day of each
month  thereafter  until the unpaid balance of all Advances is paid in full. The
outstanding  principal  balance and all accrued  and unpaid  interest  under all
Advances  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 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) five Business Days
prior to the date that is the requested  Funding Date  specifying (i) the amount
of such Borrowing,  (ii) the requested  Funding Date,  which shall be a Business
Day,  (iii)  whether  the Advance is a Tranche A Advance or a Tranche B Advance,
and (iv) the details of the  Equipment to be financed  with the proceeds of such
Advance,  including,  without  limitation,  whether  such  Equipment  is  Gaming
Equipment,  the cost,  manufacturer and vendor of such Equipment,  and the make,
model and serial number of such Equipment,  if applicable.  At Agent's election,
in lieu of delivering  the  above-described  request in writing,  any Authorized
Person may give Lender  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)  [INTENTIONALLY OMITTED].

         (c)  MAKING OF ADVANCES.

                                      -19-


<PAGE>


                  (i)  Promptly  after  receipt  of a  request  for a  Borrowing
         pursuant to Section 2.3(a),  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  Administrative
         Borrower on the  applicable  Funding Date by  transferring  immediately
         available   funds  equal  to  such   proceeds   received  by  Agent  to
         Administrative 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 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 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
         Administrative  Borrower  of such  failure to fund and,  upon demand by
         Agent,  Borrowers  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  composing such  Borrowing.  The
         failure of any Lender to make any Advance on any Funding Date shall not
         relieve any other Lender of any obligation hereunder to make an Advance
         on such  Funding  Date,  but no  Lender  shall be  responsible  for the
         failure  of any  other  Lender to make the  Advance  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

                                      -20-


<PAGE>

         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  Administrative  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 it 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  Administrative  Borrower
         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  Administrative  Borrower at its 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  Agreement 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  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)   [INTENTIONALLY OMITTED]

         (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)


                                      -21-
<PAGE>

         to enhance the  likelihood of repayment of the  Obligations,  or (C) to
         pay any other amount  chargeable to Borrowers  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  $1,000,000.  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 Lenders to equal,  at all times,  such  Lender's Pro
Rata Share of the outstanding Advances.  Such agreement  notwithstanding,  Agent
and the other 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
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
         Lenders on a weekly basis, or on a more frequent basis if so determined
         by Agent, (1) for itself,  with respect to each Agent Advance,  and (2)
         with  respect to  Collections  received,  as to each by  notifying  the
         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 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
         Lender's  balance  of the  Advances  and Agent  Advances  exceeds  such
         Lender's  Pro Rata Share of the  Advances  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  Lender  as such  Lender  may
         designate,  an amount such that each such Lender shall, upon receipt of
         such amount,  have as of the Settlement Date, its Pro Rata Share of the
         Advances  and Agent  Advances,  and (z) if a  Lender's  balance  of the
         Advances and Agent  Advances is less than such  Lender's Pro Rata Share
         of the Advances and Agent Advances as of a Settlement Date, such Lender
         shall no later than 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 Lender shall,  upon transfer of such amount,
         have as of the Settlement  Date, its Pro Rata Share of the Advances 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

                                      -22-

<PAGE>

         Agent Advance. If any such amount is not made available to Agent by any
         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 Lender  together with interest  thereon
         at the Defaulting Lender Rate.

                  (ii) In determining whether a Lender's balance of the Advances
         and  Agent  Advances  is less  than,  equal to,  or  greater  than such
         Lender's  Pro Rata Share of the  Advances  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 Lenders hereunder, and proceeds of Collateral.  To
         the  extent  that a net  amount is owed to any such  Lender  after such
         application,  such net  amount  shall be  distributed  by Agent to that
         Lender as part of such next Settlement.

         (g) NOTATION.  Agent shall record on its books the principal  amount of
the Advances  owing to each Lender and Agent  Advances  owing to Agent,  and the
interests therein of each Lender, from time to time. 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 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 Agent
Advances) 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 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.

         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 Administrative 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


                                      -23-
<PAGE>

         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
         (including  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) and
         payments of fees and expenses (other than fees or expenses that are for
         Agent's separate account,  after giving effect to any letter agreements
         between Agent and  individual  Lenders)  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  of  specific
         Obligations or which relate to the payment of specific  fees),  and all
         proceeds of Collateral or the 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 the 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
                  Advances  (other  than  Agent  Advances)  until  paid in full;
                  provided,  however,  proceeds  of  Tranche  A  Collateral  and
                  Tranche B  Collateral  shall only be used to pay  interest  of
                  Tranche A Advances and Tranche B Advances, respectively,

                           (G) seventh,  to pay principal of all Advances  until
                  paid  in  full;  provided,  however,  proceeds  of  Tranche  A
                  Collateral and Tranche B Collateral  shall only be used to pay
                  principal  of  Tranche A  Advances  and  Tranche  B  Advances,
                  respectively,

                                      -24-


<PAGE>

                           (H) eighth,  to pay any other  Obligations until paid
                  in full, and

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

                  (ii) Agent promptly shall distribute to each Lender,  pursuant
         to the  applicable  wire  instructions  received  from  each  Lender in
         writing,  such funds as it may be  entitled  to  receive,  subject to a
         Settlement delay as provided in Section 2.3(h).

                  (iii)  In each  instance,  so long as no  Default  or Event of
         Default has occurred  and is  continuing,  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.

                  (iv) 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.

                  (v) 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   [INTENTIONALLY OMITTED].

         2.6   INTEREST: RATES, PAYMENTS, AND CALCULATIONS.

         (a)  INTEREST  RATES.  Except as  provided  in clause  (c)  below,  all
Obligations  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 the Base Rate plus the Base Rate Margin. The foregoing notwithstanding,
at no time  shall any  portion of the  Obligations  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  daily  rate,  the  interest  rate  chargeable  hereunder  for  such day
automatically shall be deemed increased to the minimum rate.

         (b) [INTENTIONALLY OMITTED.]

         (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),  all
Obligations  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.

                                      -25-

<PAGE>

         (d) PAYMENT. Interest 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.  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 2.11 (as and
when accrued or  incurred),  and all other  payments as and when due and payable
under any Loan Document 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.

         (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.

