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<SEC-DOCUMENT>0000950134-06-012301.txt : 20060628
<SEC-HEADER>0000950134-06-012301.hdr.sgml : 20060628
<ACCEPTANCE-DATETIME>20060628165117
ACCESSION NUMBER:		0000950134-06-012301
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		19
CONFORMED PERIOD OF REPORT:	20060622
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Termination of a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060628
DATE AS OF CHANGE:		20060628

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LAKES ENTERTAINMENT INC
		CENTRAL INDEX KEY:			0001071255
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990]
		IRS NUMBER:				411913991
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24993
		FILM NUMBER:		06930527

	BUSINESS ADDRESS:	
		STREET 1:		130 CHESHIERE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305
		BUSINESS PHONE:		6124499092

	MAIL ADDRESS:	
		STREET 1:		130 CHESHIRE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LAKES GAMING INC
		DATE OF NAME CHANGE:	19980929
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>c06339e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>








<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Date of Report (Date of earliest event reported): June&nbsp;22, 2006</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Lakes Entertainment, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Minnesota
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">0-24993
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">41-1913991</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of<BR>
incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer<BR>
Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">130 Cheshire Lane, Minnetonka, Minnesota
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">55305</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code: (952)&nbsp;449-9092</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Not Applicable<BR>
(Former name or former address, if changed since last report)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>









<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">










<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
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</TR>
<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01. Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;1.02. Termination of a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">Item&nbsp;9.01.Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w1.txt">Credit Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w2.txt">Security Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w3.txt">Pledge Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w4.txt">Continuing Guaranty</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w5.txt">Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w6.txt">Deed of Trust, Assignment of Leases and Rents, Seucrity Agreement and Fixture Filing</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w7.txt">Deed of Trust, Assignment of Leases and Rents, Seucrity Agreement and Fixture Filing</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w8.txt">Deed of Trust, Assignment of Leases and Rents, Seucrity Agreement and Fixture Filing</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w9.txt">Deed of Trust, Assignment of Leases and Rents, Seucrity Agreement and Fixture Filing</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w10.txt">Purchase Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w11.txt">Notes Dominion Account Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w12.txt">Security Agreement Acknowledgment</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w13.txt">Intercreditor and Subordination Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w14.txt">First Amendment to the Third Amended and Restated Management Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w15.txt">First Amendment to the Third Amended and Restated Development Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w16.txt">Assignment and Assumption Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv10w17.txt">Release and Indemnification Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="c06339exv99w1.txt">Press Release</A></TD></TR>
</TABLE>
</CENTER>
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<!-- link1 "Item&nbsp;1.01. Entry into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01. Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Bank of America, N.A. Loan Financing</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;22, 2006, Lakes Entertainment, Inc. (&#147;<B>Lakes</B>&#148; or the &#147;<B>Company</B>&#148;) through its
wholly-owned subsidiary, Lakes Gaming and Resorts, LLC (&#147;<B>Borrower</B>&#148;), closed on a $105&nbsp;million
financing facility with Bank of America, N.A. (the &#147;<B>BofA</B>&#148;), serving as administrative agent with
certain lenders (the &#147;<B>Lenders</B>&#148;) pursuant to the terms and conditions of a Credit Agreement dated as
of June&nbsp;22, 2006 (the &#147;<B>Credit Agreement</B>&#148;) among Lakes, Lakes Gaming and Resorts, LLC, BofA and the
Lenders. Banc of America Securities LLC served as sole lead arranger and sole book manager for the
transaction. An initial draw of $105&nbsp;million was made under the Credit Agreement, and another $50
million can be drawn in $12.5&nbsp;million increments, subject to the satisfaction of certain
conditions. Any funds drawn under the Credit Agreement bear interest at the rate of LIBOR plus
6.25% per annum, subject to adjustment or change as specified in the Credit Agreement, and are due
and payable on the fourth anniversary of the closing date. Subject to certain premiums, Lakes may
prepay the facility in whole or in part at any time. Pursuant to the terms of the Credit
Agreement, Borrower paid a closing fee of $1.5&nbsp;million, and is obligated to pay a $50,000 annual
administrative agent fee to BofA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan under the Credit Agreement is secured by substantially all of the material assets of
Lakes and its subsidiaries, including the proceeds from its management, development and consulting
agreements with Indian tribes, its real property located in California, Minnesota and Mississippi,
its deposit and security accounts, its equity interests in subsidiaries not involved in Indian
gaming projects and promissory notes relating to the casino project with the Pokagon Band of
Potawatomi Indians in Michigan pursuant to the terms and conditions of, among other agreements, a
Security Agreement dated as of June&nbsp;22, 2006 by Lakes and various subsidiaries of Lakes (the
&#147;<B>Subsidiaries</B>&#148;) in favor of BofA, and a Pledge Agreement dated as of June&nbsp;22, 2006 by Lakes and the
Subsidiaries in favor of BofA. Lakes&#146; shares of WPT Enterprises, Inc. (Nasdaq: WPTE) (&#147;<B>WPTE</B>&#148;) do
not secure the loan under the Credit Agreement, and Lakes is entitled to sell up to 3&nbsp;million of
the approximate 12.5&nbsp;million WPTE shares it owns without
application of the proceeds of such sale to reduction of the amounts
owing under the Credit Agreement. However, in the event Lakes were to sell more than 3&nbsp;million
WPTE shares, the proceeds of such sale over and above the amount
realized on the 3 million shares would be required to be placed in a cash collateral account
securing the loan under the Credit Agreement. In addition, Lakes and the Subsidiaries have
guaranteed the repayment of the loan under the Credit Agreement pursuant to the terms of a
Continuing Guaranty dated as of June&nbsp;22, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan under the BofA Facility can be declared immediately due and payable upon the
occurrence of an event of default that is not cured within any applicable cure period. Events of
default include, but are not limited to, the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;the failure of Borrower, Lakes or any of the Subsidiaries (individually, a &#147;<B>Loan Party</B>&#148;
and collectively, the &#147;<B>Loan Parties</B>&#148;) to pay principal and interest payable under the Credit
Agreement when due; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;any representation or warranty made in connection with the Credit Agreement shall have
been incorrect or misleading when made or deemed made; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;the
failure of the Loan Parties to perform or comply with the terms of the Credit Agreement and
the documents relating to such financing facility; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;bankruptcy, insolvency, dissolution, liquidation, winding up, reorganization or similar
proceedings are instituted against any Loan Party or any subsidiary of a Loan Party, or any Loan
Party or any of subsidiary of a Loan Party is generally not paying its debts as such debts become
due or shall admit in writing its inability to pay its debts generally, or makes a general
assignment for the benefit of creditors; or
</DIV>

<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;any Loan Party or any subsidiary of a Loan Party (A)&nbsp;fails to make any payment when due
with respect to any indebtedness or guarantee (other than indebtedness under the Credit Agreement
and indebtedness under swap contracts) having an aggregate principal amount of more than $1
million, or (B)&nbsp;fails to observe or perform any other agreement or condition relating to any such
indebtedness or guarantee or any other event occurs, the effect of which default or other event is
to cause, or to permit the holder or holders of such indebtedness or the beneficiary or
beneficiaries of such guarantee to cause, with the giving of notice if required, such indebtedness
to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed, or an offer to
repurchase, prepay, defease or redeem such indebtedness to be made, prior to its stated maturity,
or such guarantee to become payable or cash collateral in respect thereof to be demanded; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;there is entered against any Loan Party or any subsidiary of a Loan Party (A)&nbsp;one or more
final judgments or orders for the payment of money in an aggregate amount exceeding $1&nbsp;million (to
the extent not covered by independent third-party insurance as to which the insurer is rated at
least &#147;A&#148; by A.M. Best Company, has been notified of the potential claim and does not dispute
coverage), or (B)&nbsp;any one or more non-monetary final judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a material adverse effect (as defined in the
Credit Agreement) and, in either case, (i)&nbsp;enforcement proceedings are commenced by any creditor
upon such judgment or order, or (ii)&nbsp;there is a period of 10 consecutive days during which a stay
of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;an ERISA event (as defined in the Credit Agreement ) occurs with respect to a pension plan
or multiemployer plan which has resulted or could reasonably be expected to result in liability of
the Borrower under Title IV of ERISA to the pension plan, multiemployer plan or the Pension Benefit
Guaranty Corporation in an aggregate amount in excess of $1&nbsp;million,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;the Borrower or any ERISA affiliate (as defined in the Credit Agreement) fails to pay when
due, after the expiration of any applicable grace period, any installment payment with respect to
its withdrawal liability under Section&nbsp;4201 of ERISA under a multiemployer plan in an aggregate
amount in excess of $1&nbsp;million; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;any provision of the Credit Agreement and certain other documents delivered pursuant to
the Credit Agreement (the &#147;<B>Loan Documents</B>&#148;), at any time after such Loan Document&#146;s execution and
delivery and for any reason other than as expressly permitted under such Loan Documents or
satisfaction in full of all the amounts due under the Credit Agreement, ceases to be in full force
and effect; or any Loan Party or any other person contests in any manner the validity or
enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any provision of any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;there occurs any change of control (as defined in the Credit Agreement); or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;any of the security, pledge and similar agreements shall for any reason (other than
pursuant to the terms of such agreements) cease to create a valid and perfected first priority lien
(subject to liens permitted by the Credit Agreement) on the collateral purported to be covered by
such agreements; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;the subordination provisions of the documents evidencing or governing any subordinated
indebtedness (the &#147;<B>Subordinated Provisions</B>&#148;) shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable against any holder of the
applicable subordinated indebtedness; or the Borrower or any other Loan Party shall, directly or
indirectly, disavow or contest in any manner (A)&nbsp;the effectiveness, validity or enforceability of
any of the Subordination Provisions, (B)&nbsp;that the Subordination Provisions exist for the benefit of
the Administrative Agent and the Lenders or (C)
</DIV>

<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">that all payments of principal of or premium and interest on the applicable subordinated
indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject
to any of the Subordination Provisions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately $25&nbsp;million of the initial draw under the financing facility was used to repay
in full Lakes&#146; loan from PLKS Holdings, LLC, an affiliate of Prentice Capital Management, LP
(collectively, &#147;<B>Prentice Capital</B>&#148;) under a Financing Agreement dated February&nbsp;15, 2006 and Prentice
Capital released its security interest which covered substantially all of the assets of Lakes. As a result of
repaying the Prentice Capital loan in full without any additional draws under the financing
facility, common stock purchase warrants previously issued to Prentice Capital remain exercisable
for 1.25&nbsp;million shares and warrants to purchase up to approximately 3.21 shares have lapsed and
will not become exercisable. The 4,457,751 shares of Series&nbsp;A Convertible Preferred Stock, par
value $0.01 per share, sold to Prentice Capital remain outstanding. These preferred shares have no
dividend rights, had voting rights only if there had been a default under the February&nbsp;15, 2006
Financing Agreement, and become convertible into common stock of Lakes (on a fixed one-to-one
basis) only if and when the warrants are cancelled in accordance with the terms of the warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copies of the Company&#146;s material agreements relating to, and the press release announcing, the
BofA financing facility are attached as exhibits to this Current Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pokagon Band of Potawatomi Indians Financing for Four Winds Casino</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Pokagon Band of Potawatomi Indians and certain of its affiliates who acquired rights and
obligations under an Assignment and Assumption Agreement dated effective as of May&nbsp;25, 2006 (the
&#147;<B>Pokagon Band</B>&#148;) closed on a $305&nbsp;million senior note financing pursuant to the terms and conditions
of a Purchase Agreement dated as of June&nbsp;22, 2006 (the &#147;<B>Purchase Agreement</B>&#148;) among Banc of America
Securities LLC, Lakes&#146; subsidiary, Great Lakes Gaming of Michigan, LLC (the &#147;<B>Manager</B>&#148;), and the
Pokagon Band, and a $75&nbsp;million commitment for furniture, fixtures and equipment ( the &#147;<B>FF&#038;E Loan</B>&#148;)
to fund the Four Winds Casino project in New Buffalo Township, Michigan. The Manager has
management and development agreements with the Pokagon Band to develop and manage the Four Winds
Casino.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with these financing arrangements the Manager entered into an Intercreditor and
Subordination Agreement dated as of June&nbsp;22, 2006 with the U.S. Bank National Association, as
trustee, and U.S. Bank National Association, as collateral agent, by which payment of loans made by
the Manager to the Pokagon Band and other amounts payable by the Pokagon Band under the management
and development agreements (including management fees payable to Manager with respect to the Four
Winds Casino), as well as security interests securing such payments, have been subordinated to the
payment of and security interests securing such financing arrangements and certain additional
financing arrangements as may be made available to the Pokagon Band.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Manager entered into a Notes Dominion Account Agreement dated as of June&nbsp;22,
2006 with the Pokagon Band, U.S. Bank National Association and Fifth Third Bank, which established
one or more accounts into which Pokagon Band revenues will be deposited on a daily basis, and from
which the Manager will have the sole right to withdraw funds to make such payments required or
permitted by its management and development agreements with the Pokagon Band as are also permitted
by the financing arrangements, so long as no event of default has occurred with respect to such
financing arrangements. Such accounts secure the $305&nbsp;million senior note financing and certain
additional financing arrangements as may be made available to the Pokagon Band and, on a
subordinate basis, the loan, management fee and other payment obligations of the Pokagon Band to
the Manager.
</DIV>


<P align="center" style="font-size: 10pt">4
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the FF&#038;E Loan, Manager intends to enter into an
Intercreditor and Subordination
Agreement, to be effective as of June&nbsp;22, 2006, with Wells Fargo Bank Northwest, National Association,
as collateral agent, by which payment of the loans made by the Manager to the Pokagon Band and
other amounts payable by the Pokagon Band under the management and development agreements
(including management fees payable to Manager with respect to the
Four Winds Casino) have been subordinated to the payment of the FF&#038;E Loan. A copy of this Intercreditor
and Subordination Agreement will be filed by amendment to this
Current Report after the parties have finalized and agreed
to its definitive terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to a Security Agreement Acknowledgment dated June&nbsp;22, 2006, the
Manager has agreed that the security interest granted by the Pokagon
Band to secure amounts payable by the Pokagon Band to the Manager
will not attach to the furniture, furnishing, equipment and other
assets comprising collateral for the FF&#038;E Loan unless and until
the FF&#038;E Loan is repaid or, with respect to an item of such
collateral, such item is released from the security interest securing
the FF&#038;E Loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
also in connection with these financing arrangements, the Manager
released mortgages it previously held on certain non-gaming lands
owned by the Pokagon Band.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copies of the Company&#146;s material agreements relating to, and the press release announcing, the
Pokagon Band senior note financing are attached as exhibits to this Current Report.
</DIV>
<!-- link1 "Item&nbsp;1.02. Termination of a Material Definitive Agreement" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.02. Termination of a Material Definitive Agreement.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following agreements were terminated as of June&nbsp;22, 2006 as a result of the Company entering
into the financing facility described in Item&nbsp;1.01 above under the caption &#147;<B>Bank of America, N.A.
Loan Financing</B>&#148;:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financing Agreement dated as of February&nbsp;15, 2006 among Lakes Entertainment, Inc.,
various subsidiaries of Lakes Entertainment, Inc., and PLKS Funding, LLC.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Securities Purchase Agreement dated as of February&nbsp;15, 2006 between Lakes Entertainment,
Inc. and PLKS Holdings, LLC including the Schedule of Buyers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Security Agreement dated as of February&nbsp;15, 2006 among Lakes Entertainment, Inc. and
various subsidiaries of Lakes Entertainment, Inc. in favor of PLKS Funding, LLC.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pledge Agreement dated as of February&nbsp;15, 2006 among Lakes Entertainment, Inc. and
various subsidiaries of Lakes Entertainment, Inc. in favor of PLKS Funding, LLC.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of February&nbsp;15, 2006 by Lakes Entertainment, Inc. in favor of PLKS Funding, LLC.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
dated as of February&nbsp;15, 2006 by Lakes Kean Argovitz Resorts-California, L.L.C. (Trustor)
to Fidelity National Title Insurance Company (Trustee) for the benefit of PLKS Funding, LLC
(Beneficiary).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
dated as of February&nbsp;15, 2006 by Lakes KAR Shingle Springs, L.L.C. (Trustor) to Fidelity
National Title Insurance Company (Trustee) for the benefit of PLKS Funding, LLC
(Beneficiary).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
dated as of February&nbsp;15, 2006 by Lakes Shingle Springs, Inc. (Trustor) to Fidelity National
Title Insurance Company (Trustee) for the benefit of PLKS Funding, LLC (Beneficiary).</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the foregoing agreements, Prentice Capital had provided the Company with a $50&nbsp;million
financing facility secured by substantially all of the material assets of Lakes and its
subsidiaries other than WPTE, including all fees or rights to cash flow from the Company&#146;s casino
projects as well as by its real property located in California and Minnesota. The Company received
an initial draw of $25&nbsp;million under this financing facility on February&nbsp;15, 2006. Funds drawn
under the facility were subject to interest at the rate of 12% per annum and were due and payable
on February&nbsp;15, 2009. No penalties were incurred by the Company in connection with terminating
this financing facility.
</DIV>


<P align="center" style="font-size: 10pt">5
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion set forth in Item&nbsp;1.01 above under the caption &#147;<B>Bank of America, N.A. Loan
Financing&#148; </B>is incorporated into this Item&nbsp;2.03 by this reference.
</DIV>

<!-- link1 "Item&nbsp;9.01.Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits.</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not Applicable</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not Applicable</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exhibits</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Credit Agreement dated as of June&nbsp;22, 2006 among Lakes Entertainment, Inc., Lakes Gaming and
Resorts, LLC, Bank of America, N.A. and various lenders. (1)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Security Agreement dated as of June&nbsp;22, 2006 among Lakes Entertainment, Inc. and various
subsidiaries of Lakes Entertainment, Inc. in favor of Bank of America, N.A. (2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pledge Agreement dated as of June&nbsp;22, 2006 among Lakes Entertainment, Inc. and various
subsidiaries of Lakes Entertainment, Inc. in favor of Bank of America, N.A. (3)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Continuing Guaranty dated as of June&nbsp;22, 2006 entered into by various subsidiaries of Lakes
Entertainment, Inc. in favor of Bank of America, N.A.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of
June&nbsp;22, 2006 by Lakes Entertainment, Inc. in favor of Bank of America, N.A.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of June&nbsp;22, 2006 by Lakes Gaming-Mississippi, LLC (Trustor) to B. Blake Teller, esq. (Trustee) for the benefit of Bank of America, N.A. (Beneficiary).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of June&nbsp;22, 2006 by Lakes Kean Argovitz Resorts-California, L.L.C. (Trustor) to Fidelity
National Title Insurance Company (Trustee) for the benefit of Bank of America, N.A.
(Beneficiary).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of February&nbsp;15, 2006 by Lakes KAR Shingle Springs, L.L.C. (Trustor) to Fidelity National Title
Insurance Company (Trustee) for the benefit of Bank of America, N.A. (Beneficiary).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of June&nbsp;22, 2006 by Lakes Shingle Springs, Inc. (Trustor) to Fidelity National Title Insurance
Company (Trustee) for the benefit of Bank of America, N.A. (Beneficiary).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Purchase Agreement dated as of June&nbsp;15, 2006 among Great Lakes Gaming of Michigan, LLC,
Pokagon Band of Potawatomi Indians, Pokagon Gaming Authority, Pokagon Properties, LLC, Filbert
Land Development, LLC and Banc of America Securities LLC. (4)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">6
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.11
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Notes Dominion Account Agreement dated as of June&nbsp;22, 2006 among Great Lakes Gaming of
Michigan, LLC, Pokagon Gaming Authority, U.S. Bank National Association and Fifth Third Bank.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.12
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Security Agreement Acknowledgment dated as of June&nbsp;22, 2006 between Lakes Gaming of
Michigan, LLC and Pokagon Gaming Authority.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.13
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Intercreditor and Subordination Agreement dated as of June&nbsp;22, 2006 among Great Lakes Gaming
of Michigan, LLC, U.S. Bank National Association, as Trustee, and U.S. Bank National
Association, as Collateral Agent.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.14
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment dated June&nbsp;1, 2006 to the Third Amended and Restated Management
Agreement dated January&nbsp;25, 2006 among Great Gaming of Michigan, LLC, Pokagon Band of
Potawatomi Indians, and Pokagon Gaming Authority.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.15
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment dated June&nbsp;1, 2006 to the Third Amended and Restated Development Agreement
dated January&nbsp;25, 2006 among Great Gaming of Michigan, LLC, Pokagon Band of Potawatomi
Indians, and Pokagon Gaming Authority.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.16
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment and Assumption Agreement dated May 25, 2006
among Pokagon Band of Potawatomi Indians, Pokagon Gaming Authority,
Great Lakes Gaming of Michigan, LLC, Lakes Entertainment, Inc. f/k/a Lakes Gaming, Inc, Lakes Gaming and Resorts,
LLC, Pokagon Properties, LLC and Filbert Land Development, LLC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.17
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Release and Indemnification Agreement dated as of June&nbsp;22,
2006 among Lakes Entertainment, Inc., Great Lakes Gaming of Michigan, LLC, Banc of America
Securities LLC, Banc of America Leasing &#038; Capital, LLC, Bank of America, N.A., Fifth Third
Bank, Wells Fargo Bank Northwest, National Association and U.S. Bank
National Association.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lakes Entertainment, Inc. Press Release dated June&nbsp;23, 2006.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="4%">&nbsp;</TD>
    <TD>Pursuant to Item&nbsp;601(b)(2) of Regulation&nbsp;S-K, other than Exhibits E, F-1, F-2 and G attached
to this Current Report as Exhibits 10.4, 10.2, 10.3 and 10.6- 10.9, respectively, the exhibits
and schedules to the Credit Agreement have been omitted. Lakes Entertainment, Inc. agrees to
supplementally furnish such exhibits and schedules upon request of the Securities and Exchange
Commission.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="4%">&nbsp;</TD>
    <TD>Pursuant to Item&nbsp;601(b)(2) of Regulation&nbsp;S-K, the schedules to the Security Agreement have
been omitted. Lakes Entertainment, Inc. agrees to supplementally furnish such schedules upon
request of the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">7
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to Item&nbsp;601(b)(2) of Regulation&nbsp;S-K, the schedules to the Pledge Agreement have been
omitted. Lakes Entertainment, Inc. agrees to supplementally furnish such schedules upon
request of the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to Item&nbsp;601(b)(2) of Regulation&nbsp;S-K, the exhibits and schedules to the Purchase
Agreement have been omitted. Lakes Entertainment, Inc. agrees to supplementally furnish such
exhibits and schedules upon request of the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">LAKES ENTERTAINMENT, INC.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(Registrant)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: June&nbsp;28, 2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/Timothy J. Cope</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Timothy J. Cope</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: President and Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">8
</DIV>

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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c06339exv10w1.txt
<DESCRIPTION>CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                                                               EXECUTION VERSION

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

                                CREDIT AGREEMENT

                            Dated as of June 22, 2006

                                      among

                         LAKES GAMING AND RESORTS, LLC,

                                as the Borrower,

                           LAKES ENTERTAINMENT, INC.,

                                  as Holdings,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                         The Other Lenders Party Hereto

                         BANC OF AMERICA SECURITIES LLC,

                   as Sole Lead Arranger and Sole Book Manager

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                                            Page
- -------                                                                                                            ----
<S>                                                                                                                <C>
                                                       ARTICLE I
                                            DEFINITIONS AND ACCOUNTING TERMS

1.01     Defined Terms.........................................................................................       1
1.02     Other Interpretive Provisions.........................................................................      28
1.03     Accounting Terms......................................................................................      29
1.04     Rounding..............................................................................................      29
1.05     Times of Day..........................................................................................      29
1.06     Currency Equivalents Generally........................................................................      29

                                                       ARTICLE II
                                         THE COMMITMENTS AND CREDIT EXTENSIONS

2.01     The Loans.............................................................................................      30
2.02     Borrowings, Conversions and Continuations of Loans....................................................      30
2.03     Prepayments...........................................................................................      32
2.04     Termination of Commitments............................................................................      34
2.05     Repayment of Loans....................................................................................      34
2.06     Interest..............................................................................................      34
2.07     Fees..................................................................................................      34
2.08     Computation of Interest and Fees......................................................................      35
2.09     Evidence of Debt......................................................................................      35
2.10     Payments Generally; Administrative Agent's Clawback...................................................      36
2.11     Sharing of Payments by Lenders........................................................................      37
2.12     Increase in Facility..................................................................................      38

                                                      ARTICLE III
                                         TAXES, YIELD PROTECTION AND ILLEGALITY

3.01     Taxes.................................................................................................      39
3.02     Illegality............................................................................................      41
3.03     Inability to Determine Rates..........................................................................      42
3.04     Increased Costs.......................................................................................      42
3.05     Compensation for Losses...............................................................................      43
3.06     Mitigation Obligations; Replacement of Lenders........................................................      44
3.07     Survival..............................................................................................      44

                                                       ARTICLE IV
                                       CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01     Conditions of Initial Credit Extension................................................................      44
4.02     Conditions to all Credit Extensions...................................................................      50
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                                <C>
                                                       ARTICLE V
                                             REPRESENTATIONS AND WARRANTIES

5.01     Existence, Qualification and Power....................................................................      51
5.02     Authorization; No Contravention.......................................................................      52
5.03     Governmental Authorization; Other Consents............................................................      52
5.04     Binding Effect........................................................................................      52
5.05     Financial Statements; No Material Adverse Effect; No Internal Control Event...........................      52
5.06     Litigation............................................................................................      53
5.07     No Default............................................................................................      54
5.08     Ownership of Property; Liens; Investments.............................................................      54
5.09     Environmental Compliance..............................................................................      55
5.10     Insurance.............................................................................................      56
5.11     Taxes.................................................................................................      56
5.12     ERISA Compliance......................................................................................      56
5.13     Subsidiaries; Equity Interests; Loan Parties..........................................................      57
5.14     Margin Regulations; Investment Company Act; Public Utility Holding Company Act........................      57
5.15     Disclosure............................................................................................      58
5.16     Compliance with Laws..................................................................................      58
5.17     Intellectual Property; Licenses, Etc..................................................................      58
5.18     Solvency..............................................................................................      59
5.19     Casualty, Etc.........................................................................................      59
5.20     Collateral Documents..................................................................................      59

                                                       ARTICLE VI
                                                 AFFIRMATIVE COVENANTS

6.01     Reporting Requirements................................................................................      59
6.02     Covenant to Guarantee Obligations and Give Security...................................................      63
6.03     Compliance with Laws, Etc.............................................................................      66
6.04     Preservation of Existence, Etc........................................................................      67
6.05     Use of Proceeds.......................................................................................      67
6.06     Inspection Rights.....................................................................................      67
6.07     Maintenance of Properties, Etc........................................................................      67
6.08     Maintenance of Insurance..............................................................................      68
6.09     Obtaining of Permits, Etc.............................................................................      68
6.10     Environmental.........................................................................................      69
6.11     Further Assurances....................................................................................      69
6.12     Change in Collateral; Collateral Records..............................................................      70
6.13     Subordination.........................................................................................      70
6.14     After Acquired Real Property..........................................................................      70
6.15     Fiscal Year...........................................................................................      71
6.16     Inactive Subsidiaries.................................................................................      71
6.17     New Subsidiaries......................................................................................      71
6.18     Interest Rate Hedging.................................................................................      71
6.19     Lien Searches.........................................................................................      71
6.20     Cash Collateral Accounts..............................................................................      72
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                <C>
6.21     Interest Reserve Account..............................................................................      72
6.22     Net Cash Proceeds of Management and Consulting Agreements, Management Promissory Notes................      73
6.23     Net Cash Proceeds of World Poker Collateral Shares....................................................      73
6.24     Post-Closing Obligations..............................................................................      73

                                                      ARTICLE VII
                                                   NEGATIVE COVENANTS

7.01     Liens, Etc............................................................................................      73
7.02     Indebtedness..........................................................................................      73
7.03     Fundamental Changes; Dispositions.....................................................................      73
7.04     Change in Nature of Business..........................................................................      73
7.05     Loans, Advances, Investments, Etc.....................................................................      73
7.06     Lease Obligations.....................................................................................      73
7.07     Capital Expenditures..................................................................................      74
7.08     Restricted Payments...................................................................................      74
7.09     Federal Reserve Regulations...........................................................................      75
7.10     Transactions with Affiliates..........................................................................      75
7.11     Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries........................      75
7.12     Limitation on Issuance of Equity Interests............................................................      76
7.13     Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc.............      76
7.14     Investment Company Act of 1940........................................................................      76
7.15     Compromise of Accounts Receivable or Notes Receivable.................................................      76
7.16     ERISA.................................................................................................      77
7.17     Environmental.........................................................................................      77
7.18     Certain Agreements....................................................................................      77
7.19     Inactive Subsidiaries.................................................................................      77
7.20     Pokagon Account.......................................................................................      78
7.21     Ownership Change......................................................................................      78

                                                      ARTICLE VIII
                                             EVENTS OF DEFAULT AND REMEDIES

8.01     Events of Default.....................................................................................      78
8.02     Remedies upon Event of Default........................................................................      81
8.03     Application of Funds..................................................................................      81

                                                       ARTICLE IX
                                                  ADMINISTRATIVE AGENT

9.01     Appointment and Authority.............................................................................      82
9.02     Rights as a Lender....................................................................................      82
9.03     Exculpatory Provisions................................................................................      82
9.04     Reliance by Administrative Agent......................................................................      83
9.05     Delegation of Duties..................................................................................      84
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                                <C>
9.06     Resignation of Administrative Agent...................................................................      84
9.07     Non-Reliance on Administrative Agent and Other Lenders................................................      85
9.08     No Other Duties, Etc..................................................................................      85
9.09     Administrative Agent May File Proofs of Claim.........................................................      85
9.10     Collateral and Guaranty Matters.......................................................................      86
9.11     Withholding Taxes.....................................................................................      86

                                                        ARTICLE X
                                                   CONTINUING GUARANTY

10.01    Guaranty..............................................................................................      86
10.02    Rights of Lenders.....................................................................................      87
10.03    Certain Waivers.......................................................................................      87
10.04    Obligations Independent...............................................................................      88
10.05    Subrogation...........................................................................................      88
10.06    Termination; Reinstatement............................................................................      88
10.07    Subordination.........................................................................................      88
10.08    Stay of Acceleration..................................................................................      89
10.09    Condition of Borrower.................................................................................      89
10.10    Additional Guarantor Waivers and Agreements...........................................................      89

                                                       ARTICLE XI
                                                     MISCELLANEOUS

11.01    Amendments, Etc.......................................................................................      90
11.02    Notices; Effectiveness; Electronic Communications.....................................................      91
11.03    No Waiver; Cumulative Remedies........................................................................      93
11.04    Expenses; Indemnity; Damage Waiver....................................................................      93
11.05    Payments Set Aside....................................................................................      95
11.06    Successors and Assigns................................................................................      95
11.07    Treatment of Certain Information; Confidentiality.....................................................      98
11.08    Right of Setoff.......................................................................................      99
11.09    Interest Rate Limitation..............................................................................     100
11.10    Counterparts; Integration; Effectiveness..............................................................     100
11.11    Survival of Representations and Warranties............................................................     100
11.12    Severability..........................................................................................     100
11.13    Replacement of Lenders................................................................................     101
11.14    Governing Law; Jurisdiction; Etc......................................................................     101
11.15    Waiver of Jury Trial..................................................................................     102
11.16    No Advisory or Fiduciary Responsibility...............................................................     103
11.17    USA PATRIOT Act Notice................................................................................     103
11.18    Time of the Essence...................................................................................     104

SIGNATURES.....................................................................................................     S-1
</TABLE>

                                       iv

<PAGE>

SCHEDULES

      1.01A        Cash Collateral Accounts
      1.01B        Excluded Debt
      1.01C        Excluded Subsidiaries
      1.01D        Existing Equity Rights
      1.01E        Inactive Subsidiaries
      1.01F        Land Transfer Agreements
      1.01G        WPT Cash Collateral Account
      1.01H        Management and Consulting Agreements
      1.01I        Management Agreement Promissory Note
      2.01         Commitments and Applicable Percentages
      2.12(e)      Conditions Precedent to Facility Increase
      4.01(a)(iv)  Mortgaged Properties
      4.01(a)(iv)  Environmental Assessment Reports
      5.05         Supplement to Interim Financial Statements
      5.06         Litigation
      5.08(b)      Existing Liens
      5.08(c)      Owned Real Property
      5.08(d)(i)   Leased Real Property (Lessee)
      5.08(d)(ii)  Leased Real Property (Lessor)
      5.08(e)      Existing Investments
      5.11         Taxes
      5.13         Subsidiaries and Other Equity Investments; Loan Parties
      5.17         Intellectual Property Matters
      6.02         Guarantors
      6.24         IP Changes and Releases
      7.01         Permitted Liens
      7.02         Existing Indebtedness
      7.11         Certain Restricted Payment Agreements
      11.02        Administrative Agent's Office, Certain Addresses for Notices
      11.06        Processing and Recordation Fees

EXHIBITS

      Form of

      A            Committed Loan Notice
      B            Note
      C            Compliance Certificate
      D            Assignment and Assumption
      E            Guaranty
      F-1          Security Agreement
      F-2          Pledge Agreement
      G            Mortgage
      H-1          Trademark Security Agreement

                                       v

<PAGE>

      H-2          Copyright Security Agreement
      H-3          Patent Security Agreement
      I-1          Opinion Matters - Counsel to Loan Parties
      I-1          Opinion Matters - Local Counsel to Loan Parties
      J            Project Business Plan

                                       vi

<PAGE>

                                CREDIT AGREEMENT

            This CREDIT AGREEMENT ("Agreement") is entered into as of June 22,
2006, among LAKES GAMING AND RESORTS, LLC, a Minnesota limited liability company
(the "Borrower"), LAKES ENTERTAINMENT, INC., a Minnesota corporation
("Holdings"), each lender from time to time party hereto (collectively, the
"Lenders" and individually, a "Lender"), and BANK OF AMERICA, N.A., as
Administrative Agent.