         (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 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).  Administrative

                                      -26-
<PAGE>

Borrower  agrees to  establish  and  maintain  the  Designated  Account with the
Designated  Account  Bank for the  purpose  of  receiving  the  proceeds  of the
Advances  requested  by  Borrowers  and made by Agent or the  Lender  hereunder.
Administrative  Borrower may add or replace,  the Designated Account Bank or the
Designated Account on 30 days prior written notice to Lender; 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 Agent
Advance  requested by Borrowers and made by Agent or the Lender  hereunder shall
be made to the Designated Account.

         2.10  MAINTENANCE OF LOAN ACCOUNT;  STATEMENTS OF  OBLIGATIONS.  Lender
shall  maintain  an  account  on its books in the name of  Borrowers  (the "Loan
Account") on which Borrowers will be charged with all Advances  (including Agent
Advances)  made by Agent or the Lenders to Borrowers or for  Borrowers'  account
and with all  other  payment  Obligations  hereunder  or under  the  other  Loan
Documents,  including, accrued interest, fees and expenses, and Lender 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  Administrative  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  Administrative  Borrower,  Administrative  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) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements  between Agent and
individual Lenders:

         (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,
and

         (b) AUDIT,  APPRAISAL,  AND VALUATION CHARGES. For the separate account
of Agent  (but  without  duplication  of any  amounts  paid to Agent  under  the
Revolving Loan Agreement for any single audit,  appraisal or valuation),  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.

                                      -27-

<PAGE>

         2.12  [INTENTIONALLY OMITTED].

         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 Administrative  Borrower 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  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.

         (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  (including,  without  limitation,  any
Obligations arising under this Section 2.15), it being the intention of the


                                      -28-
<PAGE>

parties  hereto  that  all  the  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 as and when due or to perform any
of the 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,  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 Lender
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 Lender 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 Lender 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 any Agent or Lender
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
Lender.  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 name,
constitution or place of formation of any of the Persons composing  Borrowers or
any Agent or Lender.

                                      -29-
<PAGE>

         (f)  Each Person composing  Borrowers  represents and warrants to Agent
and Lender 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.  Each
Person composing  Borrowers further  represents and warrants to Agent and Lender
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.

         (g) The provisions of this Section 2.15 are made for the benefit of the
Agent,  the Lender  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, Lender, 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  hereunder  or to elect any other  remedy.  The  provisions  of this
Section 2.15 shall remain in effect until all of the 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,  is rescinded or must
otherwise  be restored  or returned by any Agent or Lender 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
the  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 Lender  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 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.


                                      -30-
<PAGE>

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 the Agent, and
such  Borrower  shall deliver any such amounts to Agent for  application  to the
Obligations in accordance with Section 2.4(b).

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
Advances  (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 September 22, 2003;

         (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 Disbursement Letter,

                  (ii)  the Fee Letter,

                  (iii) the Officers' Certificate,

                  (iv)  the Intercompany Subordination Agreement, and

                  (v)   the Management Fees Subordination Agreement.

         (d)  Agent  shall  have  received  the  Letter of  Credit,  in form and
substance satisfactory to Lender Group;

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

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

         (g) Agent shall have received a  certificate  of status with respect to
each Borrower,  dated within 10 days of the Closing Date, such certificate to be
issued by the  appropriate  officer


                                      -31-
<PAGE>

of the jurisdiction of organization of such Borrower,  which  certificate  shall
indicate that such Borrower is in good standing in such jurisdiction;

         (h) Agent shall have  received  certificates  of status with respect to
each Borrower,  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) in which its failure to be duly
qualified  or  licensed  would  constitute  a  Material  Adverse  Change,  which
certificates  shall  indicate  that such  Borrower  is in good  standing in such
jurisdictions;

         (i) Agent shall have received  opinions of  Borrowers'  counsel in form
and  substance  satisfactory  to Agent,  such  opinions  to include (a) that the
Advances are  "Permitted  Indebtedness",  as defined in and under the Indenture,
(b) that the Agent's Liens are  "Permitted  Liens",  as defined in and under the
Indenture,  and  (c)  regulatory  opinions  as to the  due  issuance  and  valid
existence of Borrowers' Gaming License;

         (j) 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;

         (k) 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;

         (l) Agent shall have received the Closing Date Business Plan;

         (m)  Borrowers  shall  pay  all  Lender  Group  Expenses   incurred  in
connection with the transactions evidenced by this Agreement;

         (n) 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,  in connection 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;

         (o) Agent shall have  received a copy of the Revolving  Loan  Agreement
(as amended  through the Closing Date),  in form and substance  satisfactory  to
Agent, duly executed and delivered by all parties party thereto; and

         (p) 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,  Lenders are under no obligation to make
the initial  Advance (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.

                                      -32-
<PAGE>


         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 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 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;

         (d) Agent shall have received a copy of the invoice, purchase order and
any other agreements  relating to the Equipment to be financed with the proceeds
of such  Advance,  and each of the  foregoing  shall  be in form  and  substance
satisfactory to Agent ;

         (e) Agent  shall have  received  the results of lien  searches  against
Borrowers  from  all  applicable  jurisdictions  dated  within  30  days  of the
requested  Funding Date,  and such searches will reveal no other liens of record
against  Equipment  of any  Borrower  (other than  financing  statements  of the
Indenture  Trustee and with respect to the Revolving Loan Agreement on record as
of the Closing Date, and financing  statements listing specific equipment (other
than the Collateral) as collateral);

         (f) Agent  shall have  received  all  financing  statements  and notice
letters to creditors of Borrowers as may be required by Agent in connection with
such Advance;

         (g) 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,  and such insurance  shall be in full
force and effect; and

         (h) 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 Lender and shall continue in full
force and effect for a term

                                      -33-
<PAGE>

ending on March 1, 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  immediately  shall become due and payable  without
notice or demand.  No termination of this Agreement,  however,  shall relieve or
discharge Borrowers 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 UCC 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  Administrative  Borrower to Agent, to
terminate  this  Agreement  by paying to Agent,  for the  benefit  of the Lender
Group, in cash, the Obligations,  in full. If Administrative Borrower has sent a
notice of termination pursuant to the provisions of this Section,  then Lenders'
obligations to extend credit  hereunder  shall  terminate and Borrowers shall be
obligated to repay the  Obligations,  in full, on the date set forth as the date
of termination of this Agreement in such notice.