                             PRELIMINARY STATEMENTS:

            The Borrower has requested that the Lenders provide a floating rate
loan facility in an aggregate principal amount of $105,000,000, the proceeds of
which shall be used to refinance existing indebtedness and for other general
corporate purposes, to pre-fund the Interest Reserve Account and to pay fees and
expenses related to this Agreement and the transactions contemplated herein, and
the Lenders have indicated their willingness to lend on the terms and subject to
the conditions set forth herein.

            In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                   ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

            1.01 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:

            "Account Control Agreements" has the meaning specified in Section
4.01(a)(iii)(E).

            "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

            "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 11.02, or such
other address or account as the Administrative Agent may from time to time
notify to the Borrower and the Lenders.

            "Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.

            "Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

            "Aggregate Commitments" means the Commitments of all the Lenders.

            "Agreement" means this Credit Agreement.

<PAGE>

            "Applicable Percentage" means, with respect to any Lender at any
time, the percentage (carried out to the ninth decimal place) of the Facility
represented by (i) on or prior to the Closing Date, such Lender's Commitment at
such time and (ii) thereafter, the principal amount of such Lender's Loans at
such time. The initial Applicable Percentage of each Lender is set forth
opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

            "Applicable Rate" means 5.25% per annum for Base Rate Loans and
6.25% per annum for Eurodollar Rate Loans.

            "Approved Fund" means any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.

            "Arranger" means Banc of America Securities LLC, in its capacity as
sole lead arranger and sole book manager.

            "Assignee Group" means two or more Eligible Assignees that are
Affiliates of one another or two or more Approved Funds managed by the same
investment advisor.

            "Assignment and Assumption" means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of any party
whose consent is required by Section 11.06(b), and accepted by the
Administrative Agent, in substantially the form of Exhibit D or any other form
approved by the Administrative Agent.

            "Attributable Indebtedness" means, on any date, (a) in respect of
any Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease or
other agreement or instrument were accounted for as a Capitalized Lease and (c)
all Synthetic Debt of such Person.

            "Audited Financial Statements" means the audited consolidated
balance sheet of Holdings and its Subsidiaries for the fiscal years ended
January 1, 2006, January 2, 2005 and December 28, 2003 and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year of Holdings and its Subsidiaries, including the notes
thereto.

            "Bank of America" means Bank of America, N.A. and its successors.

            "Base Rate" means for any day a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return, general economic condition and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such
announced rate. Any

                                       2
<PAGE>

change in such rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change. "Base Rate Loan" means a Loan that bears interest based on the Base
Rate.

            "Borrower" has the meaning specified in the introductory paragraph
hereto.

            "Borrower Materials" has the meaning specified in Section 6.01.

            "Borrowing" means a borrowing consisting of simultaneous Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Sections 2.01 and 2.12.

            "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

            "Business Plan" means Holding's business plan as updated at least
semi-annually and which is intended to reflect anticipated revenues and expenses
related to corporate overhead for at least the following six month period,
Future Projects up to $5,000,000 in the aggregate, and funds needed in the
reasonable judgment of Holdings for the development, funding and operation of
any Existing Projects for at least the following six month period (including
guaranteed minimum payments to Indian Tribes with respect thereto) or Future
Projects in accordance with the terms hereof.

            "Capital Expenditures" means, with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant and equipment" or in a similar fixed asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
and (ii) to the extent not covered by clause (i) above, the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or fixed assets of, or the Equity
Interests of, any other Person.

            "Capitalized Leases" means all leases that have been or should be,
in accordance with GAAP, recorded as capitalized leases.

            "Cash Collateral Accounts" means the accounts listed in Schedule
1.01A hereto.

            "Cash Equivalents" means any of the following types of Investments,
to the extent owned by the Borrower or any of its Subsidiaries free and clear of
all Liens (other than Liens created under the Collateral Documents and other
Liens permitted hereunder):

            (a) readily marketable obligations issued or directly and fully
      guaranteed or insured by the United States or any agency or
      instrumentality thereof having maturities of not more than 360 days from
      the date of acquisition thereof; provided that the full faith and credit
      of the United States is pledged in support thereof;

                                       3
<PAGE>

            (b) time deposits with, or insured certificates of deposit or
      bankers' acceptances of, any commercial bank that (i) (A) is a Lender or
      (B) is organized under the laws of the United States, any state thereof or
      the District of Columbia or is the principal banking subsidiary of a bank
      holding company organized under the laws of the United States, any state
      thereof or the District of Columbia, and is a member of the Federal
      Reserve System, (ii) issues (or the parent of which issues) commercial
      paper rated as described in clause (c) of this definition and (iii) has
      combined capital and surplus of at least $1,000,000,000, in each case with
      maturities of not more than 180 days from the date of acquisition thereof;

            (c) commercial paper issued by any Person organized under the laws
      of any state of the United States and rated at least "Prime-1" (or the
      then equivalent grade) by Moody's or at least "A-1" (or the then
      equivalent grade) by S&P, in each case with maturities of not more than
      180 days from the date of acquisition thereof; and

            (d) Investments, classified in accordance with GAAP as current
      assets of the Borrower or any of its Subsidiaries, in money market
      investment programs registered under the Investment Company Act of 1940,
      which are administered by financial institutions that have the highest
      rating obtainable from either Moody's or S&P, and the portfolios of which
      are limited solely to Investments of the character, quality and maturity
      described in clauses (a), (b) and (c) of this definition.

            "Cash Management Agreement" means any agreement to provide cash
management services, including treasury, depository, overdraft, credit or debit
card, electronic funds transfer and other cash management arrangements.

            "Cash Management Bank" means any Person that, at the time it enters
into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, in
its capacity as a party to such Cash Management Agreement.

            "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.

            "CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.

            "CFC" means a Person that is a controlled foreign corporation under
Section 957 of the Code.

            "Change in Law" means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty of any Governmental Authority, (b) any change in
any law, rule, regulation or treaty or in the administration, interpretation or
application thereof by any Governmental Authority or (c) the making or issuance
of any request, guideline or directive (whether or not having the force of law)
by any Governmental Authority.

            "Change of Control" means an event or series of events by which:

                                       4
<PAGE>

            (a) any "person" or "group" (as such terms are used in Sections
      13(d) and 14(d) of the Exchange Act, but excluding any employee benefit
      plan of such person or its subsidiaries, and any person or entity acting
      in its capacity as trustee, agent or other fiduciary or administrator of
      any such plan) other than Lyle Berman becomes the "beneficial owner" (as
      defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
      person or group shall be deemed to have "beneficial ownership" of all
      securities that such person or group has the right to acquire, whether
      such right is exercisable immediately or only after the passage of time
      (such right, an "option right")), directly or indirectly, of 33% or more
      of the equity securities of Holdings entitled to vote for members of the
      board of directors or equivalent governing body of Holdings on a
      fully-diluted basis (and taking into account all such securities that such
      "person" or "group" has the right to acquire pursuant to any option
      right); or

            (b) during any period of 12 consecutive months, a majority of the
      members of the board of directors or other equivalent governing body of
      Holdings cease to be composed of individuals (i) who were members of that
      board or equivalent governing body on the first day of such period, (ii)
      whose election or nomination to that board or equivalent governing body
      was approved by individuals referred to in clause (i) above constituting
      at the time of such election or nomination at least a majority of that
      board or equivalent governing body or (iii) whose election or nomination
      to that board or other equivalent governing body was approved by
      individuals referred to in clauses (i) and (ii) above constituting at the
      time of such election or nomination at least a majority of that board or
      equivalent governing body (excluding, in the case of both clause (ii) and
      clause (iii), any individual whose initial nomination for, or assumption
      of office as, a member of that board or equivalent governing body occurs
      as a result of an actual or threatened solicitation of proxies or consents
      for the election or removal of one or more directors by any person or
      group other than a solicitation for the election of one or more directors
      by or on behalf of the board of directors); or

            (c) any Person (other than Lyle Berman) or two or more Persons
      acting in concert shall have acquired by contract or otherwise, or shall
      have entered into a contract or arrangement that, upon consummation
      thereof, will result in its or their acquisition of the power to exercise,
      directly or indirectly, a controlling influence over the management or
      policies of Holdings, or control over the equity securities of Holdings
      entitled to vote for members of the board of directors or equivalent
      governing body of Holdings on a fully-diluted basis (and taking into
      account all such securities that such Person or Persons have the right to
      acquire pursuant to any option right) representing 33% or more of the
      combined voting power of such securities;

            (d) Holdings shall cease, directly or indirectly, to own and control
      legally and beneficially all of the Equity Interests in the Borrower; or

            (e) Lyle Berman is no longer involved in the day to day operations
      and management of the business of Holdings (other than as a result of his
      death).

            "Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 11.01.

                                       5
<PAGE>

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Collateral" means all of the "Collateral" and "Mortgaged Property"
referred to in the Collateral Documents and all of the other property that is or
is intended under the terms of the Collateral Documents to be subject to Liens
in favor of the Administrative Agent for the benefit of the Secured Parties.

            "Collateral Agent" has the meaning specified in Section 9.02(b).

            "Collateral Documents" means, collectively, the Security Agreement,
the Pledge Agreement, the Intellectual Property Security Agreements, the
Mortgages, collateral assignments, Security Agreement Supplements, Pledge
Agreement Supplements, IP Security Agreement Supplements, security agreements,
pledge agreements or other similar agreements delivered to the Administrative
Agent pursuant to Section 6.02, and each of the other agreements, instruments or
documents that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties.

            "Commitment" means, as to each Lender, its obligation to make Loans
to the Borrower pursuant to Section 2.01 in an aggregate principal amount at any
one time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 2.01 under the caption "Commitment" or opposite such caption in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement. Subject to increase pursuant to Section 2.12,
the aggregate principal amount of the initial Commitment of all Lenders will be
$105,000,000.

            "Committed Loan Notice" means a notice of (a) a Borrowing, (b) a
conversion of Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall
be substantially in the form of Exhibit A.

            "Compliance Certificate" means a certificate substantially in the
form of Exhibit C.

            "Contingent Obligation" means with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) the direct or indirect guaranty,
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (D) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof. The amount of any

                                       6
<PAGE>

Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.

            "Contractual Obligation" means, as to any Person, any material
provision of any security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.

            "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.

            "Controlling" and "Controlled" have meanings correlative thereto.

            "Copyright Security Agreements" has the meaning specified in Section
4.01(a)(v).

            "Copyright Security Agreement Supplement" has the meaning specified
in the Security Agreement.

            "Corporate Aircraft Lease Agreement" means the Lease Intended as
Security dated as of December 3, 1999 between Banc of America Leasing & Capital
LLC and Lakes Gaming, Inc. (now known as Lakes Entertainment, Inc.) in respect
of the "Aircraft" as defined therein, as amended by (a) the First Amendment to
Lease Intended as Security dated as of February 11, 2000, (b) the Second
Amendment to Lease Intended as Security dated as of May 12, 2000, and (c) the
Third Amendment to Lease Intended as Security dated as of May 1, 2005.

            "Credit Extension" means a Borrowing.

            "Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

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

            "Default Rate" means an interest rate equal to (i) the Base Rate
plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans under the
Facility plus (iii) 2% per annum; provided, however, that with respect to a
Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 2% per annum.

            "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Loans required to be funded by it hereunder within one Business
Day of the date required to

                                       7
<PAGE>

be funded by it hereunder, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute, or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.

            "Disposition" or "Dispose" means the sale, transfer, license, lease
or other disposition (including any sale and leaseback transaction) of any
property by any Person (or the granting of any option or other right to do any
of the foregoing), including any sale, assignment, transfer or other disposal,
with or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

            "Dollar" and "$" mean lawful money of the United States.

            "Eligible Assignee" means any Person that meets the requirements to
be an assignee under Section 11.06(b)(iii), (v) and (vi) (subject to such
consents, if any, as may be required under Section 11.06(b)(iii)).

            "Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication from any
Person or Governmental Authority alleging (i) any actual or threatened
Environmental Liability; (ii) violations of Environmental Laws; or (iii)
Releases of Hazardous Materials (A) from any assets, properties or businesses
owned or operated by any Loan Party or any of its Subsidiaries or any
predecessor in interest, (B) onto any such properties from adjoining properties
or businesses, or (C) onto any facilities which received Hazardous Materials
generated by any Loan Party or any of its Subsidiaries or any predecessor in
interest.

            "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

            "Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

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

            "Equity Interests" means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or

                                       8
<PAGE>

other ownership or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options for
the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination. Notwithstanding the
foregoing, the following are excluded as Equity Interests hereunder: (i) shares
or other rights issued to officers, directors or employees of, or consultants
to, Holdings or the Borrower pursuant to stock option or stock purchase plans or
agreements on terms approved by their respective Boards of Directors; (ii)
shares issued as a dividend or distribution; or (iii) shares (or rights to
acquire shares) issued to financial institutions or equipment lessors in
connection with bona fide financing transactions.

            "ERISA" means the Employee Retirement Income Security Act of 1974.

            "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

            "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

            "Eurodollar Base Rate" has the meaning specified in the definition
of Eurodollar Rate.

            "Eurodollar Rate" means for any Interest Period with respect to a
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent
pursuant to the following formula:

                                     Eurodollar Base Rate
            Eurodollar Rate = ------------------------------------
                              1.00 - Eurodollar Reserve Percentage

Where,

            "Eurodollar Base Rate" means, for such Interest Period, the rate per
annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as
published by Reuters (or

                                       9
<PAGE>

other commercially available source providing quotations of BBA LIBOR as
designated by the Administrative Agent from time to time) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period. If such rate is not
available at such time for any reason, then the "Eurodollar Base Rate" for such
Interest Period shall be the rate per annum determined by the Administrative
Agent to be the rate at which deposits in Dollars for delivery on the first day
of such Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by Bank of America and
with a term equivalent to such Interest Period would be offered by Bank of
America's London Branch to major banks in the London interbank eurodollar market
at their request at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.

            "Eurodollar Rate Loan" means a Loan that bears interest at a rate
based on the Eurodollar Rate.

            "Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, carried out to
five decimal places) in effect on such day, whether or not applicable to any
Lender, under regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.

            "Event of Default" has the meaning specified in Section 8.01.

            "Excess Cash Amount" means, on each Excess Cash Payment Date, the
amount equal to (which amount shall in no event be less than $0) (v) cash on
hand on such Excess Cash Payment Date, less (w) cash or in-kind payments due in
the next six months on account of any contractual or other arrangements such as
(but not limited to) management and consulting agreements, promissory notes,
loan agreement and other agreements with Indian Tribes or related to any
Existing Projects or Future Projects in accordance with the terms hereof, less
(x) cash received by a Loan Party as a result of the incurrence of construction
indebtedness in excess of the amount referred to in (w) above, less (y) the
amount of cash necessary in the reasonable judgment of the Loan Parties for the
development, funding, and operation of any Existing Projects or Future Projects
developed over the next six months, less (z) sufficient cash which will fund six
months of corporate overhead, in the case of (x), (y), and (z), in accordance
with the Business Plan as in effect on the Closing Date (it being understood
that a variance of up to 15% of such corporate overhead as specified in such
Business Plan shall be considered an acceptable variance in the amount of such
corporate overhead).

            "Excess Cash Payment Date" means the last day of each June and
December during the term hereof.

            "Exchange Act" means the Securities Exchange Act 1934, as amended.

                                       10
<PAGE>

            "Excluded Debt" means (i) Indebtedness listed on Schedule 1.01B, and
(ii) notes payable to a Loan Party by an Indian Tribe, if the grant of a
security interest in such notes would, in the reasonable judgment of Holdings
(upon consultation with a reputable law firm with an expertise in Indian gaming
matters), reasonably be expected to require the review or approval of a
Governmental Authority.

            "Excluded Subsidiary" means (i) those Subsidiaries listed on
Schedule 1.01C, and (ii) any other Subsidiary formed for the purpose of being a
party to or a beneficiary of a contract, instrument or other agreement with an
Indian Tribe, if the grant of a security interest in the Equity Interests or
certain assets of such Subsidiary would, in the reasonable judgment of Holdings
(upon consultation with a reputable law firm with an expertise in Indian gaming
matters), reasonably be expected to require the review or approval of a
Governmental Authority.

            "Excluded Taxes" means, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of the Borrower hereunder, (a) taxes imposed on or measured in
whole or in part by its overall net income (however denominated), and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or in which the recipient
has other connections (other than such connections arising solely in connection
with the Loan or this Agreement, including the execution or the delivery of,
performance of obligations or receipt of payment under, or enforcement of, this
Agreement) or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 11.13), any withholding tax that is
imposed on amounts payable to such Foreign Lender as a result of Laws in effect
at the time such Foreign Lender becomes a party hereto (or designates a new
Lending Office) or is attributable to such Foreign Lender's failure or inability
(other than as a result of a Change in Law) to comply with Section 3.01(e),
except to the extent that such Foreign Lender designating a new Lending Office
(or its assignor, if any) was entitled, at the time of designation of a new
Lending Office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 3.01(a).

            "Existing Credit Agreement" means that certain Financing Agreement
dated as of February 15, 2006 among Holdings, the subsidiaries of Holdings
listed as a "Borrower" on the signature pages thereto, each other subsidiary of
Holdings that is a guarantor thereof, the financial institutions from time to
time party thereto and PLKS Funding, LLC, a Delaware limited liability company,
as a lender and as agent for the lenders.

            "Existing Equity Rights" means the warrants and the preferred stock
listed in Schedule 1.01D hereto and, in each case, the common stock into which
such warrants and preferred stock are exercisable or convertible (as the case
may be).

            "Existing Projects" means the Iowa Project, Jamul Project, Pawnee
Project, Pokagon Project, Shingle Springs Project and Vicksburg Project.

                                       11
<PAGE>

            "Extraordinary Receipt" means any cash in excess of $500,000 in the
aggregate received since the Closing Date by Holdings or any of its Subsidiaries
not in the ordinary course of business (and not consisting of proceeds described
in Section 2.03(b) (ii), (iii) or (iv) hereof, including, without limitation,
(i) foreign, United States, state or local tax refunds, (ii) pension plan
reversions, (iii) proceeds of insurance, (iv) judgments, proceeds of settlements
or other consideration of any kind in connection with any cause of action (other
than reimbursement of attorneys' fees and expenses), (v) condemnation awards
(and payments in lieu thereof) and (vi) any purchase price adjustment received
in connection with any purchase agreement. Dividends and distributions received
by Holdings or any of its Subsidiaries shall be deemed to be received in the
ordinary course of business.

            "Facility" means, at any time, (a) on or prior to the Closing Date,
the aggregate amount of the Commitments at such time and (b) thereafter, the
aggregate principal amount of the Loans of all Lenders outstanding at such time.

            "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

            "Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is resident for tax
purposes. For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

            "Four Winds-Pokagon Notes" means the 10 -3/8% Senior Notes due 2014
of the Pokagon Gaming Authority.

            "FRB" means the Board of Governors of the Federal Reserve System of
the United States.

            "Fund" means any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.

            "Future Project" means each project (other than the Existing
Projects) publicly disclosed in Exchange Act filings after the Closing Date for
the construction, development and/or management of a casino or casinos in the
United States entered into in accordance with the terms herewith.

            "GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American

                                       12
<PAGE>

Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

            "Governmental Authority" means the government of the United States
or any other nation (including any Indian Tribe), or of any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government (including any supra-national bodies
such as the European Union or the European Central Bank).

            "Guarantee" means, as to any Person, (a) any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.

            "Guarantors" means, collectively, Holdings, the Subsidiaries of
Holdings listed on Schedule 6.02 and each other Subsidiary of Holdings that
shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.02.

            "Guaranty" means, collectively, the Guaranty made by Holdings under
Article X in favor of the Secured Parties and the Guaranty made by the
Guarantors in favor of the Secured Parties, substantially in the form of Exhibit
E, together with each other guaranty and guaranty supplement delivered pursuant
to Section 6.02.

            "Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon

                                       13
<PAGE>

gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.

            "Hedge Bank" means the Administrative Agent or any other Person
that, at the time it enters into a Secured Hedge Agreement, is a Lender or an
Affiliate of a Lender, in its capacity as a party to such Secured Hedge
Agreement.

            "Holdings" has the meaning specified in the introductory paragraph
hereto.

            "IGRA" means the Indian Gaming Regulatory Act of 1988, 25 U.S.C.
Sec. 2701 et seq.

            "Inactive Subsidiaries" means the Subsidiaries listed in Schedule
1.01E hereto.

            "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

            (a) all obligations of such Person for borrowed money and all
      obligations of such Person evidenced by bonds, debentures, notes, loan
      agreements or other similar instruments;

            (b) the maximum amount of all direct or contingent obligations of
      such Person arising under letters of credit (including standby and
      commercial), bankers' acceptances, bank guaranties, surety bonds and
      similar instruments;

            (c) net obligations of such Person under any Swap Contract;

            (d) all obligations of such Person to pay the deferred purchase
      price of property or services (other than trade accounts payable in the
      ordinary course of business and not past due for more than 120 days after
      the date on which such trade account was created);

            (e) indebtedness (excluding prepaid interest thereon) secured by a
      Lien on property owned or being purchased by such Person (including
      indebtedness arising under conditional sales or other title retention
      agreements), whether or not such indebtedness shall have been assumed by
      such Person or is limited in recourse;

            (f) all Attributable Indebtedness in respect of Capitalized Leases
      and Synthetic Lease Obligations of such Person and all Synthetic Debt of
      such Person;

            (g) other than the Existing Equity Rights, all obligations of such
      Person to purchase, redeem, retire, defease or otherwise make any payment
      in respect of any Equity Interest in such Person or any other Person or
      any warrant, right or option to acquire such Equity Interest, valued, in
      the case of a redeemable preferred interest, at the greater of its
      voluntary or involuntary liquidation preference plus accrued and unpaid
      dividends; and

            (h) all Guarantees of such Person in respect of any of the
      foregoing.

                                       14
<PAGE>

            For all purposes hereof, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person. The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. Notwithstanding the foregoing, the Indebtedness
of any Loan Party shall not include contractual obligations to make guaranteed
minimum payments to Indian Tribes in accordance with any Project, it being
understood and agreed that such obligations shall be deemed to be loans subject
to the provisions of Section 7.05

            "Indemnified Taxes" means Taxes other than Excluded Taxes.

            "Indemnitees" has the meaning specified in Section 11.04(b).

            "Indian Tribe" means an Indian tribe or an instrumentality,
component, or other Affiliate thereof.

            "Information" has the meaning specified in Section 11.07.

            "Information Memorandum" means the information memorandum dated May,
2006 used by the Arranger in connection with the syndication of the Commitments.

            "Intellectual Property Security Agreements" has the meaning
specified in Section 4.01(a)(v).

            "Interest Payment Date" means, (a) as to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date.

            "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, as selected by the Borrower in its Committed Loan Notice
or such other period that is twelve months or less requested by the Borrower and
consented to by all the Lenders; provided that:

            (a) any Interest Period that would otherwise end on a day that is
      not a Business Day shall be extended to the next succeeding Business Day
      unless such Business Day falls in another calendar month, in which case
      such Interest Period shall end on the next preceding Business Day;

            (b) any Interest Period that begins on the last Business Day of a
      calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest
      Period) shall end on the last Business Day of the calendar month at the
      end of such Interest Period; and

                                       15
<PAGE>

            (c) no Interest Period shall extend beyond the Maturity Date.

            "Interest Reserve Account" means the account of the Borrower
maintained with the Administrative Agent pursuant to Section 6.21.

            "Interest Reserve Deposit" has the meaning set forth in Section
6.21.

            "Internal Control Event" means a material weakness in, or fraud that
involves management or other employees who have a significant role in, Holdings'
internal controls over financial reporting, in each case as described in the
Securities Laws.

            "Investment" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Equity Interests of another Person, (b) a loan, advance
or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit or all or
substantial all of the business of, such Person. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

            "Iowa Project" means the existing Cimarron casino and the proposed
casino to be built on the land of the Indian Tribe known as the `Iowa Tribe of
Oklahoma' located in the state of Oklahoma, which are the subject of the
Management and Consulting Agreements set forth in Item 10, 11, 12, 13 and 17 of
Schedule 1.01H.

            "IP Rights" has the meaning specified in Section 5.17.

            "IP Security Agreement Supplement" means the Trademark Security
Agreement Supplements, Copyright Security Agreement Supplements and the Patent
Security Agreement Supplements.

            "IRS" means the United States Internal Revenue Service.

            "Jamul Project" means the proposed casino to be built on the
Rancheria of the Indian Tribe known as `Jamul Indian Village' located near San
Diego, California, which is the subject of either the Management and Consulting
Agreements set forth in Items 9, 15 and 18 of Schedule 1.01H or the Development
Financing and Services Agreement set forth in Item 23 of Schedule 1.01H.

            "Land Transfer Agreements" means the land transfer agreements listed
on Schedule 1.01F hereto.

            "Laws" means, collectively, all international, foreign, Federal,
state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and

                                       16
<PAGE>

permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

            "Lender" has the meaning specified in the introductory paragraph
hereto.

            "Lending Office" means, as to any Lender, the office or offices of
such Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time notify the
Borrower and the Administrative Agent.

            "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale or other title retention agreement, any easement, right of
way or other encumbrance on title to real property, and any financing lease
having substantially the same economic effect as any of the foregoing).

            "Loan" means an extension of credit by a Lender to the Borrower
under Article II.

            "Loan Documents" means, collectively, (a) this Agreement, (b) the
Notes, (c) the Guaranty, (d) the Collateral Documents, (e) each Secured Hedge
Agreement and (f) each Secured Cash Management Agreement; provided that for
purposes of the definition of "Material Adverse Effect" and Articles IV through
IX, "Loan Documents" shall not include Secured Hedge Agreements or Secured Cash
Management Agreements.

            "Loan Parties" means, collectively, the Borrower and each Guarantor.

            "Management and Consulting Agreements" means, collectively, each
agreement set forth in Schedule 1.01H, and any other management, development or
consulting agreement executed by a Loan Party and a third party (including an
Indian Tribe) with respect to an Existing Project or a Future Project permitted
in accordance with the terms hereof.

            "Management Agreement Promissory Notes" means, collectively, each
promissory note set forth in Schedule 1.01I, and any other promissory note
issued in favor of any Loan Party in connection with any Management and
Consulting Agreement.

            "Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent), condition (financial or otherwise) or
prospects of Holdings or Holdings and its Subsidiaries taken as a whole; (b) a
material impairment of the rights and remedies of the Administrative Agent or
any Lender under any Loan Document, or of the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is a
party. Notwithstanding the foregoing, in no event shall a Material Adverse
Effect be caused by any adverse litigation pending or currently filed against
any Loan Party that prevents or enjoins the actual construction of any of the
Existing Projects.

                                       17
<PAGE>

            "Material Contract" means, with respect to any Person, (i) all
contracts relating to the Projects, in that if terminated or violated could
reasonably be expected to have a Material Adverse Effect and (ii) each contract
or agreement to which such Person or any of its Subsidiaries is a party
involving aggregate consideration payable to or by such Person or such
Subsidiary of $1,000,000 or more.

            "Maturity Date" means June 21, 2010; provided, however, that if such
date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.

            "Measurement Period" means, at any date of determination, the most
recently completed four fiscal quarters of Holdings or, if fewer than four
consecutive fiscal quarters of Holdings have been completed since the Closing
Date, the fiscal quarters of Holdings that have been completed since the Closing
Date.

            "Moody's" means Moody's Investors Service, Inc. and any successor
thereto.

            "Mortgage" has the meaning specified in Section 4.01(a)(iv).

            "Mortgage Policy" has the meaning specified in Section
4.01(a)(iv)(B).