4.       CREATION OF SECURITY INTEREST.

         4.1  GRANT OF SECURITY INTEREST.  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  Collateral  in order to secure  prompt  repayment of any and all of the
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;  provided,  however,  (a) the
Tranche A  Collateral  shall not secure,  and  proceeds of Tranche A  Collateral
shall not be used to repay,  Tranche B Advances and (b) the Tranche B Collateral
shall not  secure,  and  proceeds of Tranche B  Collateral  shall not be used to
repay,  Tranche A Advances.  The Agent's  Liens in and to the  Collateral  shall
attach to all Collateral  without further act on the part of Agent or Borrowers.
Anything  contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.

         4.2  NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds,  is evidenced by or consists of Negotiable  Collateral,  and if and to
the extent that perfection of priority of Agent's security interest is dependent
on or enhanced by possession,  the  applicable

                                      -34-
<PAGE>

Borrower,  immediately  upon the  request of Agent,  shall  endorse  and deliver
physical possession of such Negotiable Collateral to Agent.

4.3      [INTENTIONALLY OMITTED].

         4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent,  Borrowers  shall  execute and  deliver to Agent,  any and all
financing  statements,  original  financing  statements in lieu of  continuation
statements,   fixture  filings,  security  agreements,   pledges,   assignments,
endorsements of certificates of title,  and all other documents (the "Additional
Documents")  that Agent may  request in its  Permitted  Discretion,  in form and
substance  satisfactory  to Agent,  to perfect and continue  perfected or better
perfect the Agent's  Liens in the  Collateral  (whether  now owned or  hereafter
arising or acquired) and in order to fully  consummate  all of the  transactions
contemplated  hereby and under the other Loan  Documents.  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 authorize Agent to
file such executed Additional Documents in any appropriate filing office.

         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 (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,  (c) 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 Lender's possession,  (d) 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 (e) at any time
that an Event of  Default  has  occurred  and is  continuing,  settle and adjust
disputes and claims respecting the Collateral  directly with 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  [INTENTIONALLY OMITTED].

         4.8  LETTER  OF  CREDIT.  As  additional  credit  enhancement  for  the
repayment  of the  Obligations  to Lender,  Borrowers  have caused the Letter of
Credit to be issued and  delivered to Agent.  Agent shall have the right to draw
upon the Letter of Credit in accordance  with its terms,

                                      -35-

<PAGE>

in full or in part (and to apply the proceeds thereof to the Obligations or hold
as cash  collateral,  at the option of Lender);  provided,  however,  that, upon
written request of Borrowers after the Availability Termination Date and 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 Tranche A Advances or the
Tranche B  Advances,  or any  combination  of the  foregoing,  equals or exceeds
$3,200,000,  Agent  agrees to promptly  deliver  and  release to  Administrative
Borrower the 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 has good and indefeasible  title to
its assets, free and clear of Liens except for Permitted Liens.

         5.2 [INTENTIONALLY OMITTED].

         5.3 [INTENTIONALLY OMITTED].

         5.4  EQUIPMENT.  All of the  Equipment  is  used  or  held  for  use in
Borrowers' business and is fit for such purposes.

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

         5.6 [INTENTIONALLY OMITTED].

         5.7  LOCATION OF CHIEF  EXECUTIVE  OFFICE;  FEIN.  The chief  executive
office of each Borrower is located at the address  indicated in Schedule 5.7 and
each Borrower's FEIN is identified in 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

                                      -36-
<PAGE>

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 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.

         5.9 DUE AUTHORIZATION; NO CONFLICT.

         (a) As to each Borrower,  the execution,  delivery,  and performance by
such Borrower 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 Borrower.

         (b) As to each Borrower,  the execution,  delivery,  and performance by
such Borrower 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 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) Other  than the  filing of  financing  statements,  the  execution,
delivery,  and  performance  by each  Borrower  of this  Agreement  and the Loan
Documents  to which such  Borrower  is a party 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.

         (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,


                                      -37-
<PAGE>

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  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'  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
since the date of the latest financial  statements submitted to the Lender Group
on or before the Closing Date.

         5.12  FRAUDULENT TRANSFER.

         (a)  The Borrowers on a consolidated basis are Solvent.

         (b)  No  transfer of  property  is being  made by any  Borrower  and no
obligation is being incurred by any 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.

         5.13  EMPLOYEE BENEFITS.  None of Borrowers, any of their Subsidiaries,
or any of its 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' properties or assets has ever been
used by Borrowers  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'  properties  or assets has ever been
designated or identified in any manner pursuant to any environmental  protection
statute as a Hazardous  Materials  disposal  site,  (c) none of  Borrowers  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,  and (d)
none of Borrowers 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  resulting  in the
releasing or disposing of Hazardous Materials into the environment.

                                      -38-
<PAGE>

         5.15  BROKERAGE  FEES.  Borrowers 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 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 is the owner
or  is  an  exclusive  licensee.

         5.17 LEASES.  Borrowers enjoy peaceful and undisturbed possession under
all leases  material to the business of Borrowers  and to which  Borrowers are a
party or under which  Borrowers 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 exists under any of them.

         5.18  DDAS.  Set  forth  on  Schedule  5.18 are all of the DDAs of each
Borrower, 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  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  in writing to the 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  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  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,  have been validly  issued and are in full force and
effect; (ii) each 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

                                      -39-

<PAGE>

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 Borrower delivers to Agent
an updated schedule pursuant to Section 6.18 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 Borrower's  businesses  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 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.

         (c) Each  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.