            "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

            "Net Cash Proceeds" means:

            (a) with respect to any Disposition by any Loan Party or any of its
      Subsidiaries, or any Extraordinary Receipt received or paid to the account
      of any Loan Party or any of its Subsidiaries, the excess, if any, of (i)
      the sum of cash and Cash Equivalents received in connection with such
      transaction (including any cash or Cash Equivalents received by way of
      deferred payment pursuant to, or by monetization of, a note receivable or
      otherwise, but only as and when so received) over (ii) the sum of (A) the
      principal amount of any Indebtedness that is secured by the applicable
      asset and that is required to be repaid in connection with such
      transaction (other than Indebtedness under the Loan Documents), (B) the
      reasonable and customary out-of-pocket expenses incurred by such Loan
      Party or such Subsidiary in connection with such transaction and (C) taxes
      reasonably estimated to be actually payable within two years of the date
      of the relevant transaction (or, with respect to a deferred payment,
      within two years after receipt of the payment) as a result of any gain or
      other income recognized in connection therewith; provided that, if the
      amount of any estimated taxes pursuant to subclause (C) exceeds the amount
      of taxes actually required to be paid in cash in respect of such
      Disposition, the aggregate amount of such excess shall constitute Net Cash
      Proceeds; and

            (b) with respect to the sale or issuance of any Equity Interest by
      any Loan Party or any of its Subsidiaries, or the incurrence or issuance
      of any Indebtedness by any Loan Party or any of its Subsidiaries, the
      excess of (i) the sum of the cash and Cash Equivalents received in
      connection with such transaction over (ii) the underwriting

                                       18
<PAGE>

      discounts and commissions, and other reasonable and customary
      out-of-pocket expenses, incurred by such Loan Party or such Subsidiary in
      connection therewith.

            "Non-Recourse Financing" means, with respect to any Project, any
Indebtedness (including, without limitation, any obligations under a Swap
Contract in respect thereof) (a) which is not, directly or indirectly,
guaranteed by, or directly or indirectly secured by, or with respect to which
the lenders thereunder do not have recourse to, any of the Equity Interests or
assets of any Loan Party, and (b) with respect to which the lenders thereunder
shall have been notified in writing by the borrower thereunder that they will
not have any recourse to the Equity Interests or assets referred to in the
preceding clause (a).

            "Note" means a promissory note made by the Borrower in favor of a
Lender, evidencing Loans made by such Lender, substantially in the form of
Exhibit B.

            "NPL" means the National Priorities List under CERCLA.

            "Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.

            "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation, organization and operating agreement and/or by-laws; and (c) with
respect to any partnership, joint venture, trust or other form of business
entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

            "Other Taxes" means all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

            "Outstanding Amount" means with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans, occurring on such date.

            "Participant" has the meaning specified in Section 11.06(d).

            "Patent Security Agreements" has the meaning specified in Section
4.01(a)(v).

                                       19
<PAGE>

            "Patent Security Agreement Supplement" has the meaning specified in
the Security Agreement.

            "Pawnee Guaranty" means a guaranty by, or other Contingent
Obligation of, a Loan Party in a maximum amount not to exceed $15,000,000 in
respect of one or more casinos in the Pawnee Project.

            "Pawnee Project " means the existing Trading Post and Travel Plaza
casinos and the proposed casino to be built on the land of the Indian Tribe
known as the `Pawnee Nation' located in the state of Oklahoma, which are the
subject of the Management and Consulting Agreements set forth in Items 3, 4, 5,
6, 7, 8 and 16 of Schedule 1.01H.

            "PBGC" means the Pension Benefit Guaranty Corporation.

            "PCAOB" means the Public Company Accounting Oversight Board.

            "Pension Plan" means any "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that
is subject to Title IV of ERISA and is sponsored or maintained by the Borrower
or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five plan years.

            "Periodic Project Development Report" has the meaning specified in
Section 6.01(e).

            "Permitted Encumbrances" has the meaning given to the term
"Permitted Liens" in the Mortgages.

            "Permitted Indebtedness" means

            (a) any Indebtedness owing to the Administrative Agent and any
      Lender under this Agreement and the other Loan Documents;

            (b) to the extent not otherwise constituting Permitted Indebtedness,
      any other Indebtedness listed on Schedule 7.02, and the extension of
      maturity, refinancing or modification of the terms thereof; provided,
      however, that (i) such extension, refinancing or modification is pursuant
      to terms that are not less favorable to the Loan Parties and the Lenders
      than the terms of the Indebtedness being extended, refinanced or modified
      and (ii) after giving effect to such extension, refinancing or
      modification, the amount of such Indebtedness is not greater than the
      amount of Indebtedness outstanding immediately prior to such extension,
      refinancing or modification;

            (c) Indebtedness evidenced by Capitalized Lease Obligations entered
      into in order to finance Capital Expenditures made by the Loan Parties in
      accordance with the provisions of Section 7.07, which Indebtedness, when
      aggregated with the principal amount of all Indebtedness incurred under
      this clause (c) and clause (d) of this definition, does not exceed
      $250,000 at any time outstanding;

                                       20
<PAGE>

            (d) Indebtedness permitted by clauses (d), (e), and (j) of the
      definition of "Permitted Liens";

            (e) other guaranties, other Contingent Obligations and other
      Indebtedness permitted under Section 7.05;

            (f) with the written consent of the Administrative Agent,
      Subordinated Indebtedness;

            (g) Indebtedness of any Loan Party to another Loan Party; and

            (h) Indebtedness incurred pursuant to a Non-Recourse Financing of
      Lakes Jamul Development, LLC and Lakes Gaming-Mississippi, LLC or another
      Affiliate of Holdings (the "Vicksburg Entity") in an aggregate principal
      amount not in excess of $600,000,000, to be incurred after the Closing
      Date: (A) in order to provide financing for Lakes Jamul Development, LLC,
      with respect to the construction of the Jamul Project (the "Jamul
      Indebtedness") which Jamul Indebtedness may be secured Liens on any
      secured promissory note (and collateral therefore) evidencing such
      construction financing and on other assets arising solely out of such
      project and owned by Lakes Jamul Development LLC, to which Liens the
      Administrative Agent will subordinate any Liens of the Administrative
      Agent in the same assets (other than the mortgage of the Administrative
      Agent in respect thereof); and (B) for the Vicksburg Entity to finance the
      Vicksburg Project (the "Vicksburg Indebtedness"), which Vicksburg
      Indebtedness may be secured by Liens on assets arising solely out of such
      project and owned by the Vicksburg Entity, to which Liens the
      Administrative Agent will subordinate any Liens of the Administrative
      Agent in the same assets.

            "Permitted Liens" means:

            (a) Liens securing the Obligations;

            (b) Liens for taxes, assessments and governmental charges the
      payment of which is not required under Section 6.03;

            (c) Liens imposed by law, such as carriers', warehousemen's,
      mechanics', materialmen's and other similar Liens arising (provided they
      are subordinate to the Administrative Agent's Liens on Collateral) in the
      ordinary course of business and securing obligations (other than
      Indebtedness for borrowed money) that are not overdue by more than 30 days
      or are being contested in good faith and by appropriate proceedings
      promptly initiated and diligently conducted, and a reserve or other
      appropriate provision, if any, as shall be required by GAAP shall have
      been made therefor;

            (d) to the extent not otherwise constituting Permitted Liens, Liens
      described on Schedule 7.01, but not the extension of coverage thereof to
      other property or the extension of maturity, refinancing or other
      modification of the terms thereof or the increase of the Indebtedness
      secured thereby;

                                       21
<PAGE>

            (e) (i) purchase money Liens on equipment acquired or held by any
      Loan Party or any of its Subsidiaries in the ordinary course of its
      business to secure the purchase price of such equipment or Indebtedness
      incurred solely for the purpose of financing the acquisition of such
      equipment or (ii) Liens existing on such equipment at the time of its
      acquisition; provided, however, that (A) no such Lien shall extend to or
      cover any other property of any Loan Party or any of its Subsidiaries, (B)
      the principal amount of the Indebtedness secured by any such Lien shall
      not exceed the lesser of 80% of the fair market value or the cost of the
      property so held or acquired and (C) the aggregate principal amount of
      Indebtedness secured by any or all such Liens shall not exceed $1,000,000
      during the term of this Agreement;

            (f) deposits and pledges of cash securing (i) obligations incurred
      in respect of workers' compensation, unemployment insurance or other forms
      of governmental insurance or benefits, (ii) the performance of bids,
      tenders, leases, contracts (other than for the payment of money) and
      statutory obligations or (iii) obligations on surety or appeal bonds, but
      only to the extent such deposits or pledges are made or otherwise arise in
      the ordinary course of business and secure obligations not past due;

            (g) easements, zoning restrictions and similar encumbrances on real
      property and minor irregularities in the title thereto that do not (i)
      secure obligations for the payment of money or (ii) materially impair the
      value of such property or its use by any Loan Party or any of its
      Subsidiaries in the normal conduct of such Person's business;

            (h) Liens securing Indebtedness permitted by subsections (b) and (c)
      of the definition of Permitted Indebtedness;

            (j) Liens in the Pokagon Account securing obligations of Great Lakes
      Gaming of Michigan, LLC, a Minnesota limited liability company, under the
      Pokagon Development Agreement;

            (k) other Liens securing guaranties, other Contingent Obligations
      and other Indebtedness permitted by subsection (e) of the definition of
      Permitted Indebtedness, but only to the extent such Liens exist as of the
      Closing Date, are thereafter granted as contemplated by or in accordance
      with the Business Plan, or are otherwise granted with the written consent
      of the Required Lenders (not to be unreasonably withheld if no Event of
      Default shall have occurred and be continuing);

            (l) Liens securing Indebtedness permitted by subsection (h) of the
      definition of Permitted Indebtedness;

            (m) any statutory or common law provision relating to bankers' Liens
      (or rights of set-off) incurred in the ordinary course of business for
      amounts that are not past due; and

            (n) Permitted Encumbrances.

            "Permitted Project Credit Support" means, any Contingent Obligation
of a Loan Party which secures or guarantees any project obligation under an
Existing Project (other than

                                       22
<PAGE>

obligations under any financing for such Existing Project), which (a) is
provided in lieu of all or any part of the obligation of such Loan Party under a
Management and Consulting Agreement (in the form existing on the Closing Date)
to make minimum working capital advances to the Indian Tribe party to such
Management and Consulting Agreement, and (b) is expressly set forth in the
Project Business Plan.

            "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

            "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

            "Plan Reconciliation Report" shall mean a report prepared by
Holdings listing the financial projections of Holdings and its Subsidiaries
delivered pursuant to Section 6.01(d) for the most recent fiscal quarter of
Holdings and its Subsidiaries along with actual financial results together with
an summary and analysis prepared by the chief financial officer of Holdings
discussing the deviations, if any.

            "Platform" has the meaning specified in Section 6.01.

            "Pledge Agreement" has the meaning specified in Section
4.01(a)(iii).

            "Pledge Agreement Supplement" has the meaning given to the term
Pledge Amendment in the Pledge Agreement.

            "Pledged Debt" has the meaning specified in the Pledge Agreement
but, in any event, shall exclude Excluded Debt.

            "Pledged Equity" has the meaning specified in the Pledge Agreement,
but, in any event, shall exclude Equity Interests in Excluded Subsidiaries and
all of the World Poker Shares directly or indirectly owned by Holdings.

            "Pledged Interests" means Pledged Debt and Pledged Equity.

            "Pokagon Account" means account number 15522000 or 5522000
maintained at US Bank National Association referred to and as defined in the
Pokagon Development Agreement which at any time shall not contain an amount in
the aggregate in excess of $2,500,000.

            "Pokagon Development Agreement" means that certain Third Amended and
Restated Development Agreement, dated as of January 25, 2006, between the
Pokagon Band of Potawatomi Indians, and Great Lakes Gaming of Michigan, LLC.

            "Pokagon Gaming Authority" means a wholly-owned unincorporated
government component of the Pokagon Project, formed by the Pokagon Project to
develop and operate all gaming and related business of the Pokagon Project.

            "Pokagon Management Agreement" shall mean that certain Third Amended
and

                                       23
<PAGE>

Restated Management Agreement, dated as of January 25, 2006, between the Pokagon
Band of Potawatomi Indians, and Great Lakes Gaming of Michigan, LLC.

            "Pokagon Project " means the proposed casino to be built on the land
of the Indian Tribe known as the `Pokagon Band of Potawatomi Indians' located in
New Buffalo Township, Michigan, which is the subject of the Pokagon Development
Agreement and the Pokagon Management Agreement.

            "Project Business Plan" means the project business plan of Holdings,
dated as of the date hereof, and attached as Exhibit J hereto which shall
include all relevant information of each Project (it being understood that a
variance of up to 15% of any construction financing shall be considered an
acceptable variance in the amount of such construction financing), by phase, to
be required in respect of each such project.

            "Projects" means the Existing Projects and the Future Projects.

            "Register" has the meaning specified in Section 11.06(c).

            "Registered Public Accounting Firm" has the meaning specified by the
Securities Laws and shall be independent of Holdings as prescribed by the
Securities Laws.

            "Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.

            "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through the soil, surface or
ground water, or property.

            "Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials present in the indoor or outdoor environment; (ii) 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; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
perform any other actions authorized by 42 U.S.C. Section 9601.

            "Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than events for which the 30 day notice period has been
waived.

            "Required Lenders" means, as of any date of determination, Lenders
holding more than 50% of the Facility on such date; provided that the portion of
the Facility held by any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.

                                       24
<PAGE>

            "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer, assistant treasurer or controller of a Loan
Party. Any document delivered hereunder that is signed by a Responsible Officer
of a Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Loan
Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.

            "Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interest of any Person or any of its Subsidiaries, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such capital stock
or other Equity Interest, or on account of any return of capital to any Person's
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.

            "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

            "Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002.

            "SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

            "Secured Cash Management Agreement" means any Cash Management
Agreement that is entered into by and between the Borrower and any Cash
Management Bank.

            "Secured Hedge Agreement" means any interest rate Swap Contract
required or permitted under Article VI that is entered into by and between the
Borrower and any Hedge Bank.

            "Secured Parties" means, collectively, the Administrative Agent, the
Lenders, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent
appointed by the Administrative Agent from time to time pursuant to Section
9.05, and the other Persons the Obligations owing to which are or are purported
to be secured by the Collateral under the terms of the Collateral Documents.

            "Securities Account Control Agreements" means has the meaning
specified in Section 4.01(a)(iii)(E).

            "Securities Laws" means the Securities Act of 1933, as amended, the
Exchange Act, Sarbanes-Oxley, and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or incorporated
by the SEC or the PCAOB.

            "Security Agreement" has the meaning specified in Section
4.01(a)(iii).

            "Security Agreement Supplement" has the meaning given to the term
Supplement in the Security Agreement.

                                       25
<PAGE>

            "Shingle Springs Project " means the proposed casino to be built on
the Rancheria of the Indian Tribe known as the `Shingle Springs Band of Miwok
Indians' located in El Dorado county, California, which is the subject of the
Management and Consulting Agreements set forth in Items 1 and 14 of Schedule
1.01H.

            "Solvent" and "Solvency" mean, with respect to any Person on any
date of determination, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital, and (e)
such Person is able to pay its debts and liabilities, contingent obligations and
other commitments as they mature in the ordinary course of business. The amount
of contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.

            "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
Holdings but excluding World Poker and the Inactive Subsidiaries.

            "Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

            "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such

                                       26
<PAGE>

Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

            "Synthetic Debt" means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds (including any minority interest transactions that function
primarily as a borrowing) but are not otherwise included in the definition of
"Indebtedness" or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.

            "Synthetic Lease Obligation" means the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property (including sale
and leaseback transactions), in each case, creating obligations that do not
appear on the balance sheet of such Person but which, upon the application of
any Debtor Relief Laws to such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

            "Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

            "Threshold Amount" means $1,000,000.

            "Trademark Security Agreements" has the meaning specified in Section
4.01(a)(v).

            "Trademark Security Agreement Supplement" has the meaning specified
in the Security Agreement.

            "Type" means, with respect to a Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

            "UCC" means the Uniform Commercial Code as in effect in the State of
New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, "UCC" means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.

            "Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

                                       27
<PAGE>

            "United States" and "U.S." mean the United States of America.

            "U.S. Loan Party" means any Loan Party that is organized under the
laws of one of the states of the United States and that is not a CFC.

            "Vicksburg Project " means the proposed casino to be located in
Vicksburg, Mississippi.

            "World Poker" means WPT Enterprises, Inc., a Delaware corporation.

            "World Poker Collateral Shares" means the aggregate amount of World
Poker Shares owned by Lakes Poker Tour, LLC less 3,000,000 World Poker Shares
owned by Lakes Poker Tour, LLC.

            "World Poker Shares" means the Equity Interests of World Poker (as
adjusted for stock splits, stock dividends, reverse stock splits,
recapitalizations, reclassifications and similar events).

            "WPT Cash Collateral Account" means the blocked account maintained
with the Administrative Agent and listed in Schedule 1.01G hereto.

            1.02 Other Interpretive Provisions. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

            (a) The definitions of terms herein shall apply equally to the
      singular and plural forms of the terms defined. Whenever the context may
      require, any pronoun shall include the corresponding masculine, feminine
      and neuter forms. The words "include," "includes" and "including" shall be
      deemed to be followed by the phrase "without limitation." The word "will"
      shall be construed to have the same meaning and effect as the word
      "shall." Unless the context requires otherwise, (i) any definition of or
      reference to any agreement, instrument or other document (including any
      Organization Document) shall be construed as referring to such agreement,
      instrument or other document as from time to time amended, supplemented or
      otherwise modified (subject to any restrictions on such amendments,
      supplements or modifications set forth herein or in any other Loan
      Document), (ii) any reference herein to any Person shall be construed to
      include such Person's successors and assigns, (iii) the words "herein,"
      "hereof" and "hereunder," and words of similar import when used in any
      Loan Document, shall be construed to refer to such Loan Document in its
      entirety and not to any particular provision thereof, (iv) all references
      in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits
      and Schedules shall be construed to refer to Articles and Sections of, and
      Preliminary Statements, Exhibits and Schedules to, the Loan Document in
      which such references appear, (v) any reference to any law shall include
      all statutory and regulatory provisions consolidating, amending, replacing
      or interpreting such law and any reference to any law or regulation shall,
      unless otherwise specified, refer to such law or regulation as amended,
      modified or supplemented from time to time, and (vi) the words "asset" and
      "property" shall be construed to have the same meaning and effect and to
      refer to any and all tangible and intangible assets and properties,
      including cash, securities, accounts and contract rights.

                                       28
<PAGE>

            (b) In the computation of periods of time from a specified date to a
      later specified date, the word "from" means "from and including;" the
      words "to" and "until" each mean "to but excluding;" and the word
      "through" means "to and including."

            (c) Section headings herein and in the other Loan Documents are
      included for convenience of reference only and shall not affect the
      interpretation of this Agreement or any other Loan Document.

            1.03 Accounting Terms. (a) Generally. All accounting terms not
specifically or completely defined herein shall be construed in conformity with,
and all financial data (including financial ratios and other financial
calculations) required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing
the Audited Financial Statements, except as otherwise specifically prescribed
herein.

            (b) Changes in GAAP. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.

            1.04 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

            1.05 Times of Day. Unless otherwise specified, all references herein
to times of day shall be references to Eastern time (daylight or standard, as
applicable).

            1.06 Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, IX and X) or any of the other Loan
Documents to be in Dollars shall also include the equivalent of such amount in
any currency other than Dollars, such equivalent amount thereof in the
applicable currency to be determined by the Administrative Agent at such time on
the basis of the Spot Rate (as defined below) for the purchase of such currency
with Dollars. For purposes of this Section 1.06, the "Spot Rate" for a currency
means the rate determined by the Administrative Agent to be the rate quoted by
the Person acting in such capacity as the spot rate for the purchase by such
Person of such currency with another currency through its principal foreign
exchange trading office at approximately 11:00 a.m. on the date two Business
Days prior to the date of such determination; provided that the Administrative

                                       29
<PAGE>

Agent may obtain such spot rate from another financial institution designated by
the Administrative Agent if the Person acting in such capacity does not have as
of the date of determination a spot buying rate for any such currency.

                                   ARTICLE II
                      the COMMITMENTS and Credit Extensions

            2.01 The Loans. Subject to the terms and conditions set forth
herein, each Lender severally agrees to make a single loan (consisting of one or
more Borrowings) to the Borrower on the Closing Date in an amount not to exceed
such Lender's Commitment. Such Borrowings shall consist of Loans made
simultaneously by the Lenders in accordance with their respective Commitments.
Amounts borrowed under this Section 2.01 and repaid or prepaid may not be
reborrowed. Loans may be Base Rate Loans or Eurodollar Rate Loans as further
provided herein. It is acknowledged that the Loans are initially being made
hereunder with original issue discount (such that for each $100 of the
Commitments hereunder, the Borrower shall have received proceeds on the Closing
Date of $99 but Loans in an amount of $100 shall be deemed to have been made)
and that, subject to the terms hereof, the Borrower shall be obligated to repay
to the Lenders (and interest shall accrue on) the full aggregate principal
amount of the Loans outstanding hereunder calculated in accordance with the
terms hereof.

            2.02 Borrowings, Conversions and Continuations of Loans. (a) Each
Borrowing, each conversion of Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrower's
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing
of, conversion to or continuation of Eurodollar Rate Loans or of any conversion
of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of
any Borrowing of Base Rate Loans; provided, however, that if the Borrower wishes
to request Eurodollar Rate Loans having an Interest Period other than one, two,
three or six months in duration as provided in the definition of "Interest
Period", the applicable notice must be received by the Administrative Agent not
later than 11:00 a.m. four Business Days prior to the requested date of such
Borrowing, conversion or continuation, whereupon the Administrative Agent shall
give prompt notice to the Lenders of such request and determine whether the
requested Interest Period is acceptable to all of them. Not later than 11:00
a.m., three Business Days before the requested date of such Borrowing,
conversion or continuation, the Administrative Agent shall notify the Borrower
(which notice may be by telephone) whether or not the requested Interest Period
has been consented to by all the Lenders. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Committed Loan Notice, appropriately completed
and signed by a Responsible Officer of the Borrower. Each Borrowing of,
conversion to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each
Borrowing of or conversion to Base Rate Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Borrowing, a conversion of Loans from one Type to the other, or a
continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as the case may be (which shall be a Business Day),
(iii) the principal amount of Loans to be borrowed, converted or continued, (iv)
the Type of Loans to be borrowed or to which existing

                                       30
<PAGE>

Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of Loan in
a Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be made
as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans
in any such Committed Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.

            (b) Following receipt of a Committed Loan Notice, the Administrative
Agent shall promptly notify each Lender of the amount of its Applicable
Percentage, and if no timely notice of a conversion or continuation is provided
by the Borrower, the Administrative Agent shall notify each Lender of the
details of any automatic conversion to Base Rate Loans described in Section
2.02(a). In the case of a Borrowing, each Lender shall make the amount of its
Loan available to the Administrative Agent in immediately available funds at the
Administrative Agent's Office not later than 1:00 p.m. on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Administrative Agent shall make all
funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower.

            (c) Except as otherwise provided herein, a Eurodollar Rate Loan may
be continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.

            (d) The Administrative Agent shall promptly notify the Borrower and
the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of America's prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

            (e) After giving effect to all Borrowings, all conversions of Loans
from one Type to the other, and all continuations of Loans as the same Type,
there shall not be more than six Interest Periods in effect in respect of the
Facility.

            2.03 Prepayments. (a) Optional. Subject to Section 2.03(c) below,
the Borrower may, upon notice to the Administrative Agent, at any time or from
time to time voluntarily prepay Loans in whole or in part; provided that (A)
such notice must be received by the Administrative Agent not later than 11:00
a.m. (1) three Business Days prior to any date of prepayment of Eurodollar Rate
Loans and (2) on the date of prepayment of Base Rate Loans; (B) any prepayment
of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate
Loans shall be in a principal amount of $500,000 or a

                                       31
<PAGE>

whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loans to be prepaid
and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such
Loans. The Administrative Agent will promptly notify each Lender of its receipt
of each such notice, and of the amount of such Lender's ratable portion of such
prepayment (based on such Lender's Applicable Percentage). If such notice is
given by the Borrower, the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest to the date of such prepayment on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05. Each prepayment
of the outstanding Loans pursuant to this Section 2.03(a) shall be paid to the
Lenders in accordance with their respective Applicable Percentages.

            (b) Mandatory. (i) Within five Business Days after financial
statements have been delivered pursuant to Section 6.01(b) and the related
Compliance Certificate has been delivered pursuant to Section 6.01(c), the
Borrower shall prepay an aggregate principal amount of Loans equal to the excess
(if any) of (A) 100% of the Excess Cash Amount for the fiscal year covered by
such financial statements over (B) the aggregate principal amount of Loans
prepaid pursuant to Section 2.03(a) (such prepayments to be applied as set forth
in clause (vii) below).

            (ii) If any Loan Party or any of its Subsidiaries Disposes of any
      property (other than any Disposition of any property contemplated by
      Section 6.23 or permitted by Section 7.03) with a book value of more than
      $250,000 and which results in the realization by such Person of Net Cash
      Proceeds, the Borrower shall prepay an aggregate principal amount of Loans
      equal to 100% of such Net Cash Proceeds immediately upon receipt thereof
      by such Person (such prepayments to be applied as set forth in clauses
      (vi) and (viii) below).

            (iii) Upon the sale or issuance by any Loan Party or any of its
      Subsidiaries of any of its Equity Interests (other than (a) any sales or
      issuances of Equity Interests to another Loan Party and (b) the sale of
      World Poker Collateral Shares during the term of this Agreement), the
      Borrower shall prepay an aggregate principal amount of Loans equal to 100%
      of all Net Cash Proceeds received therefrom immediately upon receipt
      thereof by such Loan Party or such Subsidiary (such prepayments to be
      applied as set forth in clause (viii) below). Notwithstanding the
      foregoing, Holdings shall be permitted, without Borrower being obligated
      to make any mandatory prepayment, to sell an unlimited amount of Equity
      Interests of Holdings, in each case, at not less than the fair market
      value (it being understood that fair market value may be impacted as a
      result of lack of liquidity and similar market factors impacting the value
      of the Equity Interests sold) and such Net Cash Proceeds may be used for
      general corporate purposes of the Loan Parties so long as not in violation
      of the terms of this Agreement.

            (iv) Upon the incurrence or issuance by any Loan Party or any of its
      Subsidiaries of any Indebtedness (other than Indebtedness expressly
      permitted to be incurred or issued pursuant to Section 7.02), the Borrower
      shall prepay an aggregate

                                       32
<PAGE>

      principal amount of Loans equal to 100% of all Net Cash Proceeds received
      therefrom immediately upon receipt thereof by such Loan Party or such
      Subsidiary (such prepayments to be applied as set forth in clause (vii)
      below).

            (v) Upon any Extraordinary Receipt received by or paid to or for the
      account of any Loan Party or any of its Subsidiaries, and not otherwise
      included in clause (ii), (iii) or (iv) of this Section 2.03(b), the
      Borrower shall prepay an aggregate principal amount of Loans equal to 100%
      of all Net Cash Proceeds received therefrom immediately upon receipt
      thereof by such Loan Party or such Subsidiary (such prepayments to be
      applied as set forth in clauses (vi) and (viii) below).

            (vi) Subject to Section 2.03(c) below, upon the occurrence of a
      Change of Control, the Borrower shall immediately prepay the entire
      aggregate principal amount of Loans and all accrued and unpaid interest
      thereon.

            (vii) Notwithstanding any of the other provisions of clause (ii),
      (iii), (iv), (v) or (vi) of this Section 2.03(b), so long as no Default
      shall have occurred and be continuing, if, on any date on which a
      prepayment would otherwise be required to be made pursuant to clause (ii),
      (iii), (iv), (v) or (vi) of this Section 2.03(b), the aggregate amount of
      Net Cash Proceeds required by such clause to be applied to prepay Loans on
      such date is less than or equal to $1,000,000, the Borrower may defer such
      prepayment until the first date on which the aggregate amount of Net Cash
      Proceeds or other amounts otherwise required under clause (ii), (iii),
      (iv), (v) or (vi) of this Section 2.03(b) to be applied to prepay Loans
      exceeds $1,000,000. Upon the occurrence of a Default during any such
      deferral period, the Borrower shall immediately prepay the Loans in the
      amount of all Net Cash Proceeds received by the Borrower and other
      amounts, as applicable, that are required to be applied to prepay Loans
      under this Section 2.03(b) (without giving effect to the first sentences
      of this clause (vii)) but which have not previously been so applied.

            (viii) The Administrative Agent will promptly notify each Lender of
      its receipt of each such prepayment, and of the amount of such Lender's
      ratable portion of such prepayment (based on such Lender's Applicable
      Percentage). Each prepayment of the outstanding Loans pursuant to this
      Section 2.03(b) shall be paid to the Lenders in accordance with their
      respective Applicable Percentages

            (c) Prepayment Premium. In the event all or any portion of the Loans
are repaid for any reason pursuant to Section 2.03(a) or clauses (iii), (iv) and
(vi) of Section 2.03(b) (but, for the avoidance of doubt, not Sections 3.02 and
3.04) prior to the fourth anniversary of the Closing Date, such repayments will
be made at (i) 101.0% of the amount repaid if such repayment occurs on or prior
to the first anniversary of the Closing Date, (ii) 102.0% of the amount repaid
if such repayment occurs after the first anniversary of the Closing Date, but on
or prior to the second anniversary of the Closing Date, (iii) 103.0% of the
amount repaid if such repayment occurs after the second anniversary of the
Closing Date, but on or prior to the third anniversary of the Closing Date, and
(iv) 104.0% of the amount repaid if such repayment occurs after the third
anniversary of the Closing Date, but on or prior to the fourth anniversary of
the Closing Date. No premium will apply with respect to any other prepayments of
the Loans.

                                       33
<PAGE>

            2.04 Termination of Commitments. Subject to Section 2.12, the
aggregate Commitments shall be automatically and permanently reduced to zero on
the date of the Borrowing.

            2.05 Repayment of Loans. The Borrower shall repay to the Lenders the
aggregate principal amount of all Loans outstanding on the Maturity Date.

            2.06 Interest. (a) Subject to the provisions of Section 2.06(b), (i)
each Eurodollar Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
Eurodollar Rate for such Interest Period plus the Applicable Rate and (ii) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate.

            (b) (i) If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

            (ii) If any amount (other than principal of any Loan) payable by the
      Borrower under any Loan Document is not paid when due (without regard to
      any applicable grace periods), whether at stated maturity, by acceleration
      or otherwise, then upon the request of the Required Lenders such amount
      shall thereafter bear interest at a fluctuating interest rate per annum at
      all times equal to the Default Rate to the fullest extent permitted by
      applicable Laws.

            (iii) Upon the request of the Required Lenders, while any Event of
      Default exists, the Borrower shall pay interest on the principal amount of
      all outstanding Obligations hereunder at a fluctuating interest rate per
      annum at all times equal to the Default Rate to the fullest extent
      permitted by applicable Laws.

            (iv) Accrued and unpaid interest on past due amounts (including
      interest on past due interest) shall be due and payable upon demand.

            (c) Interest on each Loan shall be due and payable in arrears on
each Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

            2.07 Fees.

            (a) The Borrower shall pay to the Arranger and the Administrative
Agent for their own respective accounts fees in the amounts and at the times
agreed in writing on or prior to the Closing Date. Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.

                                       34
<PAGE>

            (b) The Borrower shall pay to the Lenders such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

            2.08 Computation of Interest and Fees. All computations of interest
for Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.10(a),
bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

            2.09 Evidence of Debt. The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the Administrative Agent in the ordinary course of business. The accounts
or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrower and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender's Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

                                       35
<PAGE>

            2.10 Payments Generally; Administrative Agent's Clawback. (a)
General. All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent's Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each
Lender its Applicable Percentage (or other applicable share as provided herein)
of such payment in like funds as received by wire transfer to such Lender's
Lending Office. All payments received by the Administrative Agent after 2:00
p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected on computing interest or fees, as the case may be.

            (b) Funding by Lenders; Presumption by Administrative Agent. Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing)
that such Lender will not make available to the Administrative Agent such
Lender's share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with Section
2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has
made such share available in accordance with and at the time required by Section
2.02) and may (but shall not be obligated to), in reliance upon such assumption,
make available to the Borrower a corresponding amount. In such event, if a
Lender has not in fact made its share of the applicable Borrowing available to
the Administrative Agent, then the applicable Lender agrees to pay to the
Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, in the case of a
payment to be made by such Lender, at the greater of the Federal Funds Rate and
a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation, plus any administrative, processing or
similar fees customarily charged by the Administrative Agent in connection with
the foregoing. If such Lender pays its share of the applicable Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender's
Loan included in such Borrowing.

            A notice of the Administrative Agent to any Lender with respect to
any amount owing under this subsection (b) shall be conclusive, absent manifest
error.

            (c) Failure to Satisfy Conditions Precedent. If any Lender makes
available to the Administrative Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this Article II, and such
funds are not made available to the Borrower by the Administrative Agent because
the conditions to the applicable Credit Extension set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

                                       36
<PAGE>

            (d) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Loans and to make payments pursuant to Section 11.04(c) are
several and not joint. The failure of any Lender to make any Loan or to make any
payment under Section 11.04(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or to make its payment under Section 11.04(c).

            (e) Funding Source. Nothing herein shall be deemed to obligate any
Lender to obtain the funds for any Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.

            (f) Insufficient Funds. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, interest and fees then due hereunder, such funds shall be applied
(i) first, toward payment of interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, toward payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.

            2.11 Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of (a) Obligations in respect of the Facility due and payable to such
Lender hereunder and under the other Loan Documents at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of the Obligations in respect of the Facility due and payable to all
Lenders hereunder and under the other Loan Documents at such time) of payments
on account of the Obligations in respect of the Facility due and payable to all
Lenders hereunder and under the other Loan Documents at such time obtained by
all the Lenders at such time or (b) Obligations in respect of the Facility owing
(but not due and payable) to such Lender hereunder and under the other Loan
Documents at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations owing (but not due and payable)
to such Lender at such time to (ii) the aggregate amount of the Obligations in
respect of the Facility owing (but not due and payable) to all Lenders hereunder
and under the other Loan Parties at such time) of payment on account of the
Obligations in respect of the Facility owing (but not due and payable) to all
Lenders hereunder and under the other Loan Documents at such time obtained by
all of the Lenders at such time then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Loans of the other
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of Obligations in respect of the Facility
then due and payable to the Lenders or owing (but not due and payable) to the
Lenders, as the case may be, provided that:

            (i) if any such participations are purchased and all or any portion
      of the payment giving rise thereto is recovered, such participations shall
      be rescinded and the purchase price restored to the extent of such
      recovery, without interest; and

                                       37
<PAGE>

            (ii) the provisions of this Section shall not be construed to apply
      to (A) any payment made by the Borrower pursuant to and in accordance with
      the express terms of this Agreement or (B) any payment obtained by a
      Lender as consideration for the assignment of or sale of a participation
      in any of its Loans to any assignee or participant, other than to the
      Borrower or any Subsidiary thereof (as to which the provisions of this
      Section shall apply).

            Each Loan Party consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

            2.12 Increase in Facility. (a) Request for Increase. Provided there
exists no Default, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), the Borrower may from time to time, request an increase in
the Loans by an amount (for all such requests) not exceeding $25,000,000;
provided that (i) any such request for an increase shall be in an amount which
is a multiple of $12,500,000, and (ii) the Borrower may make a maximum of two
such requests. At the time of sending such notice, the Borrower (in consultation
with the Administrative Agent) shall specify the time period within which each
Lender is requested to respond (which shall in no event be less than ten
Business Days from the date of delivery of such notice to the Lenders).

            (b) Lender Elections to Increase. Each Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Loans and, if so, whether by an amount equal to, greater than, or
less than its ratable portion (based on such Lender's Applicable Percentage) of
such requested increase. Any Lender not responding within such time period shall
be deemed to have declined to increase its Loans.

            (c) Notification by Administrative Agent; Additional Lenders. The
Administrative Agent shall notify the Borrower and each Lender of the Lenders'
responses to each request made hereunder. To achieve the full amount of a
requested increase, and subject to the approval of the Administrative Agent
(which approval shall not be unreasonably withheld), the Borrower may also
invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its
counsel.

            (d) Effective Date, Allocations and Interest. If the Loans are
increased in accordance with this Section, the Administrative Agent and the
Borrower shall determine the effective date (the "Increase Effective Date") and
the final allocation of such increase. The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase and
the Increase Effective Date. The principal amount of such additional Loans shall
be payable on the Maturity Date. Such amendment may be signed by the
Administrative Agent on behalf of the Lenders.

            (e) Conditions to Effectiveness of Increase. As conditions precedent
to such increase, (1) the Borrower shall deliver to the Administrative Agent a
certificate of each Loan

                                       38
<PAGE>

Party dated as of the Increase Effective Date (in sufficient copies for each
Lender) signed by a Responsible Officer of such Loan Party (i) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such increase, and (ii) in the case of the Borrower, certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article V and the other Loan Documents are true and correct on and
as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Section 2.12, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (B) no Default exists, (2) the conditions precedent set forth
on Schedule 2.12(e) shall have been satisfied and (iii) to the extent the
interest rate applicable to the increase in Loans shall be greater than the
equivalent interest rate that may, under any circumstances, be payable with
respect to the initial Loans hereunder, the Applicable Margin with respect to
the initial Loans hereunder shall be increased such that the interest rate
applicable to the initial Loans equals the equivalent interest rate applicable
to the increase in Loans. The additional Loans shall be made by the Lenders
participating therein pursuant to the procedures set forth in Section 2.02.

            (f) Conflicting Provisions. This Section shall supersede any
provisions in Section 2.11 or 10.01 to the contrary.

                                   ARTICLE III
                     TAXES, YIELD PROTECTION AND ILLEGALITY

            3.01 Taxes. (a) Payments Free of Taxes. Any and all payments by or
on account of any obligation of the Borrower or Holdings hereunder or under any
other Loan Document shall be made free and clear of and without reduction or
withholding for any Indemnified Taxes or Other Taxes, provided that if any
Person shall be required by applicable law to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable by
Borrower or Holdings shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or any Lender, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or Holdings, as the case may be, shall
make such deductions and (iii) the Borrower or Holdings, as the case may be,
shall timely pay the full amount deducted to the relevant Governmental Authority
in accordance with applicable law.

            (b) Payment of Other Taxes by the Borrower and Holdings. Without
limiting the provisions of subsection (a) above, the Borrower and Holdings shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

            (c) Indemnification by the Borrower and Holdings. The Borrower and
Holdings shall, jointly and severally, indemnify the Administrative Agent and
each Lender, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent or such Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with

                                       39
<PAGE>

respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability (together with
reasonable supporting documentation) delivered to the Borrower by a Lender (with
a copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error. The
Administrative Agent and Lender receiving an indemnification payment under this
subsection (c) shall, at Borrower's request and expense, reasonably cooperate
with Borrower in attempting to obtain a refund of the Taxes so indemnified if
the Borrower believes in good faith that such Taxes were not legally imposed or
asserted by the Governmental Authority; provided, however, that under no
circumstances shall the Administrative Agent or any Lender be required to share
with the Borrower or provide to the Borrower any information that they consider
confidential.

            (d) Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower or Holdings, as the case may
be, to a Governmental Authority, the Borrower or Holdings, as the case may be,
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

            (e) Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower or Holdings, as the case may be, is resident for tax
purposes, or any treaty to which such jurisdiction is a party, with respect to
payments hereunder or under any other Loan Document shall deliver to the
Borrower and Holdings (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law and reasonably requested by the Borrower,
Holdings or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by the Borrower, Holdings or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower, Holdings or the Administrative Agent as
will enable the Borrower, Holdings or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

Without limiting the generality of the foregoing, each Foreign Lender shall
deliver to the Borrower, Holdings and the Administrative Agent on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the request of the Borrower, Holdings or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), two copies of whichever of the following is applicable:

            (i) duly completed copies of Internal Revenue Service Form W-8BEN
      claiming eligibility for benefits of an income tax treaty to which the
      United States is a party,

            (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

            (iii) in the case of a Foreign Lender claiming the benefits of the
      exemption for portfolio interest under section 881(c) of the Code, (A) a
      certificate to the effect that such

                                       40
<PAGE>

      Foreign Lender is not (1) a "bank" within the meaning of section
      881(c)(3)(A) of the Code, (2) a "10 percent shareholder" of the Borrower
      or Holdings within the meaning of section 881(c)(3)(B) of the Code, or (3)
      a "controlled foreign corporation" described in section 881(c)(3)(C) of
      the Code and (B) duly completed copies of Internal Revenue Service Form
      W-8BEN, or

            (iv) any other form prescribed by applicable law as a basis for
      claiming exemption from or a reduction in United States Federal
      withholding tax duly completed together with such supplementary
      documentation as may be prescribed by applicable law to permit the
      Borrower to determine the withholding or deduction required to be made.

            (f) Treatment of Certain Refunds. If the Administrative Agent or any
Lender determines, in its reasonable discretion, that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
or Holdings, as the case may be, or with respect to which the Borrower or
Holdings, as the case may be, has paid additional amounts pursuant to this
Section, it shall promptly pay to the Borrower or Holdings, as the case may be,
an amount equal to such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower or Holdings under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender, as the case
may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower
or Holdings, as the case may be, upon the request of the Administrative Agent or
such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender if the Administrative
Agent or such Lender is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require the Administrative
Agent or any Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower, Holdings or
any other Person.

            3.02 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

                                       41
<PAGE>

            3.03 Inability to Determine Rates. If the Required Lenders determine
that for any reason in connection with any request for a Eurodollar Rate Loan or
a conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders
to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending request
for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a Committed
Loan Notice for a Borrowing of Base Rate Loans in the amount specified therein.

            3.04 Increased Costs. (a) Increased Costs Generally. If any Change
in Law shall:

            (i) impose, modify or deem applicable any reserve, special deposit,
      compulsory loan, insurance charge or similar requirement against assets
      of, deposits with or for the account of, or credit extended or
      participated in by, any Lender (except any reserve requirement reflected
      in the Eurodollar Rate); or

            (ii) impose on any Lender or the London interbank market any other
      condition, cost or expense affecting this Agreement or Eurodollar Rate
      Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or any
other amount) then, upon request of such Lender, the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.

            (b) Capital Requirements. If any Lender determines that any Change
in Law affecting such Lender or any Lending Office of such Lender or such
Lender's holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.

                                       42
<PAGE>

            (c) Certificates for Reimbursement. A certificate of a Lender
setting forth (together with reasonable supporting documentation) the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in subsection (a) or (b) of this Section and delivered to
the Borrower shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

            (d) Delay in Requests. Failure or delay on the part of any Lender to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender's right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender pursuant
to the foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).

            3.05 Compensation for Losses. Upon demand of any Lender (with a copy
to the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

            (a) any continuation, conversion, payment or prepayment of any Loan
      other than a Base Rate Loan on a day other than the last day of the
      Interest Period for such Loan (whether voluntary, mandatory, automatic, by
      reason of acceleration, or otherwise);

            (b) any failure by the Borrower (for a reason other than the failure
      of such Lender to make a Loan) to prepay, borrow, continue or convert any
      Loan other than a Base Rate Loan on the date or in the amount notified by
      the Borrower; or

            (c) any assignment of a Eurodollar Rate Loan on a day other than the
      last day of the Interest Period therefor as a result of a request by the
      Borrower pursuant to Section 11.13;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

            3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation
of a Different Lending Office. If any Lender requests compensation under Section
3.04, or the

                                       43
<PAGE>

Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such Lender, upon
request by Borrower, shall use reasonable efforts to designate a different
Lending Office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

            (b) Replacement of Lenders. If any Lender requests compensation
under Section 3.04, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, the Borrower may replace such Lender in accordance
with Section 11.13.

            3.07 Survival. All of the Borrower's obligations under this Article
III shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

                                   ARTICLE IV
                    CONDITIONS PRECEDENT TO Credit Extensions

            4.01 Conditions of Initial Credit Extension. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
of the following conditions precedent:

            (a) The Administrative Agent's receipt of the following, each of
      which shall be originals or telecopies (followed promptly by originals)
      unless otherwise specified, each properly executed by a Responsible
      Officer of the signing Loan Party, each dated the Closing Date (or, in the
      case of certificates of governmental officials, a recent date before the
      Closing Date) and each in form and substance satisfactory to the
      Administrative Agent and each of the Lenders:

                  (i) executed counterparts of this Agreement and the Guaranty,
            sufficient in number for distribution to the Administrative Agent,
            each Lender and the Borrower;

                  (ii) a Note executed by the Borrower in favor of each Lender
            requesting a Note;

                  (iii) a security agreement, in substantially the form of
            Exhibit F-1 (the "Security Agreement") and a pledge agreement, in
            substantially the form of Exhibit F-2 (the "Pledge Agreement"),
            together with each other pledge agreement and security agreement and
            pledge agreement supplement and security agreement supplement
            delivered pursuant to Section 6.02, in each case as amended, the
            "Security Agreements"), duly executed by each Loan Party, together
            with:

                                       44
<PAGE>

                        (A) certificates representing the Pledged Equity
                  referred to therein accompanied by undated stock powers
                  executed in blank and instruments evidencing the Pledged Debt
                  indorsed in blank,

                        (B) proper Financing Statements in form appropriate for
                  filing under the Uniform Commercial Code of all jurisdictions
                  that the Administrative Agent may deem necessary or desirable
                  in order to perfect the Liens created under the Security
                  Agreement, covering the Collateral described in the Security
                  Agreement,

                        (C) completed requests for information, dated on or
                  before the date of the initial Credit Extension, listing the
                  financing statements referred to in clause (B) above and all
                  other effective financing statements filed in the
                  jurisdictions referred to in clause (B) above that name any
                  Loan Party as debtor, together with copies of such other
                  financing statements,

                        (D) evidence of the completion of all other actions,
                  recordings and filings of or with respect to the Security
                  Agreement that the Administrative Agent may deem necessary or
                  desirable in order to perfect the Liens created thereby,

                        (E) the account control agreements ("Account Control
                  Agreements") and the securities account control agreements
                  ("Securities Account Control Agreements"), in each case as
                  referred to in the Security Agreement and duly executed by the
                  appropriate parties, and

                        (F) evidence that all other action that the
                  Administrative Agent may deem necessary or desirable in order
                  to perfect the Liens created under the Security Agreement has
                  been taken (including receipt of duly executed payoff letters,
                  UCC-3 termination statements and landlords' and bailees'
                  waiver and consent agreements);

                  (iv) deeds of trust, trust deeds, deeds to secure debt,
            mortgages, leasehold mortgages and leasehold deeds of trust, in
            substantially the form of Exhibit G (with such changes as may be
            satisfactory to the Administrative Agent and its counsel to account
            for local law matters) and covering the properties listed on
            Schedule 4.01(a)(iv) (together with the Assignments of Leases and
            Rents referred to therein and each other mortgage delivered pursuant
            to Section 6.02, in each case as amended, the "Mortgages"), duly
            executed by the appropriate Loan Party, together with:

                        (A) evidence that counterparts of the Mortgages have
                  been duly executed, acknowledged and delivered and are in form
                  suitable for filing or recording in all filing or recording
                  offices that the Administrative Agent may deem necessary or
                  desirable in order to create a valid first and subsisting Lien
                  on the property described therein in favor of the

                                       45
<PAGE>

                  Administrative Agent for the benefit of the Secured Parties
                  and that all filing, documentary, stamp, intangible and
                  recording taxes and fees have been paid (the Administrative
                  Agent shall be satisfied that, to the extent a property the
                  subject of a Mortgage is not subject to a Land Transfer
                  Agreement, if the Administrative Agent exercises remedies
                  under any Mortgage, upon acceleration, if any, of the
                  Obligations under the Facility, the Administrative Agent may
                  foreclose and sell to a third party free and clear of any
                  interest under any Indian Tribe party to any Material
                  Contract),

                        (B) fully paid Chicago Title Insurance Company and/or
                  Fidelity National Title Company title insurance policies (the
                  "Mortgage Policies") in form and substance, with endorsements
                  and in amounts acceptable to the Administrative Agent, issued,
                  coinsured and reinsured by title insurers acceptable to the
                  Administrative Agent, insuring the Mortgages to be valid first
                  and subsisting Liens on the property described therein, free
                  and clear of all defects (including, but not limited to,
                  mechanics' and materialmen's Liens) and encumbrances,
                  excepting only Permitted Encumbrances and other Liens
                  permitted under the Loan Documents, and providing for such
                  other affirmative insurance (including endorsements for future
                  advances under the Loan Documents, for mechanics' and
                  materialmen's Liens and for zoning of the applicable property)
                  and such coinsurance and direct access reinsurance as the
                  Administrative Agent may deem necessary or desirable,

                        (C) existing form surveys, for which all necessary fees
                  (where applicable) have been paid, and dated no more than 30
                  days before the day of the initial Credit Extension, certified
                  to the Administrative Agent and the issuer of the Mortgage
                  Policies in a manner satisfactory to the Administrative Agent
                  by a land surveyor duly registered and licensed in the States
                  in which the property described in such surveys is located and
                  acceptable to the Administrative Agent, showing all buildings
                  and other improvements, any off-site improvements, the
                  location of any easements, parking spaces, rights of way,
                  building set-back lines and other dimensional regulations and
                  the absence of encroachments, either by such improvements or
                  on to such property, and other defects, other than
                  encroachments and other defects acceptable to the
                  Administrative Agent,

                        (D) copies of all existing environmental site assessment
                  reports (such as "Phase I" reports) and such other existing
                  documents (as identified on Schedule 4.01(a)(iv)(D) hereto)
                  describing the current environmental condition of the
                  properties described in the Mortgages, each in form and
                  substance acceptable to the Administrative Agent,

                        (E) estoppel and consent agreements, in form and
                  substance satisfactory to the Administrative Agent, executed
                  by each of the lessors of the leased real properties listed on
                  Schedule 5.08(d)(i), along with (1) a

                                       46
<PAGE>

                  memorandum of lease in recordable form with respect to such
                  leasehold interest, executed and acknowledged by the owner of
                  the affected real property, as lessor, or (2) evidence that
                  the applicable lease with respect to such leasehold interest
                  or a memorandum thereof has been recorded in all places
                  necessary or desirable, in the Administrative Agent's
                  reasonable judgment, to give constructive notice to
                  third-party purchasers of such leasehold interest, or (3) if
                  such leasehold interest was acquired or subleased from the
                  holder of a recorded leasehold interest, the applicable
                  assignment or sublease document, executed and acknowledged by
                  such holder, in each case in form sufficient to give such
                  constructive notice upon recordation and otherwise in form
                  satisfactory to the Administrative Agent,

                        (F) evidence of the insurance required by the terms of
                  the Mortgages, and

                        (G) evidence that all other action that the
                  Administrative Agent may deem necessary or desirable in order
                  to create valid first and subsisting Liens on the property
                  described in the Mortgages has been taken;

                  (v) (A) a trademark security agreement, in substantially the
            form of Exhibit H-1 (together with each other trademark security
            agreement supplement delivered pursuant to Section 6.12, in each
            case as amended, the "Trademark Security Agreement"), (B) a
            copyright security agreement, in substantially the form of Exhibit
            H-2 (together with each other copyright security agreement
            supplement delivered pursuant to Section 6.12, in each case as
            amended, the "Copyright Security Agreement") and (C) a patent
            security agreement, in substantially the form of Exhibit H-3
            (together with each other patent security agreement supplement
            delivered pursuant to Section 6.12, in each case as amended, the
            "Patent Security Agreement" and, together with the Trademark
            Security Agreement and the Copyright Security Agreement, the
            "Intellectual Property Security Agreements"), in each case, duly
            executed by each relevant Loan Party, together with evidence that
            all action that the Administrative Agent may deem necessary or
            desirable in order to perfect the Liens created under the
            Intellectual Property Security Agreements has been taken;

                  (vi) such certificates of resolutions or other action,
            incumbency certificates and/or other certificates of Responsible
            Officers of each Loan Party as the Administrative Agent may require
            evidencing the identity, authority and capacity of each Responsible
            Officer thereof authorized to act as a Responsible Officer in
            connection with this Agreement and the other Loan Documents to which
            such Loan Party is a party or is to be a party;

                  (vii) such documents and certifications as the Administrative
            Agent may reasonably require to evidence that each Loan Party is
            duly organized or formed, and that each of the Borrower and the
            Guarantors is validly existing, in

                                       47
<PAGE>

            good standing and qualified to engage in business in each
            jurisdiction where its ownership, lease or operation of properties
            or the conduct of its business requires such qualification, except
            to the extent that failure to do so could not reasonably be expected
            to have a Material Adverse Effect;

                  (viii) a favorable opinion of Gray Plant Mooty, counsel to the
            Loan Parties, addressed to the Administrative Agent and each Lender,
            as to the matters set forth in Exhibit I-1 and such other matters
            concerning the Loan Parties and the Loan Documents as the Required
            Lenders may reasonably request;

                  (ix) a favorable opinion of local counsel to the Loan Parties
            in New York, addressed to the Administrative Agent and each Lender,
            as to the matters set forth in Exhibit I-2 and such other matters
            concerning the relevant Loan Parties and the relevant Loan Documents
            as the Required Lenders may reasonably request;

                  (x) the Project Business Plan, in form and substance
            satisfactory to the Administrative Agent;

                  (xi) a certificate of a Responsible Officer of each Loan Party
            either (A) attaching copies of all consents, licenses and approvals
            required in connection with the execution, delivery and performance
            by such Loan Party and the validity against such Loan Party of the
            Loan Documents to which it is a party, and such consents, licenses
            and approvals shall be in full force and effect, or (B) stating that
            no such consents, licenses or approvals are so required;

                  (xii) a certificate signed by a Responsible Officer of the
            Borrower certifying (A) that the conditions specified in Sections
            4.02(a) and (b) have been satisfied and (B) that there has been no
            event or circumstance since the date of the Audited Financial
            Statements that has had or could be reasonably expected to have,
            either individually or in the aggregate, a Material Adverse Effect;

                  (xiii) certificates attesting to the Solvency of each Loan
            Party, from its chief financial officer;

                  (xiv) copies of all existing environmental site assessment
            reports (such as "Phase I" reports) and such other existing
            documents (as identified on Schedule 4.01(a)(xiv) hereto) describing
            the current environmental condition of all properties operated or
            managed by any Loan Parties or their Subsidiaries (other than the
            properties described in the Mortgages, which are addressed under
            Section 4.01(a)(iv) above), each in form and substance acceptable to
            the Administrative Agent;

                  (xv) certified copies of each employment agreement and other
            compensation arrangement with each executive officer of any Loan
            Party or any of its Subsidiaries as the Administrative Agent shall
            request;

                                       48
<PAGE>

                  (xvi) evidence that all insurance required to be maintained
            pursuant to the Loan Documents has been obtained and is in effect,
            together with the certificates of insurance, naming the
            Administrative Agent, on behalf of the Lenders, as an additional
            insured or loss payee, as the case may be, under all insurance
            policies maintained with respect to the assets and properties of the
            Loan Parties that constitutes Collateral;

                  (xvii) a duly completed Compliance Certificate as of the last
            day of the fiscal quarter of Holdings ended April 2, 2006, signed by
            chief executive officer, chief financial officer, treasurer or
            controller of Holdings;

                  (xviii) evidence that the Existing Credit Agreement has been,
            or concurrently with the Closing Date is being, terminated and all
            Liens securing obligations under the Existing Credit Agreement have
            been, or concurrently with the Closing Date are being, released;

                  (xix) a copy of the Management and Consulting Agreements
            certified by a Responsible Officer;

                  (xx) a certified copy of the duly executed release agreement
            between Great Lakes Gaming of Michigan, LLC , Holdings and U.S.
            Bank, National Association in its capacity as trustee for the Four
            Winds-Pokagon Notes and a certificate of a Responsible Officer
            confirming such agreement is in full force and effect; and

                  (xxi) such other assurances, certificates, documents, consents
            or opinions as the Administrative Agent or any Lender reasonably may
            require.

            (b) (i) All fees required to be paid to the Administrative Agent and
      the Arranger on or before the Closing Date shall have been paid and (ii)
      all fees required to be paid to the Lenders on or before the Closing Date
      shall have been paid.

            (c) Unless waived by the Administrative Agent, the Borrower shall
      have paid all fees, charges and disbursements of counsel to the
      Administrative Agent (directly to such counsel if requested by the
      Administrative Agent) to the extent invoiced prior to or on the Closing
      Date, plus such additional amounts of such fees, charges and disbursements
      as shall constitute its reasonable estimate of such fees, charges and
      disbursements incurred or to be incurred by it through the closing
      proceedings (provided that such estimate shall not thereafter preclude a
      final settling of accounts between the Borrower and the Administrative
      Agent), in each case, on such terms as separately agreed between the
      Borrower and the Arranger.

            (d) The Closing Date shall have occurred on or before June 22, 2006.

            (e) All of the information made available to the Administrative
      Agent prior to June 22, 2006 shall be complete and correct in all material
      respects; and no changes or developments shall have occurred, and no new
      or additional information shall have been received or discovered by the
      Administrative Agent or the Lenders regarding Holdings

                                       49
<PAGE>

      and its Subsidiaries after January 1, 2006 that (A) either individually or
      in the aggregate could reasonably be expected to have a Material Adverse
      Effect or (B) purports to adversely affect the Facility, nothing shall
      have come to the attention of the Lenders to lead them to believe that the
      Information Memorandum was or has become misleading, incorrect or
      incomplete in any material respect.

            (f) The Administrative Agent shall be satisfied with the Borrower's
      cash management arrangements (it being acknowledged that the cash
      management arrangements in place as of June 22, 2006 shall be satisfactory
      for the purposes of this condition precedent).

            (g) The issuer of the Four Winds-Pokagon Notes shall have received
      not less than $300,000,000 in gross cash proceeds from the issuance of
      such notes.

            (h) The Lenders shall be satisfied with the Borrower's management
      (it being acknowledged that the management in place as of May 1, 2006
      shall be satisfactory for the purposes of this condition precedent).

Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

            4.02 Conditions to all Credit Extensions. The obligation of each
Lender to honor any Committed Loan Notice (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type, or a continuation of
Eurodollar Rate Loans) is subject to the following conditions precedent:

            (a) The representations and warranties of the Borrower and each
      other Loan Party contained in Article V or any other Loan Document, or
      which are contained in any document furnished at any time under or in
      connection herewith or therewith, shall be true and correct on and as of
      the date of such Credit Extension, except to the extent that such
      representations and warranties specifically refer to an earlier date, in
      which case they shall be true and correct as of such earlier date, and
      except that for purposes of this Section 4.02, the representations and
      warranties contained in Sections 5.05(a) and (b) shall be deemed to refer
      to the most recent financial statements furnished pursuant to Sections
      6.01(a) and (b), respectively.

            (b) No Default shall exist, or would result from such proposed
      Credit Extension or from the application of the proceeds thereof.

            (c) The Administrative Agent shall have received a Committed Loan
      Notice in accordance with the requirements hereof.

            (d) The Administrative Agent shall have received the most recent
      Plan Reconciliation Report.

                                       50
<PAGE>

            (e) The Administrative Agent shall have received such other
      approvals, opinions or documents as any Lender through the Administrative
      Agent may reasonably request.

            Each Committed Loan Notice (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type or a continuation of
Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

            Each of Holdings and the Borrower represents and warrants to the
Administrative Agent and the Lenders that:

            5.01 Existence, Qualification and Power. Each Loan Party and each of
its Subsidiaries (a) is duly organized or formed, validly existing and, as
applicable, in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to (i)
own or lease its assets and carry on its business as currently conducted and
(ii) execute, deliver and perform its obligations under the Loan Documents to
which it is a party, and (c) is duly qualified and is licensed and, as
applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

            5.02 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is or
is to be a party have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien (other than pursuant to
any Loan Document) under, or require any payment to be made under (i) any
Contractual Obligation to which such Person is a party or affecting such Person
or the properties of such Person or any of its Subsidiaries or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (c) violate any Law.

            5.03 Governmental Authorization; Other Consents. No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, (b) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral
Documents, (c) the perfection or maintenance of the Liens created under the
Collateral Documents (including the first priority nature thereof) or (d) the
exercise by the Administrative Agent or any Lender of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents.

                                       51
<PAGE>

            5.04 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject to laws or judicial
decisions relating to or generally affecting the rights of creditors or lenders
and by general principles of equity.

            5.05 Financial Statements; No Material Adverse Effect; No Internal
Control Event. (a) The Audited Financial Statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (ii) fairly present the financial
condition of Holdings as of the date thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other liabilities, direct
or contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.

            (b) The unaudited consolidated and consolidating balance sheets of
Holdings and its Subsidiaries dated April 2, 2006, and the related consolidated
and consolidating statements of income or operations, shareholders' equity and
cash flows for the fiscal quarter ended on that date (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, and (ii) fairly present the
financial condition of Holdings and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby, subject, in the case
of clauses (i) and (ii), to the absence of footnotes and to normal year-end
audit adjustments. Schedule 5.05 sets forth all material indebtedness and other
liabilities, direct or contingent, of Holdings and its consolidated Subsidiaries
as of the date of such financial statements, including liabilities for taxes,
material commitments and Indebtedness.

            (c) Since the date of the Audited Financial Statements, there has
been no event or circumstance, either individually or in the aggregate, that has
had or could reasonably be expected to have a Material Adverse Effect.

            (d) To the best knowledge of Holdings, no Internal Control Event
exists or has occurred since the date of the Audited Financial Statements that
has resulted in or could reasonably be expected to result in a misstatement in
any material respect, in any financial information delivered or to be delivered
to the Administrative Agent or the Lenders, of (i) covenant compliance
calculations provided hereunder or (ii) the assets, liabilities, financial
condition or results of operations of Holdings and its Subsidiaries on a
consolidated basis.

            (e) The consolidated and consolidating pro forma balance sheets of
Holdings and its Subsidiaries as at April 2, 2006, and the related consolidated
and consolidating pro forma statements of income and cash flows of Holdings and
its Subsidiaries for the 12 months then ended, certified by the chief financial
officer or treasurer of the Borrower, copies of which have been furnished to
each Lender, fairly present the consolidated and consolidating pro forma
financial condition of Holdings and its Subsidiaries as at such date and the
consolidated and

                                       52
<PAGE>

consolidating pro forma results of operations of Holdings and its Subsidiaries
for the period ended on such date, all in accordance with GAAP.

            (f) The consolidated and consolidating forecasted balance sheetS,
statements of income and cash flows of Holdings and its Subsidiaries delivered
pursuant to Section 6.01(e) were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, Holdings' best estimate of its future financial
condition and performance.

            5.06 Litigation. Except as set forth in Schedule 5.06, there are no
actions, suits, proceedings, claims or disputes pending or, to the best of
Holdings' knowledge, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against Holdings or any
of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
(b) either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.