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 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
(but  without  duplication  of any  identical  reports  delivered to Wells Fargo
Foothill, as agent under the Revolving Loan Agreement):

----------------------------------- --------------------------------------------
Monthly (not later than the         (a) a detailed itemized report reflecting
15th day of each month)             the prior months and year-to-date revenues
                                    from the racetrack, off-track betting
                                    parlors (including video poker revenues) and
                                    out-of-state satellite operations,

                                    (b) a detailed itemized report reflecting
                                    tax payments made during the prior month,
----------------------------------- --------------------------------------------
Monthly (not later than the 15th    (c) a detailed  itemized report showing the
day of each month), commencing      following items: (i) the average daily
with the month following the        dollar amount of winnings for all Gaming
month in which the Racino Project   Equipment for such month, (ii) the average
casino opens to the general public  daily number of customers admitted into the
                                    Racino Project casino for such month,
                                    and (iii) the average daily dollar amount of
                                    winnings the per customer admitted for such
                                    month, and
----------------------------------- --------------------------------------------

                                      -40-

<PAGE>

----------------------------------- --------------------------------------------
Upon request by Agent               (d) such other reports as to the Collateral,
                                    or the financial condition of Borrowers, 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 (but without duplication of any identical reports delivered to Wells
Fargo Foothill, as lender under the Revolving Loan Agreement):

         (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,

                  (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 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), and

                           (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), 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,

                                      -41-
<PAGE>

                  (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  thirty (30)
days after the end of each of Parent's fiscal years,

                  (i) 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
         Parent and its 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 or any other Gaming Authority
         other than such  filings or monthly  reports  submitted in the ordinary
         course of business,

                  (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  and as  requested  by  Agent,
satisfactory   evidence  of  payment  of   applicable   excise   taxes  in  each
jurisdictions in which (i) any Borrower  conducts business or is required to pay
any  such  excise  tax,  (ii)  where  any  Borrower's  failure  to pay any  such
applicable  excise tax would result in a Lien on the properties or assets of any
Borrower,  or (iii)  where any  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  any   construction   documents
(including,  without limitation, the Fixed Price

                                      -42-


<PAGE>

Contract),  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  gaming  activities or the Racino Project  submitted to the floor for
business before any Governmental  Authority in the state of Louisiana (including
the state legislature or any committee thereof), and

         (i) upon the request of Agent,  any other report  reasonably  requested
relating to the financial condition of Borrowers.

         In addition to the financial  statements  referred to above,  Borrowers
agree to  deliver  financial  statements  prepared  on both a  consolidated  and
consolidating basis and agree 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
Borrowers 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.  Borrowers  shall cause all  material
properties  which are owned or leased by Borrowers  used in the conduct of their
business and the business of each of the  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 (other than
the  Collateral),  or disposing of any of them (other than the  Collateral),  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 to satisfy
their obligations under the 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
or any of their  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 make timely  payment or deposit of all tax payments and  withholding  taxes
required of it by applicable  laws,  including those laws  concerning  F.I.C.A.,
F.U.T.A.,  state  disability,  and local,

                                      -43-

<PAGE>

state,  and federal  income taxes,  and will,  upon request,  furnish Agent with
proof  satisfactory to Agent  indicating  that the applicable  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 its 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. 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 the Collateral shall cover the full  replacement cost of such Equipment.  The
deductible under all such insurance  policies  covering  personal property shall
not exceed $100,000 per occurrence in 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 to Agent 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.  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  of the  policy  for any
reason  whatsoever.  In the event of any casualty loss of assets of any Borrower
constituting Collateral and assets not constituting Collateral,  Borrowers shall
allocate any deductible for such loss to the assets not constituting Collateral,
to the extent practicable under the circumstances.

         (b) Borrowers  shall give Agent prompt notice of the  occurrence of any
loss covered by such insurance.

                  (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 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

                                      -44-

<PAGE>

         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.

         (c) No Borrower will take out separate 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.
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 EQUIPMENT.  Keep the  Equipment  only at the locations
identified on Schedule 5.5; provided,  however, that Administrative Borrower 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  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.  None of the Equipment  comprising  the  Collateral is affixed to any
real property or other goods.

         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 is a party or by which any  Borrower's  properties
and  assets are bound,  unless  such  payments  are the  subject of a  Permitted
Protest.

         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  valid existence and good standing and any rights and franchises
material to Borrowers' businesses.

                                      -45-



<PAGE>

         6.14  ENVIRONMENTAL.

         (a) Keep any property  either owned or operated by any 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 and take any
Remedial  Actions  required  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, (ii) commencement of any Environmental Action
or notice that an Environmental  Action will be filed against any 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 ten (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 filing or receipt  thereof
by 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  application
therefor,  for a hearing or which refuses renewal or extension of, or revokes or
suspends the authority of such Borrower to construct,  own,  manage,  or operate
its businesses,  and (b) a copy of any competing  application filed with respect
to any such Gaming License or other authorization,  or application  therefor, 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.

         6.17 LICENSE RENEWALS.  Commencing on the date six months following the
Closing Date and  continuing  every six 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 have been

                                      -46-
<PAGE>

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.


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
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;

         (b) Indebtedness set forth on Schedule 5.20;

         (c)  Indebtedness  evidenced by, or under, the Revolving Loan Agreement
and the Loan Documents (as defined in the Revolving Loan Agreement);

         (d) (i) Miscellaneous Indebtedness, and (ii) Permitted Gaming Equipment
Purchase Money Indebtedness;

         (e)  Indebtedness  under the  Senior  Note  Documents  in an  aggregate
principal amount not to exceed $123,200,000 at any one time outstanding;

         (f)  refinancings,  renewals,  or extensions of Indebtedness  permitted
under  clauses (b),  (c), (d) and (e) of this  Section 7.1 (and  continuance  or
renewal of any Permitted Liens  associated  therewith) so long as: (i) the terms
and conditions of such refinancings,  renewals, or extensions do not, in Agent's
reasonable  judgment,  materially  impair  the  prospects  of  repayment  of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness,  (ii)
such refinancings,  renewals,  or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced,  renewed, or extended or add
one or more of the Borrowers as liable with respect  thereto if such  additional
Borrowers were not liable with respect to the original Indebtedness,  (iii) such
refinancings,  renewals,  or  extensions  do not result in a  shortening  of the
average  weighted  maturity  of the  Indebtedness  so  refinanced,  renewed,  or
extended,  nor are they on  terms or  conditions,  that,  taken as a whole,  are
materially more burdensome or restrictive to the applicable  Borrower,  and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of  payment  to the  Obligations,  then the  terms and  conditions  of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and  conditions  that are at least as  favorable  to Lender  as those  that were
applicable to the refinanced, renewed, or extended Indebtedness;

         (g)  Indebtedness  in an aggregate  amount not to exceed  $6,000,000 in
favor of OED Acquisition provided that such Indebtedness is at all times subject
to the Intercompany Subordination Agreement;

                                      -47-
<PAGE>

         (h) Indebtedness with respect to the obligations of Borrowers  pursuant
to the  Management  Agreement  so long as such  obligations  are  subject to the
Management Fees Subordination Agreement; and

         (i) Indebtedness composing Permitted Investments.