            5.07 No Default. Neither any Loan Party nor any Subsidiary thereof
is in default under or with respect to, or a party to, any Contractual
Obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

            5.08 Ownership of Property; Liens; Investments. (a) Each Loan Party
and each of its Subsidiaries has good record and marketable title in fee simple
to, or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business as currently conducted, except for such defects
in title as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

            (b) Schedule 5.08(b) sets forth a complete and accurate list of all
Liens on the property or assets of each Loan Party and each of its Subsidiaries,
showing as of the date hereof the lienholder thereof, the principal amount of
the obligations secured thereby and the property or assets of such Loan Party or
such Subsidiary subject thereto. The property of each Loan Party and each of its
Subsidiaries is subject to no Liens, other than (i) Liens set forth on Schedule
5.08(b), and as otherwise permitted by Section 7.01 and (ii) obligations to
convey properties to Indian Tribes pursuant to the Land Transfer Agreements.

            (c) Schedule 5.08(c) sets forth a complete and accurate list of all
real property owned by each Loan Party and each of its Subsidiaries, showing as
of the date hereof the street address, county or other relevant jurisdiction,
state, record owner and book value thereof. Each Loan Party and each of its
Subsidiaries has good, marketable and insurable fee simple title to the real
property owned by such Loan Party or such Subsidiary, free and clear of all
Liens, other than Liens created or permitted by the Loan Documents.

            (d) (i) Schedule 5.08(d)(i) sets forth a complete and accurate list
of all material leases of real property under which any Loan Party or any
Subsidiary of a Loan Party is

                                       53
<PAGE>

the lessee, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof. Each such lease is the legal, valid and binding obligation of the
lessor thereof, enforceable in accordance with its terms.

            (ii) Schedule 5.08(d)(ii) sets forth a complete and accurate list of
      all leases of real property under which any Loan Party or any Subsidiary
      of a Loan Party is the lessor, showing as of the date hereof the street
      address, county or other relevant jurisdiction, state, lessor, lessee,
      expiration date and annual rental cost thereof. Each such lease is the
      legal, valid and binding obligation of the lessee thereof, enforceable in
      accordance with its terms.

            (e) Schedule 5.08(e) sets forth a complete and accurate list of all
Investments held by any Loan Party or any Subsidiary of a Loan Party on the date
hereof, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.

            5.09 Environmental Compliance. Except as set forth in Schedule 5.09
(a) the Loan Parties and their respective Subsidiaries are each in compliance
with existing Environmental Laws and have obtained and maintain all necessary
permits, consents or authorizations required under Environmental Laws
("Environmental Permits") for the conduct of their respective businesses except
for such noncompliance or failure to obtain Environmental Permits as could not
reasonably be expected, individually or in the aggregate, to result in
Environmental Liability in excess of $500,000. Compliance by the Loan Parties or
their Subsidiaries with all current and reasonably foreseeable future
requirements of Environmental Laws could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;

            (b) none of the Loan Parties or their respective Subsidiaries (and
their respective businesses, assets or properties) is subject to any order or
directive from any Governmental Authority imposing Environmental Liability or to
any pending or, to the knowledge of Holdings, any Loan Party or their
Subsidiaries, threatened judicial or administrative proceeding asserting any
Environmental Liability that, in either case, would reasonably be expected,
individually or in the aggregate, to result in Environmental Liability in excess
of $500,000. Neither Holdings, the Loan Parties or their Subsidiaries has
knowledge of existing facts or circumstances that could reasonably be expected
to lead to the assertion of any such Environmental Liability;

            (c) none of the properties owned or operated by any Loan Party or
any of their Subsidiaries or, to the best knowledge of Holdings, any Loan Party
or their Subsidiaries, any property subject to a Management and Consulting
Agreement, is listed or, to the knowledge of any Loan Party, proposed for
listing on the NPL or on the CERCLIS or any analogous foreign, state or local
list or, to the knowledge of any Loan Party, is adjacent to any such property;

            (d) Hazardous Materials have not been Released (i) by any person on
any property currently owned or operated by any Loan Party or any of its
Subsidiaries or (ii) by any Loan Party or their Subsidiaries or, to the best
knowledge of Holdings, any Loan Party or their Subsidiaries, on any property
subject to a Management and Consulting Agreement, on any other property (whether
or not currently owned, operated or managed by a Loan Party) that, in either

                                       54
<PAGE>

case, would reasonably be expected to require any Loan Party to complete a
Remedial Action or otherwise result in Environmental Liability in excess of
$500,000;

            (e) there are no and never have been any underground or above-ground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by any Loan Party or any of its
Subsidiaries or, to the best of the knowledge of the Loan Parties, on any
property subject to a Management and Consulting Agreement or during the term of
any ownership, operation or management by any Loan Party or their Subsidiaries,
on any property formerly owned or operated by any Loan Party or any of its
Subsidiaries that, in either case, would reasonably be expected to require any
such Loan Party to complete a Remedial Action or otherwise result in
Environmental Liability in excess of $500,000;

            (f) there is no asbestos or asbestos-containing material on any
property currently owned or operated by any Loan Party or any of its
Subsidiaries or, to the best knowledge of Holdings, any Loan Party or their
Subsidiaries, on any property subject to a Management and Consulting Agreement,
in any form or condition that would reasonably be expected to require any such
Loan Party to complete a Remedial Action or otherwise result in Environmental
Liability in excess of $500,000; and

            (g) Neither any Loan Party nor any of its Subsidiaries is
undertaking, and has not completed, either individually or together with other
potentially responsible parties, any Remedial Action relating to any actual or
threatened release, discharge or disposal of Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of any
Governmental Authority or the requirements of any Environmental Law; and all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from any property either currently owned or operated by any
Loan Party or any of its Subsidiaries or any property formerly owned or operated
by any Loan Party or any of its Subsidiaries (solely with respect to the time
such property was owned or operated by any Loan Party or any of its
Subsidiaries), have been disposed of in a manner not reasonably expected to
result in material Environmental Liability.

            5.10 Insurance. The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.

            5.11 Taxes. Except as set forth on Schedule 5.11, Holdings and its
Subsidiaries have filed all Federal, state and other material tax returns and
reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
Holdings or any Subsidiary that would, if made, have a Material Adverse Effect.
Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing
agreement.

                                       55
<PAGE>

            5.12 ERISA Compliance. (a) Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws. Each Plan that is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the IRS or
an application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of the Borrower, nothing has occurred
which would prevent, or cause the loss of, such qualification. The Borrower and
each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.

            (b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

            (c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.

            5.13 Subsidiaries; Equity Interests; Loan Parties. No Loan Party has
any Subsidiaries other than those specifically disclosed in Part (a) of Schedule
5.13 and the Inactive Subsidiaries, and all of the outstanding Equity Interests
in such Subsidiaries have been validly issued, are fully paid and non-assessable
and are owned by a Loan Party in the amounts specified on Part (a) of Schedule
5.13 free and clear of all Liens except those created under the Collateral
Documents. No Loan Party has any equity investments in any other corporation or
entity other than those specifically disclosed in Part (b) of Schedule 5.13. All
of the outstanding Equity Interests in the Borrower have been validly issued,
are fully paid and non-assessable and are owned by Holdings in the amounts
specified on Part (c) of Schedule 5.13 free and clear of all Liens except those
created under the Collateral Documents. Set forth on Part (d) of Schedule 5.13
is a complete and accurate list of all Loan Parties, showing as of the Closing
Date (as to each Loan Party) the jurisdiction of its incorporation, the address
of its principal place of business and its U.S. taxpayer identification number
or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer
identification number, its unique identification number issued to it by the
jurisdiction of its organization. The copy of the charter of each Loan Party and
each amendment thereto provided pursuant to Section 4.01(a)(vii) is a true and
correct copy of each such document, each of which is valid and in full force and
effect.

            5.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act. (a) The Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of purchasing
or carrying margin stock (within the meaning

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of Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock. Following the application of the proceeds
of each Borrowing, not more than 25% of the value of the assets (either of the
Borrower only or of the Borrower and its Subsidiaries on a consolidated basis)
subject to the provisions of Section 7.01 or Section 7.05 or subject to any
restriction contained in any agreement or instrument between the Borrower and
any Lender or any Affiliate of any Lender relating to Indebtedness and within
the scope of Section 8.01(e) will be margin stock.

            (b) None of the Borrower, any Person Controlling the Borrower, or
any Subsidiary (i) is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, or (ii) is or is required to be registered as an
"investment company" under the Investment Company Act of 1940.

            5.15 Disclosure. Holdings has disclosed to the Administrative Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any of its Subsidiaries or any other Loan Party is subject, and
all other matters known to it, in either case, that individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
or under any other Loan Document (in each case as modified or supplemented by
other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected or forecasted financial information,
the Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.

            5.16 Compliance with Laws. Each Loan Party and each Subsidiary
thereof is in compliance in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

            5.17 Intellectual Property; Licenses, Etc. Each Loan Party and each
of its Subsidiaries own, or possess the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
non-governmental licenses and other intellectual property rights (collectively,
"IP Rights") that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person, except for
such infringements and conflicts which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, and Schedule 5.17
sets forth a complete and accurate list as of the Closing Date of all such IP
Rights owned or used by each Loan Party and each of its Subsidiaries. To the
best knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Loan Party or any of its Subsidiaries
infringes upon any

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rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower, threatened,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

            5.18 Solvency. After giving effect to the transactions contemplated
hereby and immediately before and after giving effect to the Borrowings
contemplated by Section 2.01, the Loan Parties together with their Subsidiaries
are, on a consolidated basis, Solvent.

            5.19 Casualty, Etc. Neither the businesses nor the properties of any
Loan Party or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

            5.20 Collateral Documents. The provisions of the Collateral
Documents are effective to create in favor of the Administrative Agent for the
benefit of the Secured Parties a legal, valid and enforceable first priority
Lien (subject to Liens permitted by Section 7.01) on all right, title and
interest of the respective Loan Parties in the Collateral described therein.
Except for filings completed prior to the Closing Date and as contemplated
hereby and by the Collateral Documents, no filing or other action will be
necessary to perfect or protect such Liens.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

            So long as any principal of or interest on any Loan or any other
Obligation (whether or not due) shall remain unpaid or any Lender shall have any
Commitment hereunder, unless the Required Lenders shall otherwise consent in
writing, Holdings and the Borrower will, and will cause each other Loan Party to
(unless the requirement hereunder is expressly that of Holdings or the
Borrower):

            6.01 Reporting Requirements. Furnish, through electronic mail,
facsimile, or delivery, to the Administrative Agent:

            (a) as soon as available and in any event within 45 days after the
end of each fiscal quarter of Holdings and its Subsidiaries commencing with the
first fiscal quarter of Holdings and its Subsidiaries ending after the Closing
Date, unaudited consolidated and unaudited consolidating balance sheets,
unaudited consolidated and unaudited consolidating statements of operations and
retained earnings and unaudited consolidated and unaudited consolidating
statements of cash flows of Holdings and its Subsidiaries as at the end of such
quarter, and for the period commencing at the end of the immediately preceding
fiscal year of Holdings and its Subsidiaries and ending with the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding date or period of the immediately preceding fiscal year of
Holdings and its Subsidiaries, all in reasonable detail and certified by a
Responsible Officer of Holdings as fairly presenting, in all material respects,
the financial position of Holdings and its Subsidiaries as of the end of such
quarter and the results of operations and cash flows of Holdings and its
Subsidiaries for such quarter, in accordance with GAAP applied in a manner
consistent with that of the most recent audited financial statements of

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Holdings and its Subsidiaries furnished to the Administrative Agent and the
Lenders, subject to normal year-end adjustments;

            (b) as soon as available, and in any event within 90 days after the
end of each fiscal year of Holdings and its Subsidiaries, audited consolidated
and unaudited consolidating balance sheets, audited consolidated and unaudited
consolidating statements of operations and retained earnings and audited
consolidated and unaudited consolidating statements of cash flows of Holdings
and its Subsidiaries as at the end of such fiscal year, setting forth in each
case in comparative form the corresponding figures for the immediately preceding
fiscal year, all in reasonable detail and prepared in accordance with GAAP, and
accompanied by a report and an unqualified opinion, prepared in accordance with
generally accepted auditing standards, of independent certified public
accountants of recognized standing selected by Holdings and satisfactory to the
Administrative Agent (which opinion shall be without (A) a "going concern" or
like qualification or exception, or (B) any qualification or exception as to the
scope of such audit, together with a written statement of such accountants (1)
to the effect that, in making the examination necessary for their certification
of such financial statements, they have not obtained any knowledge of the
existence of an Event of Default or a Default and (2) if such accountants shall
have obtained any knowledge of the existence of an Event of Default or such
Default, describing the nature thereof);

            (c) simultaneously with the delivery of the financial statements of
Holdings and its Subsidiaries required by clauses (a) and (b) of this Section
6.01, a certificate of a Responsible Officer of Holdings stating that such
Responsible Officer has reviewed the provisions of this Agreement and the other
Loan Documents and has made or caused to be made under his or her supervision a
review of the condition and operations of Holdings and its Subsidiaries during
the period covered by such financial statements with a view to determining
whether Holdings and its Subsidiaries were in compliance with all of the
provisions of this Agreement and such Loan Documents at the times such
compliance is required hereby and thereby, and that such review has not
disclosed, and such Responsible Officer has no knowledge of, the existence
during such period of an Event of Default or Default or, if an Event of Default
or Default existed, describing the nature and period of existence thereof and
the action which Holdings and its Subsidiaries propose to take or have taken
with respect thereto;

            (d) (A) as soon as available and in any event not later than 60 days
prior to the end of each fiscal year of Holdings and its Subsidiaries, financial
projections, supplementing and superseding the financial projections in the
Project Business Plan, prepared on a monthly basis and otherwise in form and
substance satisfactory to the Administrative Agent, for the immediately
succeeding fiscal year for Holdings and its Subsidiaries and (B) as soon as
available and in any event not later than 30 days prior to the end of each
fiscal quarter of Holdings and its Subsidiaries, financial projections,
supplementing and superseding the financial projections referred to in the
Project Business Plan, prepared on a monthly basis and otherwise in form and
substance satisfactory to the Administrative Agent, for each remaining quarterly
period in such fiscal year of Holdings and its Subsidiaries, all such financial
projections to be reasonable, to be prepared on a reasonable basis and in good
faith, and to be based on assumptions believed by Holdings to be reasonable at
the time made and from the best information then available to Holdings;

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<PAGE>

            (e) as soon as available and in any event within 30 days of the end
of each fiscal quarter of Holdings and its Subsidiaries, a (x) Periodic Project
Development Report (which shall include the same general type of information as
in the Project Business Plan in addition to an update with respect to each
Future Project (a "Periodic Project Development Report"), and all such Periodic
Project Development Reports to be reasonably acceptable to the Administrative
Agent, to be prepared on a reasonable basis and in good faith, and to be based
on assumptions believed by Holdings to be reasonable at the time made and from
the best information then available to Holdings and consistent with all Exchange
Act filings and (y) a Plan Reconciliation Report.

            (f) as soon as possible, and in any event within 3 days after the
occurrence of a breach under or a termination of any of the Management and
Consulting Agreements, any other loan agreement or other agreement with Indian
Tribes, or any Material Contract, in each case by any party thereto, the written
statement of a Responsible Officer of Holdings setting forth the details of
breach or termination and the action which the affected Loan Party proposes to
take with respect thereto;

            (g) promptly after submission to any Governmental Authority, all
documents and information furnished to such Governmental Authority in connection
with any investigation of any Loan Party other than routine inquiries by such
Governmental Authority;

            (h) as soon as possible, and in any event within 3 days after the
occurrence of an Event of Default or Default or the occurrence of any event or
development that could have a Material Adverse Effect, the written statement of
a Responsible Officer of Holdings setting forth the details of such Event of
Default or Default or other event or development having a Material Adverse
Effect and the action which the affected Loan Party proposes to take with
respect thereto;

            (i) (A) as soon as possible and in any event within 10 days after
any Loan Party or any ERISA Affiliate thereof knows or has reason to know that
(1) any Reportable Event with respect to any Pension Plan has occurred, (2) any
other ERISA Event with respect to any Pension Plan has occurred, or (3) an
accumulated funding deficiency has been incurred or an application has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Pension
Plan, a statement of a Responsible Officer of Holdings setting forth the details
of such occurrence and the action, if any, which such Loan Party or such ERISA
Affiliate proposes to take with respect thereto, (B) promptly and in any event
within three days after receipt thereof by any Loan Party or any ERISA Affiliate
thereof from the PBGC, copies of each notice received by any Loan Party or any
ERISA Affiliate thereof of the PBGC's intention to terminate any Plan or to have
a trustee appointed to administer any Plan, (C) promptly and in any event within
10 days after the filing thereof with the IRS if requested by the Administrative
Agent, copies of each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) with respect to each Pension Plan and Multiemployer Plan, (D)
promptly and in any event within 10 days after any Loan Party or any ERISA
Affiliate thereof knows or has reason to know that a required installment within
the meaning of Section 412 of the Code has not been made when due with respect
to a Pension Plan, (E) promptly and in any event within 3 days after receipt
thereof by any Loan Party or any

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<PAGE>

ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or from the PBGC,
a copy of each notice received by any Loan Party or any ERISA Affiliate thereof
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or indicating that such Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA, and (F) promptly and in any event within 10
days after any Loan Party or any ERISA Affiliate thereof sends notice of a plant
closing or mass layoff (as defined in the Worker Adjustment and Retraining
Notification Act) to employees, copies of each such notice sent by such Loan
Party or such ERISA Affiliate thereof;

            (j) promptly after the commencement thereof but in any event not
later than 5 days after service of process with respect thereto on, or the
obtaining of knowledge thereof by, any Loan Party, notice of each action, suit
or proceeding before any court or other Governmental Authority or other
regulatory body or any arbitrator which, if adversely determined, could have a
Material Adverse Effect;

            (k) as soon as possible and in any event within 5 days after
execution, receipt or delivery thereof, copies of any material notices that any
Loan Party executes or receives in connection with any Material Contract;

            (l) as soon as possible and in any event within 5 days after
execution, receipt or delivery thereof, copies of any material notices that any
Loan Party executes or receives in connection with the sale or other Disposition
of the Equity Interests of, or all or substantially all of the assets of, any
Loan Party;

            (m) promptly after the sending or filing thereof, copies of all
statements, reports and other information any Loan Party sends to any holders of
its Indebtedness or its securities or files with the SEC or any national
(domestic or foreign) securities exchange;

            (n) promptly upon receipt thereof, copies of all financial reports
(including, without limitation, management letters), if any, submitted to any
Loan Party by its auditors in connection with any annual or interim audit of the
books thereof; and

            (o) promptly upon request, such other information concerning the
condition or operations, financial or otherwise, of any Loan Party as the
Administrative Agent may from time to time may reasonably request.

            The Borrower hereby acknowledges that (a) the Administrative Agent
and/or the Arranger will make available to the Lenders materials and/or
information provided by or on behalf of the Borrower hereunder (collectively,
"Borrower Materials") by posting the Borrower Materials on IntraLinks or another
similar electronic system (the "Platform") and (b) certain of the Lenders may be
"public-side" Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
"Public Lender"). The Borrower hereby agrees that it will use commercially
reasonable efforts to identify that portion of the Borrower Materials that may
be distributed to the Public Lenders and that (w) all such Borrower Materials
shall be clearly and conspicuously marked "PUBLIC" which, at a minimum, shall
mean that the word "PUBLIC" shall appear prominently on the first page thereof;
(x) by marking Borrower Materials "PUBLIC," the Borrower shall be deemed to have
authorized the

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Administrative Agent, the Arranger and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although it may
be sensitive and proprietary) with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 11.07); (y) all Borrower Materials marked
"PUBLIC" are permitted to be made available through a portion of the Platform
designated "Public Investor;" and (z) the Administrative Agent and the Arranger
shall be entitled to treat any Borrower Materials that are not marked "PUBLIC"
as being suitable only for posting on a portion of the Platform not designated
"Public Investor."

            6.02 Covenant to Guarantee Obligations and Give Security. (a) Upon
the formation or acquisition of any new direct or indirect Subsidiary (other
than an Excluded Subsidiary, any CFC or a Subsidiary that is held directly or
indirectly by a CFC) by any Loan Party, at the Borrower's expense:

            (i) within 10 days after such formation or acquisition, cause such
      Subsidiary, and cause each direct and indirect parent of such Subsidiary
      (if it has not already done so), to duly execute and deliver to the
      Administrative Agent a guaranty or guaranty supplement, in form and
      substance satisfactory to the Administrative Agent, guaranteeing the other
      Loan Parties' obligations under the Loan Documents,

            (ii) within 10 days after such formation or acquisition, furnish to
      the Administrative Agent a description of the real and personal properties
      of such Subsidiary, in detail satisfactory to the Administrative Agent,

            (iii) within 15 days after such formation or acquisition, cause such
      Subsidiary and each direct and indirect parent of such Subsidiary (if it
      has not already done so) to duly execute and deliver to the Administrative
      Agent deeds of trust, trust deeds, deeds to secure debt, mortgages,
      leasehold mortgages, leasehold deeds of trust, Security Agreement
      Supplements, IP Security Agreement Supplements and other security and
      pledge agreements, as specified by and in form and substance satisfactory
      to the Administrative Agent (including delivery of all Pledged Interests
      in and of such Subsidiary, and other instruments of the type specified in
      Section 4.01(a)(iii)), securing payment of all the Obligations of such
      Subsidiary or such parent, as the case may be, under the Loan Documents
      and constituting Liens on all such real and personal properties,

            (iv) within 30 days after such formation or acquisition, cause such
      Subsidiary and each direct and indirect parent of such Subsidiary (if it
      has not already done so) to take whatever action (including the recording
      of mortgages, the filing of Uniform Commercial Code financing statements,
      the giving of notices and the endorsement of notices on title documents)
      may be necessary or advisable in the opinion of the Administrative Agent
      to vest in the Administrative Agent (or in any representative of the
      Administrative Agent designated by it) valid and subsisting Liens on the
      properties purported to be subject to the deeds of trust, trust deeds,
      deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of
      trust, Security Agreement Supplements, IP

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      Security Agreement Supplements and security and pledge agreements
      delivered pursuant to this Section 6.02, enforceable against all third
      parties in accordance with their terms,

            (v) within 60 days after such formation or acquisition, deliver to
      the Administrative Agent, upon the request of the Administrative Agent in
      its sole discretion, a signed copy of a favorable opinion, addressed to
      the Administrative Agent and the other Secured Parties, of counsel for the
      Loan Parties acceptable to the Administrative Agent as to the matters
      contained in clauses (i), (iii) and (iv) above, and as to such other
      matters as the Administrative Agent may reasonably request, and

            (vi) as promptly as practicable after such formation or acquisition,
      deliver, upon the request of the Administrative Agent in its sole
      discretion, to the Administrative Agent with respect to each parcel of
      real property owned or held by the entity that is the subject of such
      formation or acquisition (A) in the case of real property with a Current
      Value of less than $500,000, existing title reports, surveys and
      engineering, soils and other reports, and existing environmental
      assessment reports and (B) in the case of real property with a Current
      Value greater than or equal to $500,000, title reports, surveys and
      engineering, soils and other reports, and environmental assessment
      reports, each in scope, form and substance satisfactory to the
      Administrative Agent, provided, however, that, in each case, to the extent
      that any Loan Party or any of its Subsidiaries shall have otherwise
      received any of the foregoing items with respect to such real property,
      such items shall, promptly after the receipt thereof, be delivered to the
      Administrative Agent.

            (b) Upon the acquisition of any property by any Loan Party (other
than After Acquired Property with a Current Value of less than $500,000, if such
property, in the judgment of the Administrative Agent, shall not already be
subject to a perfected first priority security interest in favor of the
Administrative Agent for the benefit of the Secured Parties, at the Borrower's
expense:

            (i) within 10 days after such acquisition, furnish to the
      Administrative Agent a description of the property so acquired in detail
      satisfactory to the Administrative Agent,

            (ii) within 15 days after such acquisition, cause the applicable
      Loan Party to duly execute and deliver to the Administrative Agent deeds
      of trust, trust deeds, deeds to secure debt, mortgages, leasehold
      mortgages, leasehold deeds of trust, Security Agreement Supplements, IP
      Security Agreement Supplements and other security and pledge agreements,
      as specified by and in form and substance satisfactory to the
      Administrative Agent, securing payment of all the Obligations of the
      applicable Loan Party under the Loan Documents and constituting Liens on
      all such properties,

            (iii) within 30 days after such acquisition, cause the applicable
      Loan Party to take whatever action (including the recording of mortgages,
      the filing of Uniform Commercial Code financing statements, the giving of
      notices and the endorsement of notices on title documents) may be
      necessary or advisable in the opinion of the Administrative Agent to vest
      in the Administrative Agent (or in any representative of the

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      Administrative Agent designated by it) valid and subsisting Liens on such
      property, enforceable against all third parties,

            (iv) within 60 days after such acquisition, deliver to the
      Administrative Agent, upon the request of the Administrative Agent in its
      sole discretion, a signed copy of a favorable opinion, addressed to the
      Administrative Agent and the other Secured Parties, of counsel for the
      Loan Parties acceptable to the Administrative Agent as to the matters
      contained in clauses (ii) and (iii) above and as to such other matters as
      the Administrative Agent may reasonably request, and

            (v) as promptly as practicable after any acquisition of a real
      property, deliver, upon the request of the Administrative Agent in its
      sole discretion, to the Administrative Agent with respect to such real
      property (A) in the case of real property with a Current Value of less
      than $500,000, existing title reports, surveys and engineering, soils and
      other reports, and existing environmental assessment reports and (B) in
      the case of real property with a Current Value greater than or equal to
      $500,000, title reports, surveys and engineering, soils and other reports,
      and environmental assessment reports, each in scope, form and substance
      satisfactory to the Administrative Agent, provided, however, that, in each
      case, to the extent that any Loan Party or any of its Subsidiaries shall
      have otherwise received any of the foregoing items with respect to such
      real property, such items shall, promptly after the receipt thereof, be
      delivered to the Administrative Agent,

            (c) Upon the request of the Administrative Agent following the
occurrence and during the continuance of a Default, at the Borrower's expense
and with respect to any or all Collateral the subject of the Loan Documents:

            (i) within 10 days after such request, furnish to the Administrative
      Agent a description of the real and personal properties of the Loan
      Parties and their respective Subsidiaries in detail satisfactory to the
      Administrative Agent,

            (ii) within 15 days after such request, duly execute and deliver,
      and cause each Loan Party (if it has not already done so) to duly execute
      and deliver, to the Administrative Agent deeds of trust, trust deeds,
      deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of
      trust, Security Agreement Supplements, IP Security Agreement Supplements
      and other security and pledge agreements, as specified by and in form and
      substance satisfactory to the Administrative Agent (including delivery of
      all Pledged Interests in and of such Subsidiary, and other instruments of
      the type specified in Section 4.01(a)(iii)), securing payment of all the
      Obligations of the applicable Loan Party under the Loan Documents and
      constituting Liens on all such properties,

            (iii) within 30 days after such request, take, and cause each Loan
      Party to take, whatever action (including the recording of mortgages, the
      filing of Uniform Commercial Code financing statements, the giving of
      notices and the endorsement of notices on title documents) may be
      necessary or advisable in the opinion of the Administrative Agent to vest
      in the Administrative Agent (or in any representative of the
      Administrative Agent designated by it) valid and subsisting Liens on the
      properties purported to be subject to

                                       64
<PAGE>

      the deeds of trust, trust deeds, deeds to secure debt, mortgages,
      leasehold mortgages, leasehold deeds of trust, Security Agreement
      Supplements, IP Security Agreement Supplements and security and pledge
      agreements delivered pursuant to this Section 6.02, enforceable against
      all third parties in accordance with their terms,

            (iv) within 60 days after such request, deliver to the
      Administrative Agent, upon the request of the Administrative Agent in its
      sole discretion, a signed copy of a favorable opinion, addressed to the
      Administrative Agent and the other Secured Parties, of counsel for the
      Loan Parties acceptable to the Administrative Agent as to the matters
      contained in clauses (ii) and (iii) above, and as to such other matters as
      the Administrative Agent may reasonably request, and

            (v) as promptly as practicable after such request, deliver, upon the
      request of the Administrative Agent in its sole discretion, to the
      Administrative Agent with respect to each parcel of real property owned or
      held by the Borrower and its Subsidiaries, title reports, surveys and
      engineering, soils and other reports, and environmental assessment
      reports, each in scope, form and substance satisfactory to the
      Administrative Agent, provided, however, that to the extent that any Loan
      Party or any of its Subsidiaries shall have otherwise received any of the
      foregoing items with respect to such real property, such items shall,
      promptly after the receipt thereof, be delivered to the Administrative
      Agent.

            (d) At any time upon request of the Administrative Agent, promptly
execute and deliver any and all further instruments and documents and take all
such other action as the Administrative Agent may deem necessary or desirable in
obtaining the full benefits of, or (as applicable) in perfecting and preserving
the Liens of, such guaranties, deeds of trust, trust deeds, deeds to secure
debt, mortgages, leasehold mortgages, leasehold deeds of trust, Security
Agreement Supplements, IP Security Agreement Supplements and other security and
pledge agreements.

            6.03 Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws
(including, without limitation, IGRA and any regulations promulgated thereunder
by the National Indian Gaming Commission pursuant thereto, the tribal-state
gaming compact in any relevant state and any regulations referenced therein, and
any other federal or state law that relates or applies to Indian gaming and any
federal or state law that relates or applies to on-line gaming), rules,
regulations, orders (including, without limitation, all Environmental Laws
judgments and awards (including any settlement of any claim that, if breached,
could give rise to any of the foregoing), such compliance to include, without
limitation, (i) paying before the same become delinquent all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or upon any of its properties, and (ii) paying all lawful claims which if unpaid
might become a Lien or charge upon any of its properties, except to the extent
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof in
accordance with GAAP.

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            6.04 Preservation of Existence, Etc. Except as otherwise permitted
by Section 7.03, maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, its existence, rights and privileges and become or
remain, and cause each of its Subsidiaries to become or remain, duly qualified
(except where failure to be so qualified could not reasonably be expect to give
rise to a Material Adverse Effect) and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary.

            6.05 Use of Proceeds. Use the proceeds of the Credit Extensions for
general corporate purposes of any Loan Party not in contravention of any Law or
of any Loan Document.

            6.06 Inspection Rights. Permit, and cause each of its Subsidiaries
to permit, the agents and representatives of the Administrative Agent at any
time and from time to time during normal business hours and upon reasonable
advance notice (it being understood that during the continuance of an Event of
Default such notice may be shorter), at the expense of the Borrower, to examine
and make copies of and abstracts from its records and books of account, to visit
and inspect its properties, to verify materials, leases, notes, accounts
receivable, deposit accounts and its other assets, to conduct audits, physical
counts, valuations, appraisals, Phase I Environmental Site Assessments or
examinations and to discuss its affairs, finances and accounts with any of its
directors, officers, managerial employees, independent accountants or any of its
other representatives; provided, that the prior approval of the Borrower (which
approval shall not be unreasonably withheld) shall be required for any such
agents or representatives of the Administrative Agent to test or sample soils,
ground water, surface water, sediments or discharges at such properties. In
furtherance of the foregoing, each Loan Party hereby authorizes its independent
accountants, and the independent accountants of each of its Subsidiaries, to
discuss the affairs, finances and accounts of such Person (independently or
together with representatives of such Person) with the agents and
representatives of the Administrative Agent in accordance with this Section
6.06.