         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  (including  Liens that are replacements of Permitted
Liens to the extent that the original  Indebtedness is refinanced,  renewed,  or
extended under Section 7.1(f) 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 Stock; or

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

         7.4  DISPOSAL OF ASSETS.  Other than  Permitted  Dispositions,  convey,
sell,  lease,  license,  assign,  transfer,  or otherwise  dispose of any of the
assets of any Borrower.

         7.5 CHANGE NAME. Change any Borrower's name, FEIN, corporate structure,
or identity, or add any new fictitious name; provided,  however, that a Borrower
may change its name upon at least 30 days prior written notice by Administrative
Borrower  to Lender of such  change and so long as, at the time of such  written
notification, such Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Lender'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 by  Subsidiaries  of
Borrowers of the  obligations of Borrowers  under the Indenture or the Revolving
Loan Agreement,  (c) guarantees constituting Investments permitted under Section
7.13, and (d) guarantees constituting Indebtedness permitted under Section 7.1.

         7.7  NATURE OF  BUSINESS.  Make any change in the  principal  nature of
Borrowers' business.

         7.8  PREPAYMENTS AND AMENDMENTS.

         (a)  Except in  connection  with a  refinancing  permitted  by  Section
7.1(f), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Borrower, other than the Obligations,  the Obligations (as defined in the
Revolving Loan Agreement) or Miscellaneous  Indebtedness in accordance with this
Agreement, and

                                      -48-
<PAGE>

         (b)  Except in  connection  with a  refinancing  permitted  by  Section
7.1(f), (i) directly or indirectly,  amend, modify,  alter,  increase, or change
any  of  the  terms  or  conditions  of  any  agreement,  instrument,  document,
indenture,  or other writing  evidencing or  concerning  Indebtedness  permitted
under  Sections  7.1(b) or (e), or (ii) directly or indirectly,  amend,  modify,
alter,  increase  or change  any of the terms or  conditions  of the  Management
Agreement  and except as permitted in clause (i) hereof,  any of the Senior Note
Documents, in each case unless approved by Agent in its Permitted Discretion.

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

         7.10  [INTENTIONALLY OMITTED].

         7.11  DISTRIBUTIONS;  MANAGEMENT  FEES.  Other  than  distributions  or
declaration  and payment of dividends by a Borrower to another  Borrower or to a
Subsidiary of a Borrower,  make any distribution or declare or pay any dividends
(in cash or other property,  other than common Stock) on, or purchase,  acquire,
redeem,  or retire any of any  Borrower's  Stock,  of any class,  whether now or
hereafter  outstanding,  or make any payment of  management  fees to any Person.
Notwithstanding  anything in this  Section 7.11 to the  contrary,  so long as no
Event of Default exists  hereunder,  (a) Parent may make cash  distributions  in
respect of, and in an amount  equal to, the amount of state and  federal  income
tax paid or to be paid by the holders of Parent's Stock on taxable income earned
by Parent and attributable to such holders as a result of Parent's  earnings for
federal  and state  (for the state or states in which any  holder is liable  for
income taxes with respect to such income) income tax purposes, after taking into
account any deduction for state income taxes in  calculating  the federal income
tax liability and all other deductions,  credits, deferrals and other reductions
available  to the  holders  from or  through  Parent,  (b)  Borrowers  may  make
distributions  to their  respective  shareholders in an aggregate  amount not to
exceed  $1,250,000  during the term of this Agreement,  so long as no Default or
Event of Default shall exist on the date of such distribution, and (c) except as
prohibited under the Management Fees Subordination Agreement, Borrowers may make
payments required pursuant to the Management Agreement.

         7.12  ACCOUNTING  METHODS.  Modify or change its  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 party  accounting firm or service bureau for the preparation
or storage of Borrowers'  accounting  records  without said  accounting  firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrowers' financial condition.

         7.13  INVESTMENTS.  Except for Permitted  Investments or for Securities
Accounts or DDAs constituting Indenture Accounts,  directly or indirectly,  make
or  acquire  any  Investment,  or incur any  liabilities  (including  contingent
obligations) for or in connection with any Investment.

         7.14  TRANSACTIONS WITH AFFILIATES.  Directly or  indirectly enter into
or permit to exist any transaction with any Affiliate of any Borrower except (a)
for transactions  that are in the ordinary course of Borrowers'  business,  upon
fair and reasonable  terms,  that are fully disclosed


                                      -49-
<PAGE>

to Agent,  and that are no less favorable to Borrowers than would be obtained in
an arm's length  transaction with a non-Affiliate,  (b) that Borrowers may incur
indebtedness to Affiliates pursuant to, and within, the limitations set forth in
Section 7.1(g), (c) for payments pursuant to the Management Agreement, except as
prohibited  under  the  Management  Fees   Subordination   Agreement,   and  (d)
transactions between or among Borrowers and any Borrower's Subsidiary.

         7.15  SUSPENSION.  Suspend  or go out of a  substantial  portion of its
business.

         7.16 COMPENSATION.  Increase the annual fee or per-meeting fees paid to
the members of its Board of Directors  during any year by more than 15% over the
prior year.

         7.17 USE OF  PROCEEDS.  Use the  proceeds of the (a) Tranche A Advances
for any purpose other than to acquire Gaming Equipment in the ordinary course of
business  for use in the  business  operations  of  Borrower,  and (b) Tranche B
Advances  for any  purpose  other than to  acquire  Gaming  Equipment  and other
Equipment in the ordinary course of business for use in the business  operations
of Borrower, in each case consistent with the terms and conditions hereof.

         7.18 CHANGE IN  LOCATION  OF CHIEF  EXECUTIVE  OFFICE;  EQUIPMENT  WITH
BAILEES.  Relocate  its  chief  executive  office  to  a  new  location  without
Administrative  Borrower providing 30 days prior written notification thereof to
Agent 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 and, upon request of Required
Lenders,  also provides to Agent a Collateral  Access  Agreement with respect to
such new  location.  The  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 with respect to any Securities Account
constituting  Indenture  Accounts,  establish or maintain any Securities Account
unless  Agent  shall  have  received  a Control  Agreement  in  respect  of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account  (other  than  Securities  Accounts  constituting  Indenture  Accounts);
provided,  however,  that,  so long as no Event of Default has  occurred  and is
continuing  or would result  therefrom,  Borrowers  may use such assets (and the
proceeds thereof) to the extent not prohibited by this Agreement.

         7.20 FINANCIAL COVENANTS.

                  (i)  MINIMUM EBITDA.  Fail to maintain  EBITDA,  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             FOR THE FOUR (4) FISCAL MONTH PERIOD
                                           ENDING JUNE 30, 2004
         --------------------------------- -------------------------------------
                    $7,294,000             FOR THE SEVEN (7) FISCAL MONTH PERIOD
                                           ENDING SEPTEMBER 30, 2004
         --------------------------------- -------------------------------------

<PAGE>


         --------------------------------- -------------------------------------
                 Applicable Amount                     Period
         --------------------------------- -------------------------------------

                   $12,504,000             FOR THE TEN (10) FISCAL MONTH PERIOD
                                           ENDING DECEMBER 31, 2004
         --------------------------------- -------------------------------------
                   $20,006,400             FOR THE TWELVE (12) FISCAL MONTH
                                           PERIOD ENDING MARCH 31, 2005
         --------------------------------- -------------------------------------
                   $20,044,800             FOR THE TWELVE (12) FISCAL MONTH
                                           PERIOD ENDING JUNE 30, 2005
         --------------------------------- -------------------------------------
                   $20,083,200             FOR THE TWELVE (12) FISCAL MONTH
                                           PERIOD ENDING SEPTEMBER 30, 2005
         --------------------------------- -------------------------------------
                   $20,121,600             FOR THE TWELVE (12) MONTH PERIOD
                                           ENDING DECEMBER 31, 2005
         --------------------------------- -------------------------------------
                   $20,160,000             FOR THE TWELVE (12) FISCAL MONTH
                                           PERIOD ENDING MARCH 31, 2006]
         --------------------------------- -------------------------------------

                  (ii) CAPITAL  EXPENDITURES.  Make capital expenditures (except
         (1) those  required  under the  Construction  Disbursement  Budget  (as
         defined in the Cash  Collateral and  Disbursement  Agreement and as the
         same may be  amended,  modified  or  supplemented  from time to time in
         accordance with the Cash Collateral and  Disbursement  Agreement),  (2)
         those  required with respect to the  acquisition  of Real Property from
         Bart C. Warner as  described  in item 2 of Schedule  5.20 and (3) those
         required  to be made to O.M.  Operating  in  connection  with the video
         gaming  purchase  described in item 10 of Schedule  5.20) in any fiscal
         year in excess of the amount set forth in the  following  table for the
         applicable period:

           July 1, 2003 through the
         end of the Fiscal Year 2003  Fiscal Year 2004   Fiscal Year 2005
         ---------------------------  ----------------   ----------------
                   $250,000               $1,500,000        $2,000,000
         ---------------------------  ----------------   ----------------


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 accrued on such amounts), fees
and charges due the Lender Group,  reimbursement  of Lender Group  Expenses,  or
other amounts  constituting  Obligations) within three (3) days of the date such
Obligation described in this clause (b) is due and payable, or when declared due
and payable;

         8.2   If Borrowers fail or neglect to perform, keep, or observe (a) any
term, provision,  condition,  covenant, or agreement:  (i) contained in Sections
6.2 (Reporting),  6.3 (Financial Statements,  Reports,  Certificates),  6.7 (Tax
Returns),   6.10  (Compliance  with  Laws),   6.11


                                      -51-
<PAGE>

(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 Lender 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),  or 6.9  (Location  of  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 Lender to  Borrowers  or (B) the date  Borrowers  knew or should  have
known of its occurrence; or (b) 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 any Borrower or any of
its Subsidiaries;

         8.5  If an Insolvency  Proceeding is commenced against any Borrower, or
any  of its  Subsidiaries,  and  any of the  following  events  occur:  (a)  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 calendar 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, 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 $50,000 are filed of record with respect to any of the  Collateral  by
the United States, or any department,  agency, or instrumentality thereof, or by
any 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 of the  Collateral  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;

                                      -52-
<PAGE>

         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 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;

         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 a proceeding  shall be commenced
by any Borrower,  or by any Governmental  Authority having jurisdiction over any
Borrower,  seeking to establish the invalidity or  unenforceability  thereof, or
any  Borrower  shall deny that any  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 Fixed Price Contract,  the Management Agreement or the Revolving
Loan Agreement; or

         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 in the manner
contemplated  on the  Closing  Date and such  restriction  results in a Material
Adverse Change.

                                      -53-
<PAGE>

9.       THE LENDER'S RIGHTS AND REMEDIES.

         9.1  RIGHTS  AND  REMEDIES.   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:

         (a) Declare all Obligations,  whether  evidenced by this Agreement,  by
any of the other Loan Documents, or otherwise, immediately due and payable;

         (b) 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;

         (c) 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;

         (d) [INTENTIONAL OMITTED];

         (e) [INTENTIONAL OMITTED];

         (f) 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
Collateral if Agent so requires,  and to make the 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
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 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;

         (g)  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;

         (h) 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;

         (i) Ship, reclaim,  recover, store, finish,  maintain,  repair, prepare
for sale,  advertise for sale, and sell (in the manner  provided for herein) the
Collateral.  Each  Borrower  hereby  grants to Agent a license or other right to
use, without charge, such Borrower's labels, patents,


                                      -54-
<PAGE>

copyrights,   trade  secrets,  trade  names,  trademarks,   service  marks,  and
advertising  matter,  or any property of a similar nature, as it pertains to the
Collateral,  in completing  production of, advertising for sale, and selling any
Collateral  and such  Borrower's  rights under all  licenses  and all  franchise
agreements shall inure to the Lender Group's benefit;

         (j) 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 Borrowers' premises) as Agent determines is
commercially  reasonable.  It is not necessary that the Collateral be present at
any such sale;

         (k) Agent shall give notice of the  disposition  of the  Collateral  as
follows:

                  (i) Agent shall give Administrative  Borrower (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  Collateral,
         then the time on or after which the private  sale or other  disposition
         is to be made; and

                  (ii) The  notice  shall be  personally  delivered  or  mailed,
         postage prepaid, to Administrative  Borrower 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  Collateral  that is  perishable or threatens to decline
         speedily in value or that is of a type customarily sold on a recognized
         market;

         (l) Agent, on behalf of the Lender Group may credit bid and purchase at
any public sale;

         (m)  Agent may 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;

         (n) 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 Letter of Credit);

         (o) 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 Administrative Borrower (for the benefit of the applicable Borrower); and

         (p) 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  the  Borrowers or any
Person or  placing  the  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.