            6.07 Maintenance of Properties, Etc. Except as otherwise permitted
by Section 7.03, maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties which are necessary or useful in
the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply
in all material respects, at all times with the provisions of all leases to
which it is a party as lessee or under which it occupies property, so as to
prevent any loss or forfeiture thereof or thereunder.

            6.08 Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any Governmental
Authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Administrative Agent. All policies covering the Collateral
are to be made payable to the Administrative Agent for the benefit of the
Lenders, as its interests may appear, in case of loss, under a standard
non-

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contributory "lender" or "secured party" clause and are to contain such other
provisions as the Administrative Agent may require to fully protect the Lenders'
interest in the Collateral and to any payments to be made under such policies.
All certificates of insurance are to be delivered to the Administrative Agent
and the policies are to be premium prepaid, with the loss payable and additional
insured endorsement in favor of the Administrative Agent and such other Persons
as the Administrative Agent may designate from time to time, and shall provide
that the insurer shall endeavor to give not less than 30 days' prior written
notice to the Administrative Agent of the exercise of any right of cancellation.
If any Loan Party or any of its Subsidiaries fails to maintain such insurance,
the Administrative Agent may arrange for such insurance, but at the Borrower's
expense and without any responsibility on the Administrative Agent's part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent shall have the sole
right, in the name of the Lenders, any Loan Party and its Subsidiaries, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

            6.09 Obtaining of Permits, Etc. Obtain, maintain and preserve, and
cause each of its Subsidiaries to obtain, maintain and preserve, and take all
necessary action to timely renew, all material permits, licenses,
authorizations, approvals, entitlements and accreditations which are necessary
or useful in the proper conduct of its business including, making modifications
to any Management and Consulting Agreements requested by the Chairman of the
National Indian Gaming Commission for the purposes of ensuring any material
permit, license, authorization, approval, entitlement and accreditation remains
in full force and effect.

            6.10 Environmental. (i) Keep any property either owned or operated
by it or any of its Subsidiaries free of any Environmental Liens; (ii) comply,
and cause each of its Subsidiaries to comply, in all material respects with
Environmental Laws and provide to the Administrative Agent any documentation of
such compliance which the Administrative Agent may reasonably request; (iii)
provide the Administrative Agent written notice within five (5) Business Days of
its or any of its Subsidiaries' discovery, or receipt of notice, of any Release
of a Hazardous Material in excess of any reportable quantity from or onto
property owned, operated or managed by it or any of its Subsidiaries and take
any Remedial Actions required to abate said Release; (iv) provide the
Administrative Agent with written notice within ten (10) Business Days of the
receipt of any of the following: (A) notice that an Environmental Lien has been
filed against any property of any Loan Party or any of its Subsidiaries; (B)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Loan Party or any of its Subsidiaries; and (C) notice
of a violation, citation or other administrative order which could have a
Material Adverse Effect and (v) defend, indemnify and hold harmless the
Administrative Agent and the Lenders and their transferees, and their respective
employees, agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses
(including, without limitation, attorney and consultant fees, investigation and
laboratory fees, court costs and litigation expenses) arising out of (A) the
generation, presence, disposal, Release or threatened Release of any Hazardous
Materials by any Loan Party, their Subsidiaries, their business or operations or
on, under, in, originating or

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<PAGE>

emanating from any property owned or operated by any Loan Party or any of its
Subsidiaries (or its predecessors in interest or title), (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to the presence or Release of such Hazardous Materials, (C) any
request for information, investigation, lawsuit brought or threatened,
settlement reached or order by a Governmental Authority relating to the presence
or Release of such Hazardous Materials, (D) any violation of any Environmental
Law by any Loan Party or Subsidiaries or their businesses or operations and/or
(E) any Environmental Action filed against the Administrative Agent or any
Lender relating to any of the foregoing.

            6.11 Further Assurances. Take such action and execute, acknowledge
and deliver, and cause each of its Subsidiaries to take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Administrative Agent may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement and the other Loan Documents, (ii) to subject to
valid and perfected first priority Liens, subject to Permitted Liens, any of the
Collateral, (iii) to establish and maintain the validity and effectiveness of
any of the Loan Documents and the validity, perfection and priority of the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer and confirm unto the Administrative Agent and each Lender the
rights now or hereafter intended to be granted to it under this Agreement or any
other Loan Document. In furtherance of the foregoing, to the maximum extent
permitted by applicable law, each Loan Party (i) authorizes the Administrative
Agent to execute any such agreements, instruments or other documents in such
Loan Party's name and to file such agreements, instruments or other documents in
any appropriate filing office, (ii) authorizes the Administrative Agent to file
any financing statement required hereunder or under any other Loan Document, and
any continuation statement or amendment with respect thereto, in any appropriate
filing office without the signature of such Loan Party, and (iii) ratifies the
filing of any financing statement, and any continuation statement or amendment
with respect thereto, filed without the signature of such Loan Party prior to
the date hereof.

            6.12 Change in Collateral; Collateral Records. (i) Give the
Administrative Agent not less than 30 days' prior written notice of any change
in the location of any Collateral and with respect to which the Administrative
Agent has filed financing statements and otherwise fully perfected its Liens
thereon, (ii) advise the Administrative Agent promptly, in sufficient detail, of
any material adverse change relating to the type, quantity or quality of the
Collateral or the Lien granted thereon and (iii) execute and deliver, and cause
each of its Subsidiaries to execute and deliver, to the Administrative Agent for
the benefit of the Lenders from time to time, solely for the Administrative
Agent's convenience in maintaining a record of Collateral, such written
statements and schedules as the Administrative Agent may reasonably require,
designating, identifying or describing the Collateral.

            6.13 Subordination. Cause all Indebtedness and other obligations now
or hereafter owed by it to any of its Affiliates, to be subordinated in right of
payment and security to the Obligations owing to the Administrative Agent and
the Lenders in accordance with a subordination agreement in form and substance
satisfactory to the Administrative Agent.

            6.14 After Acquired Real Property. Upon the acquisition by it or any
of its Subsidiaries after the date hereof of any fee-owned interest (whether fee
or leasehold) in any real

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property (wherever located) (each such fee-owned interest being an "After
Acquired Property") with a Current Value (as defined below) individually in
excess of $500,000, immediately so notify the Administrative Agent, setting
forth with specificity a description of the fee-owned interest acquired, the
location of the real property, any structures or improvements thereon and either
an appraisal or such Loan Party's good-faith estimate of the current value of
such real property (for purposes of this Section, the "Current Value"). The
Administrative Agent shall notify such Loan Party whether it intends to require
a Mortgage and the other documents referred to below. Upon receipt of such
notice requesting a Mortgage, the Person which has acquired such After Acquired
Property shall promptly furnish to the Administrative Agent the following, each
in form and substance satisfactory to the Administrative Agent: (i) a Mortgage
with respect to such real property and related assets located at the After
Acquired Property, each duly executed by such Person and in recordable form;
(ii) evidence of the recording of the Mortgage referred to in clause (i) above
in such office or offices as may be necessary or, in the opinion of the
Administrative Agent, desirable to create and perfect a valid and enforceable
first priority lien (subject to Permitted Liens) on the property purported to be
covered thereby or to otherwise protect the rights of the Administrative Agent
and the Lenders thereunder, (iii) a Mortgage Policy, (iv) a survey of such real
property, certified to the Administrative Agent and to the issuer of the
Mortgage Policy by a licensed professional surveyor reasonably satisfactory to
the Administrative Agent, (v) Phase I Environmental Site Assessments with
respect to such real property, certified to the Administrative Agent by a
company reasonably satisfactory to the Administrative Agent, and (vi) such other
documents or instruments (including guarantees and opinions of counsel) as the
Administrative Agent may reasonably require. The Borrower shall pay all fees and
expenses, including reasonable attorneys' fees and expenses, and all title
insurance charges and premiums, in connection with each Loan Party's obligations
under this Section.

            6.15 Fiscal Year. Maintain the existing fiscal year-end of Holdings
and its Subsidiaries.

            6.16 Inactive Subsidiaries. In the event the Inactive Subsidiaries
have assets, the aggregate fair market value of which exceeds $100,000, cause
one or more Inactive Subsidiaries to execute and deliver a Guaranty to the
Administrative Agent such that the aggregate fair market value of the assets of
the remaining Inactive Subsidiaries does not exceed $100,000. Upon delivery of
such Guaranty, such Inactive Subsidiary shall be deemed to be a Subsidiary and a
Loan Party.

            6.17 New Subsidiaries. In the event a Loan Party shall create, form,
acquire or otherwise own an additional or new Subsidiary, Holdings shall give
notice to the Administrative Agent of its creation, formation, acquisition or
other ownership such new Subsidiary. If such Subsidiary is formed for the
purpose of being a party to or a beneficiary of a contract, instrument or other
agreement with an Indian Tribe and Holdings desires that such new Subsidiary be
an Excluded Subsidiary, then such notice shall contain a representation of
Holdings that Holdings has consulted with a reputable counsel with an expertise
in Indian gaming matters and that upon advice of such counsel, a pledge of the
Equity Interests of such new Subsidiary would reasonably be expected to require
the review or approval of an Indian gaming authority.

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<PAGE>

            6.18 Interest Rate Hedging. Within 45 days after the Closing Date,
enter into and maintain at all times thereafter, interest rate Swap Contracts
with Persons acceptable to the Administrative Agent, covering a notional amount
of (a) not less than 100% of the aggregate outstanding Indebtedness for borrowed
money, and providing for such Persons to make payments thereunder for an initial
period of no less than 18 months and (b) thereafter, not less than 50% of the
aggregate outstanding Indebtedness for borrowed money, and providing for such
Persons to make payments thereunder.

            6.19 Lien Searches. Promptly following receipt of the acknowledgment
copy of any financing statements filed under the Uniform Commercial Code in any
jurisdiction by or on behalf of the Secured Parties, deliver to the
Administrative Agent completed requests for information listing such financing
statement and all other effective financing statements filed in such
jurisdiction that name any Loan Party as debtor, together with copies of such
other financing statements.

            6.20 Cash Collateral Accounts. Maintain, and cause each of the other
Loan Parties to maintain, all Cash Collateral Accounts with Bank of America or
another commercial bank located in the United States as determined by the
Borrower, which has accepted the assignment of such accounts to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
terms of the Security Agreement.

            6.21 Interest Reserve Account.

            (a) On the Closing Date, the Borrower shall deposit $19,000,000 in
the Interest Reserve Account in order to fund the first 18 months of interest
under the Loans (such amount, the "Interest Reserve Deposit"). The Interest
Reserve Deposit shall on a quarterly basis be rebalanced to take into account
reduced or increased interest costs, in a manner satisfactory to the
Administrative Agent and the Borrower, and for the purpose of calculating the
Interest Reserve Deposit for any period, the Eurodollar Rate for a three-month
Interest Period available on the last Business Day of each quarter shall be used
with respect to each Eurodollar Rate Loan, subject to any Secured Hedge
Agreement entered into in connection with Section 6.18.

            (b) The Interest Reserve Deposit shall be increased on the last
Business Day of each quarter to the extent that the Borrower has not complied
with the requirements set forth in Section 6.18 by depositing additional amounts
in the Interest Reserve Account in an amount equal to the product of (i) a
composite per annum rate calculated from (x) the Eurodollar Rate for the
twelve-month Interest Period available on the last Business Day of such quarter
minus (y) the Eurodollar Rate for the three-month Interest Period available on
the last Business Day of such quarter times (ii) all outstanding Loans that are
not subject to Interest Rate Protection pursuant to Section 6.18.

            (c) The Borrower shall be entitled to make withdrawals from the
Interest Reserve Account (i) to make scheduled interest payments on the Loans,
(ii) to make payment on the outstanding principal amount of, and accrued
interest on, the Loans on the Maturity Date, or, if the Loans become due and
payable in full earlier than the Maturity Date due to acceleration or otherwise,
on such date of maturity, and (iii) on the last Business Day of each quarter in
respect of amounts therein that are in excess of those required to be on deposit
at such time.

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Additionally, the Interest Reserve Account shall be subject to a first priority
lien pursuant to the Security Agreement in favor of the Administrative Agent on
behalf of the Lenders.

            6.22 Net Cash Proceeds of Management and Consulting Agreements,
Management Promissory Notes. Immediately upon the receipt thereof, the Borrower
shall deposit in the Cash Collateral Accounts all Net Cash Proceeds it or any
other Loan Party receives pursuant to (i) any Management and Consulting
Agreement, and (ii) any Management Promissory Note.

            6.23 Net Cash Proceeds of World Poker Collateral Shares. Immediately
upon the receipt thereof, the Borrower shall deposit in the WPT Cash Collateral
Account all Net Cash Proceeds it or any other Loan Party receives upon any
Disposition of World Poker Collateral Shares.

            6.24 Post-Closing Obligations.

            (a) Each of Holdings and Borrower shall use its commercially
reasonable efforts to effect the patent, trademark and copyright changes or
releases listed on Schedule 6.24 hereto within 60 days of the Closing Date (or
as soon as practicable thereafter).

            (b) Borrower shall execute all documents, provide all necessary
information and do all things requested by the Administrative Agent to open and
establish the WPT Cash Collateral Account within 3 Business Days of the Closing
Date.

                                   ARTICLE VII
                               NEGATIVE COVENANTS

            So long as any principal of or interest on any Loan or any other
Obligation (whether or not due) shall remain unpaid or any Lender shall have any
Commitment hereunder, each Loan Party shall not, unless the Required Lenders
shall otherwise consent in writing:

            7.01 Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien
upon or with respect to any of its properties, whether now owned or hereafter
acquired; file or suffer to exist under the Uniform Commercial Code or any
similar law or statute of any jurisdiction, a financing statement (or the
equivalent thereof) that names it or any of its Subsidiaries as debtor; sign or
suffer to exist any security agreement authorizing any secured party thereunder
to file such financing statement (or the equivalent thereof); sell any of its
property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable) with recourse to it or any of its Subsidiaries or assign or
otherwise transfer, or permit any of its Subsidiaries to assign or otherwise
transfer, any account or other right to receive income; other than, as to all of
the above, Permitted Liens.

            7.02 Indebtedness.

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            (a) Create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain liable with respect to, or permit any of its
Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise
become or remain liable with respect to, any Indebtedness other than Permitted
Indebtedness.

            (b) Forgive any Indebtedness owed to any Loan Party on the date
hereof except (i) in the ordinary course of business and consistent with past
practice or (ii) if otherwise consented to by the Required Lenders.

            7.03 Fundamental Changes; Dispositions. Wind-up, liquidate or
dissolve, or merge, consolidate or amalgamate with any Person, or convey, sell,
lease or sublease, transfer or otherwise dispose of, whether in one transaction
or a series of related transactions, all or any part of its business, property
or assets, whether now owned or hereafter acquired (or agree to do any of the
foregoing), or purchase or otherwise acquire, whether in one transaction or a
series of related transactions, all or substantially all of the assets of any
Person (or any division thereof) (or agree to do any of the foregoing), or
permit any of its Subsidiaries to do any of the foregoing; provided, however,
that

            (a) any wholly-owned Subsidiary of any Loan Party (other than the
Borrower) may be merged into such Loan Party or another wholly-owned Subsidiary
of such Loan Party, or may consolidate with another wholly-owned Subsidiary of
such Loan Party, so long as (A) no other provision of this Agreement would be
violated thereby, (B) such Loan Party gives the Administrative Agent at least 60
days' prior written notice of such merger or consolidation, (C) no Default or
Event of Default shall have occurred and be continuing either before or after
giving effect to such transaction, (D) the Lenders' rights in any Collateral,
including, without limitation, the existence, perfection and priority of any
Lien thereon, are not adversely affected by such merger or consolidation and (E)
if not a Loan Party, the surviving Subsidiary, if any, is a party to a Guaranty
and a Security Agreement and the Equity Interests of which Subsidiary (other
than an Excluded Subsidiary) is the subject of a Pledge Agreement, in each case,
which is in full force and effect on the date of and immediately after giving
effect to such merger or consolidation;

            (b) any Loan Party and its Subsidiaries may (A) sell inventory in
the ordinary course of business, and (B) dispose of obsolete or worn-out
equipment in the ordinary course of business;

            (c) (A) Holdings may sell any number of shares of the Equity
Interests of Holdings and (B) notwithstanding any provision in any Loan Document
to the contrary, unless, a Default or Event of Default shall have occurred and
be continuing, the Loan Parties may sell World Poker Shares (so long as the Net
Cash Proceeds of any sale of World Poker Collateral Shares shall be applied in
accordance with Section 6.23).

            (d) the Loan Parties may release, transfer, or convey real property
not constituting Collateral. Notwithstanding anything to the contrary contained
herein or in any other Loan Documents, to the extent any Loan Party has any
obligation under any Land Transfer Agreement to release properties to an Indian
Tribe relating to any Project, the Administrative Agent shall release such
properties or Mortgages thereon upon such events or at such dates.

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            7.04 Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any change in the nature of its business.

            7.05 Loans, Advances, Investments, Etc. Make or commit or agree to
make any loan, advance, guarantee of obligations, other extension of credit or
capital contributions to, or hold or invest in or commit or agree to hold or
invest in, or purchase or otherwise acquire or commit or agree to purchase or
otherwise acquire any shares of the Equity Interests, bonds, notes, debentures
or other securities of, or make or commit or agree to make any other investment
in, any other Person, or purchase or own any futures contract or otherwise
become liable for the purchase or sale of currency or other commodities at a
future date in the nature of a futures contract, or permit any of its
Subsidiaries to do any of the foregoing, except for: (i) in connection with any
Existing Project, any loan, advance, guarantee of obligations or other extension
of credit (A) outstanding as of the Closing Date as listed on Schedule 5.08(e),
(B) to be made following the Closing Date as contemplated by and in accordance
with the Business Plan (but not including any Contingent Obligation of any Loan
Party related to any Projects except the Pawnee Guaranty and Permitted Project
Credit Support), (ii) in connection with any Future Projects, any loan, advance,
guarantee of obligations or other extensions of credit (which together with
Capital Expenditures pursuant to Section 7.07 below shall not exceed $5,000,000
in respect of Future Projects developed in accordance with the terms hereof),
(iii) in connection with any Projects, any loan, advance, guarantee of
obligations or other extensions of credit otherwise made with the written
consent of the Required Lenders (not to be unreasonably withheld if no Event of
Default shall have occurred and be continuing), (iv) the Pawnee Guaranty, (v)
investments existing on the date hereof, as set forth on Schedule 5.08(e)
hereto, but not any increase in the amount thereof as set forth in such Schedule
or any other modification of the terms thereof, (vi) temporary loans and
advances by Holdings to a Subsidiary (in accordance with the Business Plan) that
owns a Project developed or to be developed in accordance herewith, (vii)
investments in Cash Equivalents (viii) Investments in Subsidiaries (other than
World Poker and Inactive Subsidiaries), provided each such Subsidiary is a Loan
Party and Investments in Inactive Subsidiaries in an aggregate amount for all
such Inactive Subsidiaries not to exceed $100,000 at any one time, and (ix)
loans and advances to employees for moving, entertainment, travel and other
similar expenses in the ordinary course of business not to exceed $250,000 in
the aggregate at any time outstanding.

            7.06 Lease Obligations. Create, incur or suffer to exist, or permit
any of its Subsidiaries to create, incur or suffer to exist, any obligations as
lessee (i) for the payment of rent for any real or personal property in
connection with any sale and leaseback transaction, or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease other
than (A) Capitalized Lease Obligations which would not cause the aggregate
amount of all obligations under Capitalized Leases entered into after the
Closing Date owing by all Loan Parties and their Subsidiaries in any fiscal year
of Holdings and its Subsidiaries to exceed the amounts set forth in Section
7.07, and (B) Operating Lease Obligations (other than the Corporate Aircraft
Lease Agreement or any renewal thereof, which renewal shall not give rise to any
Operating Lease Obligations greater than those in existence as of the date
hereof under the Corporate Aircraft Lease Agreement) which would not cause the
aggregate amount of all Operating Lease Obligations owing by all Loan Parties
and their Subsidiaries in any fiscal year of Holdings and its Subsidiaries to
exceed $200,000.

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<PAGE>

            7.07 Capital Expenditures. Make or commit or agree to make, or
permit any of its Subsidiaries to make or commit or agree to make, (i) any
Capital Expenditure (by purchase or Capitalized Lease) that would cause the
aggregate amount of all Capital Expenditures made by the Loan Parties and their
Subsidiaries to exceed (A) $2,500,000 in any fiscal year or (B) together with
any loans, advances, guarantees of obligations or other extensions of credit
pursuant to clause (i) of Section 7.05 above in respect of Future Projects
developed in accordance with the terms hereof, $5,000,000 in aggregate during
the term of the Loan, and (ii) any Capital Expenditures not disclosed to the
Administrative Agent with respect to any Project permitted under the terms
hereof prior to the date hereof unless otherwise consented to by the Required
Lenders, which consent shall not be unreasonably withheld.

            7.08 Restricted Payments. (i) Declare or pay any dividend or other
distribution, direct or indirect, on account of any Equity Interests of any Loan
Party or any of its Subsidiaries, now or hereafter outstanding, (ii) make any
repurchase, redemption, retirement, defeasance, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Equity
Interests of any Loan Party or any direct or indirect parent of any Loan Party,
now or hereafter outstanding, (iii) make any payment to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights for the purchase
or acquisition of shares of any class of Equity Interests of any Loan Party, now
or hereafter outstanding, (iv) return any Equity Interests to any shareholders
or other equity holders of any Loan Party or any of its Subsidiaries, or make
any other distribution of property, assets, shares of Equity Interests,
warrants, rights, options, obligations or securities thereto as such or (v) pay
any management fees or any other fees or expenses (including the reimbursement
thereof by any Loan Party or any of its Subsidiaries) pursuant to any
management, consulting or other services agreement to any of the shareholders or
other equityholders of any Loan Party or any of its Subsidiaries or other
Affiliates, or to any other Subsidiaries or Affiliates of any Loan Party;
provided, however, (A) any Loan Party may pay dividends or distributions to
Holdings (1) in amounts necessary to pay customary expenses of Holdings in the
ordinary course of its business as a public holding company (including salaries
and related reasonable and customary expenses incurred by employees of Holdings)
and (2) to the extent that the Borrower or its Subsidiaries are treated as a
pass-through entity or disregarded entity for United States federal and/or state
income tax purposes or a member of a consolidated or combined group with
Holdings for United States federal or state income tax purposes, in amounts
necessary to pay income taxes (including taxes imposed on or measured in whole
or in part by overall net income (however denominated), and franchise taxes
imposed in lieu of net income taxes) payable by Holdings, but only to the extent
such income taxes payable by Holdings are attributable to the taxable income of
Holdings and its Subsidiaries and in no event in excess of the amount of such
income taxes that the Borrower and its Subsidiaries would have paid if they were
filing tax returns on their own (applying the concepts of Section 1561 of the
Code as if Borrower and its Subsidiaries were corporations) and (B) any
Subsidiary of the Borrower may pay dividends or distributions to the Borrower,
(C) any Loan Party may fulfill its contractual obligations owing to Kevin M.
Kean and/or Jerry A. Argovitz under agreements existing as of the Closing Date,
as they may be amended, restated or replaced from time to time (such amendments,
restatements or replacements shall not increase the Loan Parties' obligations to
such Persons by more than $500,000, without the written consent of the Required
Lenders) and (D) Holdings may fulfill its obligations under the Existing Equity
Rights; provided that, in each case of clauses (A) and (B) above, at the
election of the Administrative Agent, which the Administrative Agent may and,
upon the direction of the

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Required Lenders, shall make by notice to Holdings, no such payment shall be
made if an Event of Default shall have occurred and be continuing or would
result from the making of any such payment.

            7.09 Federal Reserve Regulations. Permit any Loan or the proceeds of
any Loan under this Agreement to be used for any purpose that would cause such
Loan to be a margin loan under the provisions of Regulation T, U or X of the
FRB.

            7.10 Transactions with Affiliates. Enter into, renew, extend or be a
party to, or permit any of its Subsidiaries to enter into, renew, extend or be a
party to, any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any Affiliate,
except (i) in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
operation of its business, for fair consideration and on terms no less favorable
to it or its Subsidiaries than would be obtainable in a comparable arm's length
transaction with a Person that is not an Affiliate thereof, (ii) transactions
with another Loan Party, including, without limitation, transactions involving
Permitted Indebtedness and (iii) transactions permitted by Section 7.05.

            7.11 Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. Create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends
or to make any other distribution on any shares of Equity Interests of such
Subsidiary owned by any Loan Party or any of its Subsidiaries, (ii) to pay or
prepay or to subordinate any Indebtedness owed to any Loan Party or any of its
Subsidiaries, (iii) to make loans or advances to any Loan Party or any of its
Subsidiaries or (iv) to transfer any of its property or assets to any Loan Party
or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the
foregoing; provided, however, that nothing in any of clauses (i) through (iv) of
this Section shall prohibit or restrict compliance with:

            (a) this Agreement and the other Loan Documents;

            (b) any agreements in effect on the date of this Agreement and
described on Schedule 7.11;

            (c) any applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state corporate
statutes restricting the payment of dividends in certain circumstances);

            (d) in the case of clause (iv) any agreement setting forth customary
restrictions on the subletting, assignment or transfer of any property or asset
that is a lease, license, conveyance or contract of similar property or assets;
or

            (e) in the case of clause (iv) any agreement, instrument or other
document evidencing a Permitted Lien from restricting on customary terms the
transfer of any property or assets subject thereto.

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            7.12 Limitation on Issuance of Equity Interests. Except as provided
in Section 7.03, issue or sell or enter into any agreement or arrangement for
the issuance and sale of, or permit any of its Subsidiaries to issue or sell or
enter into any agreement or arrangement for the issuance and sale of, any shares
of its Equity Interests, any securities convertible into or exchangeable for its
Equity Interests or any warrants.

            7.13 Modifications of Indebtedness, Organizational Documents and
Certain Other Agreements; Etc. (i) Amend, modify or otherwise change (or permit
the amendment, modification or other change in any manner of) any of the
material provisions of any of its or its Subsidiaries' Indebtedness or of any
instrument or agreement (including, without limitation, any purchase agreement,
indenture, loan agreement or security agreement) relating to any such
Indebtedness if such amendment, modification or change would shorten the final
maturity or average life to maturity of, or require any payment to be made
earlier than the date originally scheduled on such Indebtedness, would increase
the interest rate applicable to such Indebtedness, would change the
subordination provision, if any, of such Indebtedness, or would otherwise be
adverse to the Lenders or the issuer of such Indebtedness in any respect, (ii)
except for the Obligations, make any voluntary or optional payment, prepayment,
redemption, defeasance, sinking fund payment or other acquisition for value of
any of its or its Subsidiaries' Indebtedness (including, without limitation, by
way of depositing money or securities with the trustee therefor before the date
required for the purpose of paying any portion of such Indebtedness when due),
or refund, refinance, replace or exchange any other Indebtedness for any such
Indebtedness (except to the extent such Indebtedness is otherwise expressly
permitted by the definition of "Permitted Indebtedness"), or make any payment,
prepayment, redemption, defeasance, sinking fund payment or repurchase of any
outstanding Indebtedness as a result of any asset sale, change of control,
issuance and sale of debt or equity securities or similar event, or give any
notice with respect to any of the foregoing, (iii) except as permitted by
Section 7.03, amend, modify or otherwise change its name, jurisdiction of
organization, organizational identification number or FEIN or (iv) amend, modify
or otherwise change its certificate of incorporation or bylaws (or other similar
organizational documents), including, without limitation, by the filing or
modification of any certificate of designation, or any agreement or arrangement
entered into by it, with respect to any of its Equity Interests (including any
shareholders' agreement), or enter into any new agreement with respect to any of
its Equity Interests, except any such amendments, modifications or changes or
any such new agreements or arrangements pursuant to this clause (iv) that either
individually or in the aggregate, could not have a Material Adverse Effect.

            7.14 Investment Company Act of 1940. Engage in any business, enter
into any transaction, use any securities or take any other action or permit any
of its Subsidiaries to do any of the foregoing, that would cause it or any of
its Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.

            7.15 Compromise of Accounts Receivable or Notes Receivable. Without
limiting Section 7.02 hereunder, compromise or adjust any account receivable or
note receivable (or extend the time of payment thereof) or grant any discounts,
allowances or credits or permit any of its Subsidiaries to do so other than,
provided no Default or Event of Default has occurred

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and is continuing, in the ordinary course of its business; provided, however, in
no event shall any such discount, allowance or credit exceed $1,000,000 in the
aggregate.

            7.16 ERISA. (i) Engage, or permit any ERISA Affiliate to engage, in
any transaction described in Section 4069 of ERISA; (ii) engage, or permit any
ERISA Affiliate to engage, in any prohibited transaction described in Section
406 of ERISA or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not previously been obtained from the U.S.
Department of Labor if such transaction could have more than a de minimus effect
on the Loan Party's ability to make payments under this Agreement; (iii) adopt
or permit any ERISA Affiliate to adopt any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA which provides benefits to employees after
termination of employment other than as required by Section 601 of ERISA or
applicable law; (iv) fail to make any contribution or payment to any
Multiemployer Plan which it or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto; or (v) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the Code on or
before the due date for such installment or other payment.

            7.17 Environmental. Permit the use, handling, generation, storage,
treatment, Release or disposal of Hazardous Materials at any property owned or
leased by it or any of its Subsidiaries, except in compliance with Environmental
Laws and so long as such use, handling, generation, storage, treatment, Release
or disposal of Hazardous Materials does not result in a Material Adverse Effect.

            7.18 Certain Agreements.

            (a) Agree to any amendment or modification, termination, or other
change to or waiver of any of its rights under any Material Contract or the
Berman Employment Agreement, except for (A) any amendment or modification,
termination, or other change to or waiver that is de minimus or of de minimus
effect, (B) any amendment, modification, or other change to or waiver of any of
its rights under any Material Contract relating to or executed in connection
with a Project permitted hereby, to the extent any such amendment, modification
or other change to or waiver of rights is necessary in response to commentary or
requirements of any Governmental Authority, including, without limitation, the
National Indian Gaming Commission or to ensure the compliance of such Material
Contract with applicable law, or (C) any amendment or waiver with respect to any
Material Contract which (i) is required to permit the issuance of the Four-Winds
Pokagon Notes or (ii) is entered into in connection with the financing of any
Existing Project so long as such financing has substantially the same structure
as the financing of the Pokagon Project.

            (b) Enter into any additional Material Contracts for an Existing
Project which would not require the expenditure (via loans, payments or
otherwise), in excess of $5,000,000 in the aggregate for the term hereof
provided, that no such additional Materials Contract shall be entered into when
an Event of Default hereunder has occurred or is continuing.