                                      -55-
<PAGE>

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 three (3) days'
delay as provided  under  Articles 2639 and 2721 of the Louisiana  Code of Civil
Procedure; (c) the notice of seizure as provided under Articles 2293 and 2721 of
the Louisiana  Code of Civil  Procedure;  (d) the three (3) days' delay provided
under 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 two 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.

         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.


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 Lender 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,


                                      -56-
<PAGE>

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,  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  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

                                      -57-

<PAGE>

addresses  as  Administrative  Borrower  or  Agent,  as  applicable,  may
designate to each other in accordance  herewith),  or telefacsimile to Borrowers
in care of  Administrative  Borrower  or to  Agent,  as the case may be,  at its
address set forth below:

    If to Administrative Borrower:     THE OLD EVANGELINE DOWNS, L.L.C.
                                       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
                                       1675 Broadway
                                       New York, New York 10019
                                       Attn:  Ron Brody, Esq.
                                       Fax No.  (212) 262-1910

    If to Agent:                       WELLS FARGO FOOTHILL, INC.
                                       2450 Colorado Avenue, Suite 3000W
                                       Santa Monica, California 90404
                                       Attn:  Structured Finance Group Manager
                                       Fax No.  (310) 454-7442

    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

                                      -58-
<PAGE>

  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,  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 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.


                                      -59-
<PAGE>

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  (pro rata between the Tranche A Commitment and Tranche B Commitment
of such Lender) 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 Borrower's consent shall not be unreasonably withheld, conditioned
or delayed; provided further that no Lender may make any assignment hereunder at
any time to Cerberus or Ableco  Finance LLC without  consent of  Borrowers;  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  Administrative  Borrower  and Agent by such  Lender and the
Assignee,  (ii) such Lender and its Assignee  have  delivered to  Administrative
Borrower  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.

         (b) From and after the date that Agent  notifies  the  assignor  Lender
(with a copy  to  Administrative  Borrower)  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


                                      -60-
<PAGE>

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  Commitment  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 Commitment,  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 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


                                      -61-
<PAGE>

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
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 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 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,


                                      -62-
<PAGE>

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.

         (j)  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.  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  Administrative  Borrower  (on  behalf  of  all
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 consent shall, unless in writing and
signed by all the Lenders  affected  thereby  and  Administrative  Borrower  (on
behalf of all 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,

                                      -63-

<PAGE>

         (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,

         (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,  affect the rights or duties of Agent, 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.

         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 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  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  Agreement  prior  to the  effective  date  of  such
replacement,  the Holdout  Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement.  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.

         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


                                      -64-
<PAGE>

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, 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,  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,  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  Lenders  as  provided  in the Loan
Documents,  (d) exclusively  receive,  apply,  and distribute the Collections 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,  (f) perform,  exercise, and enforce any and all
other rights and remedies of the Lender  Group with  respect to  Borrowers,  the
Obligations,  the Collateral, 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.

                                      -65-
<PAGE>

         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 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 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  Administrative
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

                                      -66-
<PAGE>

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  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 Lenders for such expenses  pursuant to the Loan Agreement or otherwise.
Agent is authorized  and directed to deduct and retain  sufficient  amounts from
Collections  received by Agent to reimburse Agent for such  out-of-pocket  costs
and expenses prior to the  distribution of any amounts to Lenders.  In the event
Agent is not reimbursed for such costs and expenses from Collections 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.


                                      -67-
<PAGE>

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.

         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


                                      -68-
<PAGE>

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.

         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
Administrative Borrower:

                  (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,  before the first
         payment  of any  interest  under this  Agreement  and at any other time
         reasonably requested by Agent or Administrative Borrower;

                  (ii) if such Lender  claims an exemption  from, or a reduction
         of,  withholding  tax  under  a  United  States  tax  treaty,  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 Administrative 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,  two 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  Administrative
         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  Administrative  Borrower 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

                                      -69-
<PAGE>

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.

         (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



<PAGE>

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  Administrative
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  owned any  interest at the time the
security  interest was granted or at any time thereafter,  or (iv)  constituting
property leased to a Borrower 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  Administrative  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) 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 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


                                      -71-
<PAGE>

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 Liens in assets which,  in accordance  with Article 9 of
the UCC 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.

                                      -72-
<PAGE>

         16.17   FIELD   AUDITS  AND   EXAMINATION   REPORTS;   CONFIDENTIALITY;
DISCLAIMERS BY 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,  however, that, unless
         prohibited by applicable law, statute, regulation, or court order, such
         Lender  shall  notify  Administrative  Borrower  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.

                                      -73-
<PAGE>

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  Administrative
Borrower the  additional  reports or  information  reasonably  specified by such
Lender, and, upon receipt thereof from Administrative  Borrower,  Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative  Borrower 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.


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 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.

                                      -74-
<PAGE>

         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 the  transfer to 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
automatically  shall be revived,  reinstated,  and  restored  and shall exist as
though such Voidable Transfer had never been made.

         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 PARENT AS AGENT FOR BORROWERS.  Each Borrower  hereby  irrevocably
appoints  Parent as the borrowing agent and  attorney-in-fact  for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such  appointment has been revoked and that another  Borrower
has been appointed  Administrative  Borrower.  Each Borrower hereby  irrevocably
appoints and  authorizes the  Administrative  Borrower (i) to provide Agent with
all notices  with  respect to Advances  and all other  notices and  instructions
under this Agreement and (ii) to take such action as the Administrative Borrower
deems  appropriate  on its behalf to obtain  Advances and to exercise such other
powers as are  reasonably  incidental  thereto to carry out the purposes of this
Agreement. 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


                                      -75-
<PAGE>

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  the
Administrative  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 17.8 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.

         17.10  NON-RECOURSE LIABILITY.

         (a) Subject to the  qualifications  in paragraph (b) below,  the Lender
Group shall not enforce the  liability and  obligations  of Borrowers to perform
and  observe  the  obligations  contained  in this  Agreement  or any other Loan
Document,  by any action or proceeding  wherein a money judgment shall be sought
against  Borrowers,  and  Borrowers  shall have no  personal  liability  for the
payment or  performance  of any of their  obligations  under any Loan  Documents
except  that the  Lender  Group may  bring a  foreclosure  action,  or any other
appropriate  action or  proceeding  to enable  the Lender  Group to enforce  and
realize upon the  Collateral  or the Letter of Credit,  or any other  collateral
granted to or held by the Lender  Group,  and the  interests of Borrowers in the
Collateral, the Letter of Credit and such other collateral;  provided,  however,
that, except as specifically provided herein, any judgment in any such action or
proceeding  shall be  enforceable  against  Borrowers only to the extent of each
Borrower's  respective  interest in the Collateral,  the Letter of Credit and in
any other  collateral  granted to or held by the Lender Group.  The Lender Group
agrees that it shall not sue for, seek or demand any deficiency judgment against
any  Borrower  in any such  action  or  proceeding,  under or by reason of or in
connection with this Agreement or the other Loan Documents. Nothing herein shall
be  deemed to be a waiver of any right  which the  Lender  Group may have  under
Sections 506(a),  506(b), 1111(b) or any other provisions of the Bankruptcy Code
to file a claim for the full amount of the Obligations secured by this Agreement
or to  require  that  all  Collateral  shall  continue  to  secure  all  of  the
Obligations  owing to the Lender Group in accordance with this Agreement and the
other Loan Documents.

         (b) The provisions of Section  17.10(a) above shall not,  however:  (i)
impair the right of the Lender Group to name any  Borrower as a party  defendant
in any action or suit for foreclosure  against the  Collateral;  (ii) affect the
validity  or  enforceability  of any  guaranty  made  in  connection  with  this
Agreement  or the other  Loan  Documents;  (iii)  impair the right of the Lender
Group to  obtain  the  appointment  of a  receiver  of the  Collateral;  or (iv)
constitute a release,  waiver or  impairment of the right of the Lender Group to
enforce the  liability  or


                                      -76-
<PAGE>

obligation of any Borrower , by money  judgment or  otherwise,  to the extent of
any loss, damage, cost, expense,  liability,  claim or other obligation incurred
by the Lender Group (including attorneys' fees and costs),  arising out of or in
connection  with any act or omission by such Borrower which would give rise to a
cause of action in favor of Agent, any Lender, or the Lender Group, at law or in
equity, independent of such Borrower's obligations and liabilities as a borrower
under the Loan Documents.  Anything  contained in Section  17.10(a) above to the
contrary  notwithstanding,  Borrowers  shall be liable to the Lender  Group for,
without  limitation,  the Lender  Group's harm,  loss (which may include  Lender
Group Expenses, and lost interest and principal of the Advances),  damage, costs
and  expenses  (including  the Lender  Group's  reasonable  attorneys'  fees and
collection  costs)  arising out of or in  connection  with any of the  following
circumstances:

                  (i) any use or  application of the proceeds of any Advances in
         violation  of Section  7.17  hereof,  or any failure to maintain at all
         times the  insurance  required by Section  6.8, or any failure to cause
         Agent to be named the sole  loss-payee of any such  insurance  covering
         the Collateral ;

                  (ii) any waste respecting all or any part of the Collateral;

                  (iii) any fraud or intentional misconduct of any Borrower;

                  (iv) any  material  breach of any  representation  or warranty
         made in connection  with this  Agreement  known by any Borrower to have
         been  false  when  made  or  deemed   made,   including   any  material
         misrepresentation  or inaccuracy  contained in any financial statement,
         borrowing request or other document provided to Lender pursuant to this
         Agreement  known by  Borrower  to have been  false or  inaccurate  when
         provided; or

                  (v) the occurrence of a direct or indirect  transfer of any of
         the Collateral in violation of this Agreement without the prior written
         consent of Lender,  or the  existence  of any Liens on (other  than the
         Liens in favor of  Agent),  or any  Governmental  Authority's  or other
         creditor's threatened seizure or forfeiture of, or foreclosure on , any
         of the Collateral.

                           [SIGNATURE PAGE TO FOLLOW]


                                      -77-
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                THE OLD EVANGELINE DOWNS, L.L.C.,
                                a Louisiana limited liability company


                                By:    /s/ Natalie Schramm
                                  --------------------------------
                                Title:  Chief Financial Officer


                                THE OLD EVANGELINE DOWNS CAPITAL
                                CORP., a Delaware corporation


                                By:    /s/ Natalie Schramm
                                  --------------------------------
                                Title:  Chief Financial Officer


                                WELLS FARGO FOOTHILL, INC.,
                                a California corporation, as Agent and as Lender


                                By:    /s/ Rhonda Noell
                                  -------------------------------
                                Title:  Senior Vice President





                                      -78-

<PAGE>

                                  SCHEDULE A-1
                                 AGENT'S ACCOUNT

         An  account  at a bank  designated  by Agent  from  time to time as the
account into which Borrowers shall make all payments to Agent for the benefit of
the Lender  Group and into which the Lender  Group  shall make all  payments  to
Agent under this Agreement and the other Loan Documents;  unless and until Agent
notifies Administrative  Borrower and the Lender Group to the contrary,  Agent's
Account shall be that certain deposit account bearing account number  323-266193
and maintained by Agent with JPMorgan Chase Bank, 4 New York Plaza,  15th Floor,
New York, New York 10004, ABA #021000021.



<PAGE>


                                  SCHEDULE C-1
                                   COMMITMENTS


============================= ================ ============== ==================
                                 TRANCHE A       TRANCHE B
            LENDER               COMMITMENT      COMMITMENT    TOTAL COMMITMENT
============================= ================ ============== ==================

Wells Fargo Foothill, Inc.      $10,036,097      $5,963,903     $16,000,000
============================= ================ ============== ==================

============================= ================ ============== ==================

============================= ================ ============== ==================

============================= ================ ============== ==================

============================= ================ ============== ==================
All Lenders                     $10,036,097      $5,963,903     $16,000,000
============================= ================ ============== ==================






</TEXT>
</DOCUMENT>