            7.19 Inactive Subsidiaries. Permit any Inactive Subsidiaries to (i)
have any operations or engage in any business or activity or (ii) have assets,
the fair market value of which

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is, in aggregate, more than $100,000; provided, that a Loan Party shall not be
in breach of this Section in the event the aggregate fair market value of any of
its Inactive Subsidiaries exceeds $100,000, if such Loan Party causes such
Inactive Subsidiary to execute and deliver a Guaranty to the Administrative
Agent in accordance with Section 6.16.

            7.20 Pokagon Account. In no event shall the Pokagon Account have a
balance as of the last day of each fiscal month greater than $2,500,000.

            7.21 Ownership Change. Take any action that would result in an
"ownership change" (as defined in Section 382 of the Code) with respect to the
Borrower or any of its Subsidiaries except to the extent otherwise permitted
under Section 7.05.

                                  ARTICLE VIII
                         EVENTS OF DEFAULT AND REMEDIES

            8.01 Events of Default. Any of the following shall constitute an
Event of Default:

            (a) Non-Payment. The Borrower or any other Loan Party fails to (i)
      pay when and as required to be paid herein, any amount of principal of any
      Loan, or (ii) pay within three days after the same becomes due, any
      interest on any Loan, or any fee due hereunder, or (iii) pay within five
      days after the same becomes due, any other amount payable hereunder or
      under any other Loan Document; or

            (b) Specific Covenants. (i) The Borrower fails to perform or observe
      any term, covenant or agreement contained in any of Section
      6.01(a),(b),(c),(d) and (e), 6.04 and 6.05 or Article VII, (ii) the
      Borrower fails to perform or observe any term, covenant or agreement
      contained in any of Section 6.02 and 6.18 and such failure continues for
      15 days; provided, that in the case of any failure with respect to Section
      6.18, the Borrower has used its best efforts to diligently pursue
      performance or observance of such Section, (ii) any of the Guarantors
      fails to perform or observe any term, covenant or agreement contained in
      Sections 1, 2, 4 and 6 of the Guaranty or (iii) any of the Loan Parties
      fails to perform or observe any term, covenant or agreement contained in
      Sections 2, 3, 6 and 20 of the Security Agreement, Sections 2, 3, 4 and 8
      of the Pledge Agreement or Sections 2.01, 2.02, 2.04, 3.01, 5.01, 6.04 of
      the respective Mortgages to which it is a party; or

            (c) Other Defaults. Any Loan Party fails to perform or observe any
      other covenant or agreement (not specified in Section 8.01(a) or (b)
      above) contained in any Loan Document on its part to be performed or
      observed and such failure continues for 30 days; or

            (d) Representations and Warranties. Any representation, warranty,
      certification or statement of fact made or deemed made by or on behalf of
      the Borrower or any other Loan Party herein, in any other Loan Document,
      or in any document delivered in connection herewith or therewith shall be
      incorrect or misleading when made or deemed made; or

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            (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A)
      fails to make any payment when due (whether by scheduled maturity,
      required prepayment, acceleration, demand, or otherwise) in respect of any
      Indebtedness or Guarantee (other than Indebtedness hereunder and
      Indebtedness under Swap Contracts) having an aggregate principal amount
      (including undrawn committed or available amounts and including amounts
      owing to all creditors under any combined or syndicated credit
      arrangement) of more than the Threshold Amount, or (B) fails to observe or
      perform any other agreement or condition relating to any such Indebtedness
      or Guarantee or contained in any instrument or agreement evidencing,
      securing or relating thereto, or any other event occurs, the effect of
      which default or other event is to cause, or to permit the holder or
      holders of such Indebtedness or the beneficiary or beneficiaries of such
      Guarantee (or a trustee or agent on behalf of such holder or holders or
      beneficiary or beneficiaries) to cause, with the giving of notice if
      required, such Indebtedness to be demanded or to become due or to be
      repurchased, prepaid, defeased or redeemed (automatically or otherwise),
      or an offer to repurchase, prepay, defease or redeem such Indebtedness to
      be made, prior to its stated maturity, or such Guarantee to become payable
      or cash collateral in respect thereof to be demanded; or (ii) there occurs
      under any Swap Contract an Early Termination Date (as defined in such Swap
      Contract) resulting from (A) any event of default under such Swap Contract
      as to which a Loan Party or any Subsidiary thereof is the Defaulting Party
      (as defined in such Swap Contract) and such event of default could
      reasonably be expected to have an adverse effect on any Loan Party or
      Subsidiary or (B) any Termination Event (as so defined) under such Swap
      Contract as to which a Loan Party or any Subsidiary thereof is an Affected
      Party (as so defined) could reasonably be expected to have an adverse
      effect on any Loan Party or Subsidiary and, in either event, the Swap
      Termination Value owed by such Loan Party or such Subsidiary as a result
      thereof is greater than the Threshold Amount; or

            (f) Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary
      thereof institutes or consents to the institution of any proceeding under
      any Debtor Relief Law, or makes an assignment for the benefit of
      creditors; or applies for or consents to the appointment of any receiver,
      trustee, custodian, conservator, liquidator, rehabilitator or similar
      officer for it or for all or any material part of its property; or any
      receiver, trustee, custodian, conservator, liquidator, rehabilitator or
      similar officer is appointed without the application or consent of such
      Person and the appointment continues undischarged or unstayed for 60
      calendar days; or any proceeding under any Debtor Relief Law relating to
      any such Person or to all or any material part of its property is
      instituted without the consent of such Person and continues undismissed or
      unstayed for 60 calendar days, or an order for relief is entered in any
      such proceeding; or

            (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any
      Subsidiary thereof becomes unable or admits in writing its inability or
      fails generally to pay its debts as they become due, or (ii) any writ or
      warrant of attachment or execution or similar process is issued or levied
      against all or any material part of the property of any such Person and is
      not released, vacated or fully bonded within 60 days after its issue or
      levy; or

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            (h) Judgments. There is entered against any Loan Party or any
      Subsidiary thereof (i) one or more final judgments or orders for the
      payment of money in an aggregate amount (as to all such judgments and
      orders) exceeding the Threshold Amount (to the extent not covered by
      independent third-party insurance as to which the insurer is rated at
      least "A" by A.M. Best Company, has been notified of the potential claim
      and does not dispute coverage), or (ii) any one or more non-monetary final
      judgments that have, or could reasonably be expected to have, individually
      or in the aggregate, a Material Adverse Effect and, in either case, (A)
      enforcement proceedings are commenced by any creditor upon such judgment
      or order, or (B) there is a period of 10 consecutive days during which a
      stay of enforcement of such judgment, by reason of a pending appeal or
      otherwise, is not in effect; or

            (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan
      or Multiemployer Plan which has resulted or could reasonably be expected
      to result in liability of the Borrower under Title IV of ERISA to the
      Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
      excess of the Threshold Amount, or (ii) the Borrower or any ERISA
      Affiliate fails to pay when due, after the expiration of any applicable
      grace period, any installment payment with respect to its withdrawal
      liability under Section 4201 of ERISA under a Multiemployer Plan in an
      aggregate amount in excess of the Threshold Amount; or

            (j) Invalidity of Loan Documents. Any provision of any Loan
      Document, at any time after its execution and delivery and for any reason
      other than as expressly permitted hereunder or thereunder or satisfaction
      in full of all the Obligations, ceases to be in full force and effect; or
      any Loan Party or any other Person contests in any manner the validity or
      enforceability of any provision of any Loan Document; or any Loan Party
      denies that it has any or further liability or obligation under any
      provision of any Loan Document, or purports to revoke, terminate or
      rescind any provision of any Loan Document; or

            (k) Change of Control. There occurs any Change of Control; or

            (l) Collateral Documents. Any Collateral Document after delivery
      thereof pursuant to Section 4.01 or 6.12 shall for any reason (other than
      pursuant to the terms thereof) cease to create a valid and perfected first
      priority Lien (subject to Liens permitted by Section 7.01) on the
      Collateral purported to be covered thereby; or

            (m) Subordination. (i) The subordination provisions of the documents
      evidencing or governing any subordinated Indebtedness (the "Subordinated
      Provisions") shall, in whole or in part, terminate, cease to be effective
      or cease to be legally valid, binding and enforceable against any holder
      of the applicable subordinated Indebtedness; or (ii) the Borrower or any
      other Loan Party shall, directly or indirectly, disavow or contest in any
      manner (A) the effectiveness, validity or enforceability of any of the
      Subordination Provisions, (B) that the Subordination Provisions exist for
      the benefit of the Administrative Agent and the Lenders or (C) that all
      payments of principal of or premium and interest on the applicable
      subordinated Indebtedness, or realized from the liquidation

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      of any property of any Loan Party, shall be subject to any of the
      Subordination Provisions.

            8.02 Remedies upon Event of Default. If any Event of Default occurs
and is continuing, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Lenders, take any or all of the following
actions:

            (a) declare the commitment of each Lender to make Loans to be
      terminated, whereupon such commitments and obligation shall be terminated;

            (b) declare the unpaid principal amount of all outstanding Loans,
      all interest accrued and unpaid thereon, and all other amounts owing or
      payable hereunder or under any other Loan Document to be immediately due
      and payable, without presentment, demand, protest or other notice of any
      kind, all of which are hereby expressly waived by the Borrower; and

            (c) exercise on behalf of itself and the Lenders all rights and
      remedies available to it and the Lenders under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable
without further act of the Administrative Agent or any Lender.

            8.03 Application of Funds. After the exercise of remedies provided
for in Section 8.02 (or after the Loans have automatically become immediately
due and payable as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

            First, to payment of that portion of the Obligations constituting
      fees, indemnities, expenses and other amounts (including fees, charges and
      disbursements of counsel to the Administrative Agent and amounts payable
      under Article III) payable to the Administrative Agent in its capacity as
      such;

            Second, to payment of that portion of the Obligations constituting
      fees, indemnities and other amounts (other than principal and interest)
      payable to the Lenders (including fees, charges and disbursements of
      counsel to the respective Lenders (excluding fees and time charges for
      attorneys who may be employees of any Lender) and amounts payable under
      Article III, ratably among them in proportion to the respective amounts
      described in this clause Second payable to them;

            Third, to payment of that portion of the Obligations constituting
      accrued and unpaid interest on the Loans and other Obligations, ratably
      among the Lenders in proportion to the respective amounts described in
      this clause Third payable to them;

            Fourth, to payment of that portion of the Obligations constituting
      unpaid principal of the Loans and amounts owing under Secured Hedge
      Agreements and Secured Cash

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      Management Agreements, ratably among the Lenders, the Hedge Banks and the
      Cash Management Banks in proportion to the respective amounts described in
      this clause Fourth held by them; and

            Last, the balance, if any, after all of the Obligations have been
      indefeasibly paid in full, to the Borrower or as otherwise required by
      Law.

                                   ARTICLE IX
                              ADMINISTRATIVE AGENT

            9.01 Appointment and Authority. (a) Each of the Lenders hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent and the Lenders, and neither the Borrower nor any other
Loan Party shall have rights as a third party beneficiary of any of such
provisions.

            (b) The Administrative Agent shall also act as the "collateral
agent" under the Loan Documents, and each of the Lenders (in its capacities as a
Lender, potential Hedge Bank and potential Cash Management Bank) hereby
irrevocably appoints and authorizes the Administrative Agent to act as the agent
of such Lender for purposes of acquiring, holding and enforcing any and all
Liens on Collateral granted by any of the Loan Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably
incidental thereto. In this connection, the Administrative Agent, as "collateral
agent" and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.05 for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents, or for exercising any rights and remedies thereunder at
the direction of the Administrative Agent), shall be entitled to the benefits of
all provisions of this Article IX and Article XI (including Section 11.04(c), as
though such co-agents, sub-agents and attorneys-in-fact were the "collateral
agent" under the Loan Documents) as if set forth in full herein with respect
thereto.

            9.02 Rights as a Lender. The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

            9.03 Exculpatory Provisions. The Administrative Agent shall not have
any duties or obligations except those expressly set forth herein and in the
other Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:

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            (a) shall not be subject to any fiduciary or other implied duties,
      regardless of whether a Default has occurred and is continuing;

            (b) shall not have any duty to take any discretionary action or
      exercise any discretionary powers, except discretionary rights and powers
      expressly contemplated hereby or by the other Loan Documents that the
      Administrative Agent is required to exercise as directed in writing by the
      Required Lenders (or such other number or percentage of the Lenders as
      shall be expressly provided for herein or in the other Loan Documents),
      provided that the Administrative Agent shall not be required to take any
      action that, in its opinion or the opinion of its counsel, may expose the
      Administrative Agent to liability or that is contrary to any Loan Document
      or applicable law; and

            (c) shall not, except as expressly set forth herein and in the other
      Loan Documents, have any duty to disclose, and shall not be liable for the
      failure to disclose, any information relating to the Borrower or any of
      its Affiliates that is communicated to or obtained by the Person serving
      as the Administrative Agent or any of its Affiliates in any capacity.

            The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith shall be necessary, under
the circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence
of its own gross negligence or willful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower or
a Lender.

            The Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii)
the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

            9.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing (including any electronic message, Internet or intranet website
posting or other distribution) reasonably believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and reasonably believed by it to have been made by the proper Person,
and shall not incur any liability for relying thereon. In determining compliance
with any condition hereunder to the

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making of a Loan that by its terms must be fulfilled to the satisfaction of a
Lender, the Administrative Agent may presume that such condition is satisfactory
to such Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

            9.05 Delegation of Duties. The Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

            9.06 Resignation of Administrative Agent. The Administrative Agent
may at any time give notice of its resignation to the Lenders and the Borrower.
Upon receipt of any such notice of resignation, the Required Lenders shall have
the right, in consultation with the Borrower, to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States. If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders, appoint a successor Administrative Agent meeting the qualifications set
forth above; provided that if the Administrative Agent shall notify the Borrower
and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (a) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents (except that
in the case of any collateral security held by the Administrative Agent on
behalf of the Lenders under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this Section. Upon the acceptance of a successor's
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
retiring Administrative Agent's resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 11.04 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be

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taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

            9.07 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

            9.08 No Other Duties, Etc. Anything herein to the contrary
notwithstanding, none of the Book Managers or Arrangers listed on the cover page
hereof shall have any powers, duties or responsibilities under this Agreement or
any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent or a Lender hereunder.

            9.09 Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise

            (a) to file and prove a claim for the whole amount of the principal
      and interest owing and unpaid in respect of the Loans and all other
      Obligations that are owing and unpaid and to file such other documents as
      may be necessary or advisable in order to have the claims of the Lenders
      and the Administrative Agent (including any claim for the reasonable
      compensation, expenses, disbursements and advances of the Lenders and the
      Administrative Agent and their respective agents and counsel and all other
      amounts due the Lenders and the Administrative Agent under Sections 2.07
      and 11.04) allowed in such judicial proceeding; and

            (b) to collect and receive any monies or other property payable or
      deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, if the
Administrative Agent shall consent to the making of such payments directly to
the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.07 and 11.04.

            Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization,

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arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender to authorize the Administrative Agent to vote in respect of the
claim of any Lender or in any such proceeding.

            9.10 Collateral and Guaranty Matters. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion,

            (a) to release any Lien on any property granted to or held by the
      Administrative Agent under any Loan Document (i) upon termination of the
      Aggregate Commitments and payment in full of all Obligations (other than
      contingent indemnification obligations), (ii) that is sold or to be sold
      as part of or in connection with any sale permitted hereunder or under any
      other Loan Document, or (iii) if approved, authorized or ratified in
      writing in accordance with Section 11.01;

            (b) to release any Guarantor from its obligations under the Guaranty
      if such Person ceases to be a Subsidiary as a result of a transaction
      permitted hereunder; and

            (c) to subordinate any Lien on any property granted to or held by
      the Administrative Agent under any Loan Document to the holder of any Lien
      on such property that is permitted by Section 7.01.

            Upon request by the Administrative Agent at any time, the Required
Lenders will confirm in writing the Administrative Agent's authority to release
or subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guaranty pursuant to this
Section. In each case as specified in this Section, the Administrative Agent
will, at the Borrower's expense, execute and deliver to the applicable Loan
Party such documents as such Loan Party may reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents or to subordinate its interest in such
item, or to release such Guarantor from its obligations under the Guaranty, in
each case in accordance with the terms of the Loan Documents and this Section.

            9.11 Withholding Taxes. To the extent required by any applicable
law, the Administrative Agent may withhold from any payment to any Lender an
amount equivalent to any applicable withholding tax. If any other Governmental
Authority asserts a claim that the Administrative Agent did not properly
withhold tax from amounts paid to or for the account of any Lender for any
reason, including because the appropriate form was not delivered or was not
properly executed or because such Lender failed to notify the Administrative
Agent of a change in circumstances which rendered the exemption from or
reduction of withholding tax ineffective, such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties or interest and
together with any and all expenses incurred.

                                   ARTICLE X
                               CONTINUING GUARANTY

            10.01 Guaranty. Holdings hereby absolutely and unconditionally
guarantees, as a guaranty of payment and performance and not merely as a
guaranty of collection, prompt payment when due, whether at stated maturity, by
required prepayment, upon acceleration,

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demand or otherwise, and at all times thereafter, of any and all of the
Obligations, whether for principal, interest, premiums, fees, indemnities,
damages, costs, expenses or otherwise, of the Borrower to the Secured Parties,
arising hereunder and under the other Loan Documents (including all renewals,
extensions, amendments, refinancings and other modifications thereof and all
costs, attorneys' fees and expenses incurred by the Secured Parties in
connection with the collection or enforcement thereof). The Administrative
Agent's books and records showing the amount of the Obligations shall be
admissible in evidence in any action or proceeding, and shall be binding upon
Holdings, and conclusive for the purpose of establishing the amount of the
Obligations. This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Obligations or any instrument or agreement
evidencing any Obligations, or by the existence, validity, enforceability,
perfection, non-perfection or extent of any collateral therefor, or by any fact
or circumstance relating to the Obligations which might otherwise constitute a
defense to the obligations of Holdings under this Guaranty, and Holdings hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to any or all of the foregoing.

            10.02 Rights of Lenders. To the extent permitted under the Loan
Documents, Holdings consents and agrees that the Secured Parties may, at any
time and from time to time, without notice or demand, and without affecting the
enforceability or continuing effectiveness hereof: (a) amend, extend, renew,
compromise, discharge, accelerate or otherwise change the time for payment or
the terms of the Obligations or any part thereof; (b) take, hold, exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Obligations; (c) apply such
security and direct the order or manner of sale thereof as the Administrative
Agent and the Lenders in their sole discretion may determine; and (d) release or
substitute one or more of any endorsers or other guarantors of any of the
Obligations. Without limiting the generality of the foregoing, Holdings consents
to the taking of, or failure to take, any action which might in any manner or to
any extent vary the risks of Holdings under this Guaranty or which, but for this
provision, might operate as a discharge of Holdings.

            10.03 Certain Waivers. Holdings waives (a) any defense arising by
reason of any disability or other defense of the Borrower or any other
guarantor, or the cessation from any cause whatsoever (including any act or
omission of any Secured Party) of the liability of the Borrower; (b) any defense
based on any claim that Holdings' obligations exceed or are more burdensome than
those of the Borrower; (c) the benefit of any statute of limitations affecting
Holdings' liability hereunder; (d) any right to proceed against the Borrower,
proceed against or exhaust any security for the Obligations, or pursue any other
remedy in the power of any Secured Party whatsoever; (e) any benefit of and any
right to participate in any security now or hereafter held by any Secured Party;
and (f) to the fullest extent permitted by law, any and all other defenses or
benefits that may be derived from or afforded by applicable law limiting the
liability of or exonerating guarantors or sureties. Holdings expressly waives
all setoffs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations, and all notices of acceptance
of this Guaranty or of the existence, creation or incurrence of new or
additional Obligations. Holdings waives any rights and defenses that are or may
become available to Holdings by reason of Sections 2787 to 2855, inclusive, and
Sections 2899 and 3433 of the California Civil Code. As provided

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below, this Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York. The foregoing waivers and the provisions
hereinafter set forth in this Guaranty which pertain to California law are
included solely out of an abundance of caution, and shall not be construed to
mean that any of the above-referenced provisions of California law are in any
way applicable to this Guaranty or the Obligations.

            10.04 Obligations Independent. The obligations of Holdings hereunder
are those of primary obligor, and not merely as surety, and are independent of
the Obligations and the obligations of any other guarantor, and a separate
action may be brought against Holdings to enforce this Guaranty whether or not
the Borrower or any other person or entity is joined as a party.

            10.05 Subrogation. Holdings shall not exercise any right of
subrogation, contribution, indemnity, reimbursement or similar rights with
respect to any payments it makes under this Guaranty until all of the
Obligations and any amounts payable under this Guaranty have been indefeasibly
paid and performed in full and the Commitments and the Facility are terminated.
If any amounts are paid to Holdings in violation of the foregoing limitation,
then such amounts shall be held in trust for the benefit of the Secured Parties
and shall forthwith be paid to the Secured Parties to reduce the amount of the
Obligations, whether matured or unmatured.

            10.06 Termination; Reinstatement. This Guaranty is a continuing and
irrevocable guaranty of all Obligations now or hereafter existing and shall
remain in full force and effect until all Obligations and any other amounts
payable under this Guaranty are indefeasibly paid in full in cash and the
Commitments and the Facility with respect to the Obligations are terminated.
Notwithstanding the foregoing, this Guaranty shall continue in full force and
effect or be revived, as the case may be, if any payment by or on behalf of the
Borrower or Holdings is made, or any of the Secured Parties exercises its right
of setoff, in respect of the Obligations and such payment or the proceeds of
such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by any of the Secured Parties in their discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Laws or otherwise, all as if such payment had
not been made or such setoff had not occurred and whether or not the Secured
Parties are in possession of or have released this Guaranty and regardless of
any prior revocation, rescission, termination or reduction. The obligations of
Holdings under this paragraph shall survive termination of this Guaranty.

            10.07 Subordination. Holdings hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to Holdings, whether now
existing or hereafter arising, including but not limited to any obligation of
the Borrower to Holdings as subrogee of the Secured Parties or resulting from
Holdings' performance under this Guaranty, to the indefeasible payment in full
in cash of all Obligations. If the Secured Parties so request, any such
obligation or indebtedness of the Borrower to Holdings shall be enforced and
performance received by Holdings as trustee for the Secured Parties and the
proceeds thereof shall be paid over to the Secured Parties on account of the
Obligations, but without reducing or affecting in any manner the liability of
Holdings under this Guaranty.

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            10.08 Stay of Acceleration. If acceleration of the time for payment
of any of the Obligations is stayed, in connection with any case commenced by or
against Holdings or the Borrower under any Debtor Relief Laws, or otherwise, all
such amounts shall nonetheless be payable by Holdings immediately upon demand by
the Secured Parties.

            10.09 Condition of Borrower. Holdings acknowledges and agrees that
it has the sole responsibility for, and has adequate means of, obtaining from
the Borrower and any other guarantor such information concerning the financial
condition, business and operations of the Borrower and any such other guarantor
as Holdings requires, and that none of the Secured Parties has any duty, and
Holdings is not relying on the Secured Parties at any time, to disclose to
Holdings any information relating to the business, operations or financial
condition of the Borrower or any other guarantor (Holdings waiving any duty on
the part of the Secured Parties to disclose such information and any defense
relating to the failure to provide the same).

            10.10 Additional Guarantor Waivers and Agreements. (a) Holdings
understands and acknowledges that if the Secured Parties foreclose judicially or
nonjudicially against any real property security for the Obligations, that
foreclosure could impair or destroy any ability that Holdings may have to seek
reimbursement, contribution, or indemnification from the Borrower or others
based on any right Holdings may have of subrogation, reimbursement,
contribution, or indemnification for any amounts paid by Holdings under this
Guaranty. Holdings further understands and acknowledges that in the absence of
this paragraph, such potential impairment or destruction of Holdings' rights, if
any, may entitle Holdings to assert a defense to this Guaranty based on Section
580d of the California Code of Civil Procedure as interpreted in Union Bank v.
Gradsky, 265 Cal. App. 2d 40 (1968). By executing this Guaranty, Holdings
freely, irrevocably, and unconditionally: (i) waives and relinquishes that
defense and agrees that Holdings will be fully liable under this Guaranty even
though the Secured Parties may foreclose, either by judicial foreclosure or by
exercise of power of sale, any deed of trust securing the Obligations; (ii)
agrees that Holdings will not assert that defense in any action or proceeding
which the Secured Parties may commence to enforce this Guaranty; (iii)
acknowledges and agrees that the rights and defenses waived by Holdings in this
Guaranty include any right or defense that Holdings may have or be entitled to
assert based upon or arising out of any one or more of Sections 580a, 580b,
580d, or 726 of the California Code of Civil Procedure or Section 2848 of the
California Civil Code; and (iv) acknowledges and agrees that the Secured Parties
are relying on this waiver in creating the Obligations, and that this waiver is
a material part of the consideration which the Secured Parties are receiving for
creating the Obligations.

            (b) Holdings waives all rights and defenses that Holdings may have
because any of the Obligations is secured by real property. This means, among
other things: (i) the Secured Parties may collect from Holdings without first
foreclosing on any real or personal property collateral pledged by the other
Loan Parties; and (ii) if the Secured Parties foreclose on any real property
collateral pledged by the other Loan Parties: (A) the amount of the Obligations
may be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price, and
(B) the Secured Parties may collect from Holdings even if the Secured Parties,
by foreclosing on the real property collateral, have destroyed any right
Holdings may have to collect from the Borrower. This is an unconditional and
irrevocable waiver of any rights and defenses Holdings may have because any of
the Obligations is secured by real property. These rights and defenses include,
but are not limited to,

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any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.

            (c) Holdings waives any right or defense it may have at law or
equity, including California Code of Civil Procedure Section 580a, to a fair
market value hearing or action to determine a deficiency judgment after a
foreclosure.

                                   ARTICLE XI
                                  MISCELLANEOUS

            11.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent
(provided that any such writing signed by the Lenders and the Borrower or the
applicable Loan Party shall be effective notwithstanding that it is not
acknowledged by the Administrative Agent), and each 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 amendment, waiver or consent shall:

            (a) waive any condition set forth in Section 4.01 (other than
      Section 4.01(b)(i) or (c)), or, in the case of the initial Credit
      Extension, Section 4.02, without the written consent of each Lender;

            (b) extend or increase the Commitment of any Lender (or reinstate
      any Commitment terminated pursuant to Section 8.02) without the written
      consent of such Lender;

            (c) postpone any date fixed by this Agreement or any other Loan
      Document for any payment (excluding mandatory prepayments) of principal,
      interest, fees or other amounts due to the Lenders (or any of them)
      hereunder or under such other Loan Document without the written consent of
      each Lender entitled to such payment;

            (d) reduce the principal of, or the rate of interest specified
      herein on, any Loan, or any fees or other amounts payable hereunder or
      under any other Loan Document without the written consent of each Lender
      entitled to such amount; provided, however, that only the consent of the
      Required Lenders shall be necessary to amend the definition of "Default
      Rate" or to waive any obligation of the Borrower to pay interest at the
      Default Rate;

            (e) change Section 2.11 or Section 8.03 in a manner that would alter
      the pro rata sharing of payments required thereby without the written
      consent of each Lender in any manner that materially and adversely affects
      the Lenders under the Facility without the written consent of the Required
      Lenders;

            (f) change any provision of this Section or the definition of
      "Required Lenders" or any other provision hereof specifying the number or
      percentage of Lenders required to

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      amend, waive or otherwise modify any rights hereunder or make any
      determination or grant any consent hereunder, without the written consent
      of each Lender;

            (g) release all or substantially all of the Collateral in any
      transaction or series of related transactions, without the written consent
      of each Lender;

            (h) release all or substantially all of the value of the Guaranty,
      without the written consent of each Lender; or

            (i) impose any greater restriction on the ability of any Lender
      under the Facility to assign any of its rights or obligations hereunder
      without the written consent of the Required Lenders;

and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

            If any Lender does not consent to a proposed amendment, waiver,
consent or release with respect to any Loan Document that requires the consent
of each Lender and that has been approved by the Required Lenders, the Borrower
may replace such non-consenting Lender in accordance with Section 11.13;
provided that such amendment, waiver, consent or release can be effected as a
result of the assignment contemplated by such Section (together with all other
such assignments required by the Borrower to be made pursuant to this
paragraph).

            11.02 Notices; Effectiveness; Electronic Communications. (a) Notices
Generally. Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows, and all notices
and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

            (i) if to Holdings, the Borrower or the Administrative Agent, to the
      address, telecopier number, electronic mail address or telephone number
      specified for such Person on Schedule 11.02; and

            (ii) if to any other Lender, to the address, telecopier number,
      electronic mail address or telephone number specified in its
      Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the

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recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).

            (b) Electronic Communications. Notices and other communications to
the Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Article II if such Lender has
notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

            Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender's receipt of an acknowledgement from the intended recipient (such as
by the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

            (c) The Platform. THE PLATFORM IS PROVIDED "AS IS" AND "AS
AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER
MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no
event shall the Administrative Agent or any of its Related Parties
(collectively, the "Agent Parties") have any liability to Holdings, the
Borrower, any Lender or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of the Borrower's or the Administrative Agent's transmission of
Borrower Materials through the Internet, except to the extent that such losses,
claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the
gross negligence, willful misconduct bad faith of, or breach of contract by,
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to Holdings, the Borrower, any Lender or any other Person for
indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).

            (d) Change of Address, Etc. Each of Holdings, the Borrower and the
Administrative Agent may change its address, telecopier or telephone number for
notices and

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other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.

            (e) Reliance by Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices) purportedly given by or on behalf
of the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
the Administrative Agent each Lender and the Related Parties of each of them
from all losses, costs, expenses and liabilities resulting from the reliance by
such Person on each notice purportedly given by or on behalf of the Borrower.
All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

            11.03 No Waiver; Cumulative Remedies. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided, and
provided under each other Loan Document, are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

            11.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses.
The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates (including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender (including the reasonable
fees, charges and disbursements of any counsel for the Administrative Agent or
any Lender), but excluding all fees and time charges for attorneys who may be
employees of the Administrative Agent or any Lender, in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with Loans made hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.

            (b) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent (and any sub-agent thereof) and each Lender, and each
Related Party of

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any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery by the Loan Parties of this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the Loan Parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use
of the proceeds therefrom, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any other Loan Party or any of the Borrower's or
such Loan Party's directors, shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence, willful misconduct, bad faith or breach of contract of such
Indemnitee or (y) result from a claim brought by the Borrower or any other Loan
Party against an Indemnitee for breach in bad faith of such Indemnitee's
obligations hereunder or under any other Loan Document, if the Borrower or such
Loan Party has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

            (c) Reimbursement by Lenders. To the extent that the Borrower for
any reason fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to the Administrative Agent (or any
sub-agent thereof) or any Related Party of any of the foregoing, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent) or
such Related Party, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent (or any
such sub-agent) in its capacity as such, or against any Related Party of any of
the foregoing acting for the Administrative Agent (or any such sub-agent) in
connection with such capacity. The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.10(d).

            (d) Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this

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Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or the use of
the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by such
Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

            (e) Payments. All amounts due under this Section shall be payable
not later than ten Business Days after demand therefor.

            (f) Survival. The agreements in this Section shall survive the
resignation of the Administrative Agent, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

            11.05 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The obligations of
the Lenders under clause (b) of the preceding sentence shall survive the payment
in full of the Obligations and the termination of this Agreement.

            11.06 Successors and Assigns. (a) Successors and Assigns Generally.
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that neither the Borrower nor any other Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Administrative Agent and each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this Section
(and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly

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contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

            (b) Assignments by Lenders. Any Lender may at any time assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans at the
time owing to it); provided that any such assignment shall be subject to the
following conditions:

            (i) Minimum Amounts.

                  (A) in the case of an assignment of the entire remaining
            amount of the assigning Lender's Commitment under the Facility and
            the Loans at the time owing to it under the Facility or in the case
            of an assignment to a Lender, an Affiliate of a Lender or an
            Approved Fund, no minimum amount need be assigned; and

                  (B) in any case not described in subsection (b)(i)(A) of this
            Section, the aggregate amount of the principal outstanding balance
            of the Loans of the assigning Lender subject to each such
            assignment, determined as of the date the Assignment and Assumption
            with respect to such assignment is delivered to the Administrative
            Agent or, if "Trade Date" is specified in the Assignment and
            Assumption, as of the Trade Date, shall not be less than $1,000,000,
            unless each of the Administrative Agent and, so long as no Event of
            Default has occurred and is continuing, the Borrower otherwise
            consents (each such consent not to be unreasonably withheld or
            delayed); provided, however, that concurrent assignments to members
            of an Assignee Group and concurrent assignments from members of an
            Assignee Group to a single Eligible Assignee (or to an Eligible
            Assignee and members of its Assignee Group) will be treated as a
            single assignment for purposes of determining whether such minimum
            amount has been met;

            (ii) Proportionate Amounts. Each partial assignment shall be made as
      an assignment of a proportionate part of all the assigning Lender's rights
      and obligations under this Agreement with respect to the Loans or the
      Commitment assigned;

            (iii) Required Consents. No consent shall be required for any
      assignment except to the extent required by subsection (b)(i)(B) of this
      Section and, in addition:

                  (A) the consent of the Borrower (such consent not to be
            unreasonably withheld or delayed) shall be required unless (1) an
            Event of Default has occurred and is continuing at the time of such
            assignment or (2) such assignment is to a Lender, an Affiliate of a
            Lender or an Approved Fund; and

                  (B) the consent of the Administrative Agent (such consent not
            to be unreasonably withheld or delayed) shall be required for
            assignments in respect of (i) any Commitment if such assignment is
            to a Person that is not a Lender, an Affiliate of such Lender or an
            Approved Fund with respect to such Lender or (ii)

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            any Loan to a Person that is not a Lender, an Affiliate of a Lender
            or an Approved Fund.

            (iv) Assignment and Assumption. The parties to each assignment shall
      execute and deliver to the Administrative Agent an Assignment and
      Assumption, together with a processing and recordation fee in the amount,
      if any, required as set forth in Schedule 11.06; provided, however, that
      the Administrative Agent may, in its sole discretion, elect to waive such
      processing and recordation fee in the case of any assignment. The
      assignee, if it shall not be a Lender, shall deliver to the Administrative
      Agent an Administrative Questionnaire.

            (v) No Assignment to Borrower. No such assignment shall be made to
      the Borrower or any of the Borrower's Affiliates or Subsidiaries.

            (vi) No Assignment to Natural Persons. No such assignment shall be
      made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 11.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Section 11.06(d).

            (c) Register. The Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain at the Administrative
Agent's Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

            (d) Participations. Any Lender may at any time, without the consent
of, or notice to, the Borrower or the Administrative Agent, sell participations
to any Person (other than a natural person or the Borrower or any of the
Borrower's Affiliates or Subsidiaries) (each, a

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"Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01 that affects such
Participant. Subject to subsection (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 11.06(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.11 as
though it were a Lender.

            (e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.

            (f) Certain Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.

            (g) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

            11.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its Affiliates and to its and its Affiliates' respective partners, directors,
officers, employees, agents, advisors and

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representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of, but only to the extent necessary with respect
thereto, any remedies hereunder or under any other Loan Document or any action
or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, any Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.

            For purposes of this Section, "Information" means all information
received from any Loan Party or any Subsidiary thereof relating to any Loan
Party or any Subsidiary thereof or their respective businesses, other than any
such information that is available to the Administrative Agent or any Lender on
a nonconfidential basis prior to disclosure by any Loan Party or any Subsidiary
thereof, provided that, in the case of information received from a Loan Party or
any such Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

            Each of the Administrative Agent and the Lenders acknowledges that
(a) the Information may include material non-public information concerning the
Borrower or a Subsidiary, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it will
handle such material non-public information in accordance with applicable Law,
including Federal and state securities Laws.

            11.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, after obtaining the prior written
consent of the Administrative Agent, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower or any other
Loan Party against any and all of the obligations of the Borrower or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of the Borrower or such Loan Party may be contingent or unmatured or
are owed to a branch or office of such Lender different from the branch or
office holding such deposit or

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obligated on such indebtedness. The rights of each Lender and its Affiliates
under this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender or its Affiliates may have. Each Lender
agrees to notify the Borrower and the Administrative Agent promptly after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

            11.09 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

            11.10 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

            11.11 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied.

            11.12 Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or

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unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

            11.13 Replacement of Lenders. If (a) any Lender requests
compensation under Section 3.04, (b) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, (c) any Lender is a Defaulting Lender, (d)
any Governmental Authority with gaming regulatory responsibility has notified
the Borrower or any other Loan Party that, on account of a certain Lender
providing Loans hereunder, the Borrower will be (or has become) ineligible to
hold any permits, licenses, authorizations, approvals, entitlements and
accreditations which are required under the IGRA or any applicable gaming Law
for the conduct of the Projects, or (e) if any other circumstance exists
hereunder that gives the Borrower the right to replace a Lender as a party
hereto, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.06), all of its interests,
rights and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:

            (a) the Borrower shall have paid to the Administrative Agent the
      assignment fee specified in Section 11.06(b);

            (b) such Lender shall have received payment of an amount equal to
      the outstanding principal of its Loans, accrued interest thereon, accrued
      fees and all other amounts payable to it hereunder and under the other
      Loan Documents (including any amounts under Section 3.05) from the
      assignee (to the extent of such outstanding principal and accrued interest
      and fees) or the Borrower (in the case of all other amounts);

            (c) in the case of any such assignment resulting from a claim for
      compensation under Section 3.04 or payments required to be made pursuant
      to Section 3.01, such assignment will result in a reduction in such
      compensation or payments thereafter; and

            (d) such assignment does not conflict with applicable Laws.

            A Lender shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

            11.14 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

            (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT, AND ANY

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APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR
ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN
PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

            (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

            (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW

            11.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN

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DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

            11.16 No Advisory or Fiduciary Responsibility. In connection with
all aspects of each transaction contemplated hereby, the Borrower and Holdings
each acknowledge and agree, and acknowledge their respective Affiliates'
understanding, that: (i) the credit facility provided for hereunder and any
related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm's-length commercial transaction between the
Borrower, Holdings and their respective Affiliates, on the one hand, and the
Administrative Agent and the Arranger, on the other hand, and each of the
Borrower and Holdings is capable of evaluating and understanding and understands
and accepts the terms, risks and conditions of the transactions contemplated
hereby and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, the Administrative Agent and the Arranger each is and has been
acting solely as a principal and is not the financial advisor, agent or
fiduciary, for the Borrower, Holdings or any of their respective Affiliates,
stockholders, creditors or employees or any other Person; (iii) neither the
Administrative Agent nor the Arranger has assumed or will assume an advisory,
agency or fiduciary responsibility in favor of the Borrower or Holdings with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether the Administrative
Agent or the Arranger has advised or is currently advising the Borrower,
Holdings or any of their respective Affiliates on other matters) and neither the
Administrative Agent nor the Arranger has any obligation to the Borrower,
Holdings or any of their respective Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; (iv) the Administrative Agent and the Arranger and
their respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Borrower, Holdings and their
respective Affiliates, and neither the Administrative Agent nor the Arranger has
any obligation to disclose any of such interests by virtue of any advisory,
agency or fiduciary relationship; and (v) the Administrative Agent and the
Arranger have not provided and will not provide any legal, accounting,
regulatory or tax advice with respect to any of the transactions contemplated
hereby (including any amendment, waiver or other modification hereof or of any
other Loan Document) and each of the Borrower and Holdings has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate. Each of the Borrower and Holdings hereby waives and releases, to
the fullest extent permitted by law, any claims that it may have against the
Administrative Agent and the Arranger with respect to any breach or alleged
breach of agency or fiduciary duty.

            11.17 USA PATRIOT Act Notice. Each Lender that is subject to the Act
(as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies each Loan Party, which information includes the name
and address of each Loan Party and other information that will allow such Lender
or the Administrative Agent, as applicable, to identify each Loan Party in
accordance with the Act.

            11.18 Time of the Essence. Time is of the essence of the Loan
Documents.

                                      103
<PAGE>

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

                                   LAKES GAMING AND RESORTS, LLC

                                   By: /s/ Timothy J. Cope
                                       ----------------------------------------
                                   Name:  Timothy J. Cope
                                         --------------------------------------
                                   Title: President and Chief Financial Officer
                                          -------------------------------------

                                   LAKES ENTERTAINMENT, INC.

                                   By: /s/ Timothy J. Cope
                                       -----------------------------------------
                                   Name:  Timothy J. Cope
                                         ---------------------------------------
                                   Title: President and Chief Financial Officer
                                         ---------------------------------------

                                      S-1

<PAGE>

                                              BANK OF AMERICA, N.A., as
                                              Administrative Agent and Lender

                                              By: /s/ David H. Strickert
                                                  ------------------------------
                                              Name: David H. Strickert
                                                   -----------------------------
                                              Title: Senior Vice President
                                                    ----------------------------

                                      S-2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>c06339exv10w2.txt
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
<PAGE>

                                                                    Exhibit 10.2

                               SECURITY AGREEMENT

          SECURITY AGREEMENT, dated as of June 22, 2006, among LAKES GAMING AND
RESORTS, LLC, a Minnesota limited liability company (the "Borrower"), LAKES
ENTERTAINMENT, INC., a Minnesota corporation ("Holdings"), each of the entities
listed on Schedule II hereto (the "Subsidiary Grantors" and, together with
Holdings and the Borrower, the "Grantors"), and BANK OF AMERICA, N.A., in its
capacity as collateral agent for the Secured Parties (in such capacity,
"Agent").

                                   WITNESSETH:

          WHEREAS, pursuant to that certain Credit Agreement dated as of the
date hereof by and among the Borrower, Holdings, Agent and Lenders (including
all annexes, exhibits and schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), Lenders
have agreed to make the Loans on behalf of the Borrower;

          WHEREAS, Holdings and the Subsidiary Grantors have executed guarantees
to the Lenders in respect of the obligations of the Borrower;

          WHEREAS, in order to induce Agent and Lenders to enter into the Credit
Agreement and the other Loan Documents and to induce Lenders to make the Loans
as provided for in the Credit Agreement, the Grantors have agreed to grant a
continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;

          NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1. DEFINED TERMS. The following terms shall have the following respective
meanings:

          "Accounts" means, as to any Grantor, all of such Grantor's now owned
or hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance, and all medical
receivables.

          "Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, five percent (5%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.

          "Assigned Contracts" means, as to any Grantor, collectively, all of
such Grantor's rights and remedies under, and all moneys and claims for money
due or to become due to the Borrower under Material Contracts, and any and all
amendments, supplements, extensions, and renewals thereof including all rights
and claims of such Grantor now or hereafter existing: (i) under any insurance,
indemnities, warranties, and guarantees provided for or arising out of or in

                            Lakes Security Agreement

<PAGE>

connection with any of the foregoing agreements; (ii) for any damages arising
out of or for breach or default under or in connection with any of the foregoing
contracts; (iii) to all other amounts from time to time paid or payable under or
in connection with any of the foregoing agreements; or (iv) to exercise or
enforce any and all covenants, remedies, powers and privileges thereunder.
"Assigned Contracts" shall not include any Excluded Assigned Contracts.

          "Chattel Paper" means, as to any Grantor, all of such Grantor's now
owned or hereafter acquired chattel paper, as defined in the UCC, including
electronic chattel paper.

          "Commercial Tort Claims" means, as to any Grantor, all commercial tort
claims as defined in the UCC including, without limitation, all commercial tort
claims listed and described on Schedule IV.

          "Copyright Security Agreement" means the Copyright Security Agreement
dated as of the date hereof among certain Grantors and the Agent.

          "Copyrights" has the meaning given to that term in the Copyright
Security Agreement.

          "Deposit Accounts" means all "deposit accounts" as such term is
defined in the UCC, now or hereafter held in the name of any Grantor, including,
without limitation, the Interest Reserve Account.

          "Documents" means, as to any Grantor, all documents as such term is
defined in the UCC, including bills of lading, warehouse receipts or other
documents of title, now owned or hereafter acquired by such Grantor.

          "Equipment" means, as to any Grantor, all of such Grantor's now owned
and hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
and other tangible personal property (except Inventory), including embedded
software, motor vehicles with respect to which a certificate of title has been
issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all
of such types of property leased by such Grantor and all of such Grantor's
rights and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.

          "Excluded Accounts" means, (i) Deposit Accounts specially and
exclusively used for petty cash (provided that the aggregate balance of the
funds on deposit in all such petty cash Deposit Accounts shall not exceed
$2,500,000), payroll, payroll taxes and other employee wage and benefit payments
to or for the benefit of a Grantor's salaried employees, and (ii) the Pokagon
Account.

          "General Intangibles" means, as to any Grantor, all of such Grantor's
now owned or hereafter acquired general intangibles, choses in action and causes
of action and all other intangible personal property of such Grantor of every
kind and nature (other than Accounts), including, without limitation, all
contract rights, payment intangibles, Proprietary Rights,


                                       2
                            Lakes Security Agreement

<PAGE>

corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Grantor in connection with the termination of any employee
benefit plan or any rights thereto and any other amounts payable to such Grantor
from any employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Grantor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Grantor.

          "Goods" means, as to any Grantor, all "goods" as defined in the UCC,
now owned or hereafter acquired by such Grantor, wherever located, including
embedded software to the extent included in "goods" as defined in the UCC,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.

          "Instruments" means, as to any Grantor, all instruments as such term
is defined in the UCC, now owned or hereafter acquired by such Grantor.

          "Inventory" means, as to any Grantor, all of such Grantor's now owned
and hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, work-in-process, finished goods (including embedded
software), other materials and supplies of any kind, nature or description which
are used or consumed in such Grantor's business or used in connection with the
packing, shipping, advertising, selling or finishing of such goods, merchandise,
and all documents of title or other Documents representing them.

          "Investment Property" means, as to any Grantor, all of such Grantor's
right title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.

          "Letter-of-Credit Rights" means, as to any Grantor, "letter-of-credit
rights" as such term is defined in the UCC, now owned or hereafter acquired by
such Grantor, including rights to payment or performance under a letter of
credit, whether or not such Grantor, as beneficiary, has demanded or is entitled
to demand payment or performance.

          "Material Contracts" has the meaning giving to that term in the Credit
Agreement.

          "Patent Security Agreement" means the Patent Security Agreement dated
as of the date hereof among certain Grantors and the Agent.

          "Patents" has the meaning given to that term in the Patent Security
Agreement.

          "Payment Account" means each bank account established pursuant to this
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or


                                       3
                            Lakes Security Agreement

<PAGE>

credited, and which is maintained in the name of the Agent or a Grantor, as the
Agent may determine, on terms acceptable to the Agent.

          "Proprietary Rights" means, as to any Grantor, all of such Grantor's
now owned and hereafter arising or acquired: licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to
any of the foregoing, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.

          "Software" means, as to any Grantor, all "software" as such term is
defined in the UCC, now owned or hereafter acquired by such Grantor, other than
software embedded in any category of Goods, including all computer programs and
all supporting information provided in connection with a transaction related to
any program.

          "Supplement" means any amendment or supplement to any schedule hereto
delivered pursuant to a notice by a Grantor in accordance with Section 4.

          "Supporting Obligations" means all supporting obligations as such term
is defined in the UCC.t

          "Trademark Security Agreement" means the Trademark Security Agreement
dated as of the date hereof among certain Grantors and the Agent.

          "Trademarks" has the meaning given to that term in the Trademark
Security Agreement.

          "UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.

          "Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted "Revised Article 9" of the UCC on or after July 1, 2001.

          All other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Credit Agreement. All other undefined terms
contained in this Security Agreement, unless the context indicates otherwise,
have the meanings provided for by the UCC to the extent the same are used or
defined therein.

     2. GRANT OF LIEN.

          (a) As security for all Obligations, each Grantor hereby grants to the
Agent, for the benefit of the Agent and the Lenders, a continuing security
interest in, lien on, assignment of and right of set-off against, all of the
following property and assets of such Grantor, whether now owned or existing or
hereafter acquired or arising, regardless of where located:

          (i) all Accounts (excepting Excluded Accounts);


                                       4
                            Lakes Security Agreement

<PAGE>

          (ii) all Inventory;

          (iii) all contract rights, including Assigned Contracts;

          (iv) all Chattel Paper;

          (v) all Documents;

          (vi) all Instruments;

          (vii) all Supporting Obligations and Letter-of-Credit Rights;

          (viii) all General Intangibles (including payment intangibles and
Software);

          (ix) all Goods;

          (x) all Equipment;

          (xi) all Investment Property;

          (xii) all money, cash, cash equivalents, securities and other property
of any kind of such Grantor held directly or indirectly by the Agent or any
Lender;

          (xiii) all of such Grantor's Deposit Accounts, credits, and balances
with and other claims against the Agent or any Lender or any of their Affiliates
or any other financial institution with which such Grantor maintains deposits,
including any Payment Accounts;

          (xiv) all books, records and other property related to or referring to
any of the foregoing, including books, records, account ledgers, data processing
records, computer software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing;

          (xv) all Commercial Tort Claims in which a Grantor is a plaintiff; and

          (xvi) all accessions to, substitutions for and replacements, products
and proceeds of any of the foregoing, including, but not limited to, proceeds of
any insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing.

          All of the foregoing, together with the real property covered by the
Mortgage(s), all equity interests in Subsidiaries pledged to the Agent and all
other property of the Grantors in which the Agent or any Lender may at any time
be granted a Lien as collateral for the Obligations, is herein collectively
referred to as the "Collateral."

          (b) Notwithstanding the above Section 2(a), the Collateral shall not
include:

          (i) Excluded Debt;

          (ii) Excluded Accounts;


                                       5
                            Lakes Security Agreement

<PAGE>

          (iii) the Capital Stock of any Excluded Subsidiary;

          (iv) any World Poker Shares;

          (v) the Corporate Aircraft Lease Agreement;

          (vi) any rights or interests in any existing or future contract with
an Indian tribe, the valid grant or enforcement of the rights and interests
granted under section 2(a) to Agent (A) would give such Indian Tribe a legally
enforceable right to terminate its obligations thereunder, (B) is prohibited by
the terms thereof and such prohibition has not been waived or cannot be waived
under applicable law, (C) requires the consent of the other party to such
contract and such consent, to the extent required by the terms thereof, has not
been obtained, or (D) requires the review or approval of the National Indian
Gaming Commission which has not been obtained (but, for the avoidance of doubt,
it is understood that the Lien granted therein on such Grantor's rights to
receive payments with respect to any such rights or interests (the "Payment
Rights") shall be included as Collateral whether or not the grant of such right
is permitted under such contract with such Indian Tribe, provided that in no
event will the Agent be permitted to assume any other rights of a Grantor under
any such contract, and provided further that such Lien in the Payment Rights
shall not be enforceable against or otherwise impose any duty or obligation on
such Indian Tribe; and

          (vii) any rights or interests in any Assigned Contract hereafter held
by any Grantor to the extent that (such excluded Assigned Contract is referred
to herein as "Excluded Assigned Contracts"): (i) as a result of the security
interest granted under Section 2.1(a) herein, such Grantor's right in or with
respect to such Assigned Contract would be forfeited or invalidated or such
Grantor would be deemed to have materially breached or defaulted under the
applicable Assigned Contract pursuant to restrictions contained therein; and
(ii) to the extent any such restriction is effective and enforceable under
applicable law (including, without limitation, after giving effect to the
provisions of Sections 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction); provided, however, that
in no event shall the foregoing be construed to exclude from the grant of
security interest provided herein: (X) any and all proceeds of such Assigned
Contract s, or (Y) such Assigned Contract at any time that the restrictions in
the Assigned Contract are no longer effective and enforceable or at any time
that the consent of the other party to the Assigned Contract is obtained to the
assignment provided herein, in each case, the security interest of the Agent in
such Assigned Contract shall attach immediately at such time.

          (c) All of the Obligations shall be secured by all of the Collateral.

     3. PERFECTION AND PROTECTION OF SECURITY INTEREST.

          (a) Each Grantor shall, at its expense, perform all steps requested by
the Agent at any time to perfect, maintain, protect, and enforce the Agent's
Liens, including: (i) executing, delivering and/or filing and recording of the
Mortgage(s), the Copyright Security Agreements, Patent Security Agreements and
Trademark Security Agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent; (ii) delivering to the Agent warehouse receipts
covering any


                                       6
                            Lakes Security Agreement

<PAGE>

portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of title covering any portion of the collateral for
which certificates of title have been issued; (iii) when an Event of Default has
occurred and is continuing, transferring Inventory to warehouses or other
locations designated by the Agent; (iv) placing notations on such Grantor's
books of account to disclose the Agent's security interest; and (v) taking such
other steps as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. Each Grantor agrees that a carbon, photographic,
photostatic, or other reproduction of this Security Agreement or of a financing
statement is sufficient as a financing statement.

          (b) Unless Agent shall otherwise consent in writing (which consent may
be revoked), each Grantor shall deliver to Agent all Collateral consisting of
certificated securities (accompanied by stock powers executed in blank) promptly
after such Grantor receives the same. Whenever a Default or Event of Default has
occurred and is continuing, each Grantor shall deliver to Agent all Collateral
consisting of negotiable Documents, Chattel Paper and Instruments promptly after
such Grantor receives the same. Each Grantor hereby agrees to take any or all
other action that the Agent may reasonably request in order for the Agent to
obtain control of any Collateral in accordance with the Pledge Agreement, this
Agreement and Sections 9-104, 9-105, 9-106 and 9-107 of the UCC. If no Event of
Default has occurred and is continuing, such Collateral delivered pursuant to
this subsection, 3(b), held by the Agent in respect of a Project in accordance
with the Terms of the Loan Documents shall be returned to the applicable Loan
Party within two (2) Business Days from the date such Loan Party notifies the
Agent that an Amendment to such Collateral is to be made, it being understood
that such Loan Party shall, within two (2) Business Days of receipt thereof,
return the amended Collateral to the Agent.

          (c) Each Grantor shall obtain or use its best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and such
Grantor shall in all instances obtain signed acknowledgements of Agent's Liens
from bailees having possession of any Collateral that they hold for the benefit
of the Agent.

          (d) Unless waived by the Agent in writing (which waiver may be
revoked), each Grantor shall obtain authenticated control agreements from each
issuer of uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or for
such Grantor.

          (e) If any Grantor is or becomes the beneficiary of a letter of credit
such Grantor shall promptly notify Agent thereof and enter into a tri-party
agreement with Agent and the issuer and/or confirmation bank with respect to
Letter-of-Credit Rights assigning such Letter-of-Credit Rights to Agent and
directing all payments thereunder to the Payment Account, all in form and
substance reasonably satisfactory to Agent.

          (f) Each Grantor shall take all steps necessary to grant the Agent
control of all electronic chattel paper in accordance with the Code and all
"transferable records" as defined in the Uniform Electronic Transactions Act.

          (g) Each Grantor hereby irrevocably authorizes the Agent at any time
and from time to time to file in any filing office in any Uniform Commercial
Code jurisdiction any


                                       7
                            Lakes Security Agreement

<PAGE>

initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of such Grantor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC of the State of New York or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC of the State of New York for the sufficiency or filing office acceptance
of any financing statement or amendment, including (i) whether such Grantor is
an organization, the type of organization and any organization identification
number issued to such Grantor, and (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates. Each Grantor agrees to furnish any such information to the
Agent promptly upon request. Each Grantor also ratifies its authorization for
the Agent to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.

          (h) Each Grantor shall promptly notify Agent of any Commercial Tort
Claim acquired by it.

          (i) From time to time, each Grantor shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent and the Lenders, the Collateral, but such
Grantor's failure to do so shall not affect or limit any security interest or
any other rights of the Agent or any Lender in and to the Collateral with
respect to such Grantor. So long as the Credit Agreement is in effect and until
all Obligations have been fully satisfied, the Agent's Liens shall continue in
full force and effect in all Collateral.

          (j) Not less frequently than once during each calendar quarter, each
Grantor shall, unless Agent shall otherwise consent, provide to Agent a
certificate of good standing from its state of incorporation or organization.

          (k) Without limiting the prohibitions on mergers involving any Grantor
contained in the Credit Agreement, no Grantor shall reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the date hereof or change its type of
entity as identified on Schedule II without the prior written consent of Agent.

          (l) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of Agent and agrees that
it will not do so without the prior written consent of Agent, subject to such
Grantor's rights under Section 9-509(d)(2) of the UCC.

          (m) No Grantor shall enter into any Contract that restricts or
prohibits the grant of a security interest in Accounts, Chattel Paper,
Instruments or payment intangibles or the proceeds of the foregoing to Agent.

     4. LOCATION OF COLLATERAL. (a) Each Grantor represents and warrants to the
Agent and the Lenders that: (A) Schedule I is a correct and complete list of the
location of such Grantor's chief executive office, the location of its books and
records, the locations of the Collateral, and


                                       8
                            Lakes Security Agreement

<PAGE>

the locations of all of its other places of business; and (b) Schedule I
correctly identifies any of such facilities and locations that are not owned by
such Grantor and sets forth the names of the owners and lessors or sublessors of
such facilities and locations. Each Grantor covenants and agrees that it will
not (i) maintain any Collateral at any location other than those locations
listed for such Grantor on Schedule I, (ii) otherwise change or add to any of
such locations, or (iii) change the location of its chief executive office from
the location identified in Schedule I, unless in each case it gives the Agent at
least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith.

     5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each
Grantor's name as of the Closing Date as it appears in official filings in the
state of its incorporation or other organization, the type of entity of such
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by such
Grantor's state of incorporation or organization or a statement that no such
number has been issued and the jurisdiction in which such Grantor is
incorporated or organized. Each Grantor has only one state of incorporation or
organization.

     6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) such Grantor has rights in and the power to transfer
all of the Collateral free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except for those Liens identified in clause (b) of the definition
of Permitted Liens (as set forth in the Credit Agreement); and (c) such Grantor
will use, store, and maintain the Collateral with all reasonable care and will
use such Collateral for lawful purposes only.

     7. APPRAISALS. Whenever a Default or Event of Default exists, and at such
other times as the Agent requests, each Grantor shall, at its expense and upon
the Agent's request, provide the Agent with appraisals or updates thereof of any
or all of the Collateral from an appraiser, and prepared on a basis,
satisfactory to the Agent, such appraisals and updates to include, without
limitation, information required by applicable law and regulation and by the
internal policies of the Lenders.

     8. ACCESS AND EXAMINATION. The Agent, accompanied by any Lender which so
elects, may at all reasonable times during regular business hours (and at any
time when a Default or Event of Default exists and is continuing) have access
to, examine, audit, make extracts from or copies of and inspect any or all of
each Grantor's records, files, and books of account and the Collateral, and
discuss such Grantor's affairs with such Grantor's officers and management. Each
Grantor will deliver to the Agent any instrument necessary for the Agent to
obtain records from any service bureau maintaining records for such Grantor. The
Agent may, and at the direction of the Required Lenders shall, at any time when
a Default or Event of Default exists, and at such Grantor's expense, make copies
of all of such Grantor's books and records, or require such Grantor to deliver
such copies to the Agent. The Agent may, without expense to the Agent, use such
of such Grantor's respective personnel, supplies, and real property as may be
reasonably necessary for maintaining or enforcing the Agent's Liens. The Agent
shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the


                                       9
                            Lakes Security Agreement

<PAGE>

validity, amount or any other matter relating to the Accounts, Inventory, or
other Collateral, by mail, telephone, or otherwise.

     9. COLLATERAL REPORTING. Each Grantor shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) at any time requested by the Agent, a schedule of such Grantor's Accounts
created, credits given, cash collected and other adjustments to Accounts since
the last such schedule; (b) on a quarterly basis by the 20th day of the
following fiscal quarter, or more frequently if requested by the Agent, an aging
of such Grantor's accounts payable; (c) upon request, a statement of the balance
of any intercompany accounts; (d) such other reports as to the Collateral of
such Grantor as the Agent shall reasonably request from time to time; and (e)
with the delivery of each of the foregoing, a certificate of such Grantor
executed by an officer thereof certifying as to the accuracy and completeness of
the foregoing. If any of such Grantor's records or reports of the Collateral are
prepared by an accounting service or other agent, such Grantor hereby authorizes
such service or agent to deliver such records, reports, and related documents to
the Agent, for distribution to the Lenders.

     10. ACCOUNTS.

          Each Grantor shall notify the Agent promptly of all disputes and
claims in excess of $100,000 with any Account Debtor, and agrees to settle,
contest, or adjust such dispute or claim at no expense to the Agent or any
Lender. No discount, credit or allowance shall be granted to any such Account
Debtor without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of such Grantor's business
when no Event of Default exists hereunder. Such Grantor shall send the Agent a
copy of each credit memorandum in excess of $100,000 as soon as issued. The
Agent may at all times when an Event of Default exists hereunder, settle or
adjust disputes and claims directly with Account Debtors for amounts and upon
terms which the Agent or the Required Lenders, as applicable, shall consider
advisable and, in all cases, the Agent will credit such Grantor's Loan Account
with the net amounts received by the Agent in payment of any Accounts.

     11. COLLECTION OF ACCOUNTS; PAYMENTS.

          (a) Until the Agent notifies the Grantors to the contrary, each
Grantor shall make collection of all Accounts and other Collateral for the
Agent, shall receive all payments as the Agent's trustee, and shall immediately
deliver all payments in their original form duly endorsed in blank into a
Payment Account established for the account of such Grantor at a Clearing Bank
acceptable to the Agent, subject to a blocked account agreement. On or prior to
the date hereof, each Grantor shall establish a lock-box service for collections
of Accounts at a clearing bank acceptable to the Agent and subject to a blocked
account agreement and other documentation acceptable to the Agent. Each Grantor
shall instruct all Account Debtors, that upon the occurrence and during the
continuance of a Default or an Event of Default, Account Debtors are to make all
payments directly to the address established for such service. If,
notwithstanding such instructions, a Grantor receives any proceeds of Accounts,
it shall receive such payments as the Agent's trustee, and shall immediately
deliver such payments to the Agent in their original form duly endorsed in blank
or deposit them into a Payment Account, as the Agent may direct. All collections
received in any lock-box or Payment Account or directly by a Grantor or the
Agent, and all funds in any Payment Account or other account to which such


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collections are deposited shall be subject to the Agent's sole control and
withdrawals by such Grantor shall not be permitted. The Agent or the Agent's
designee may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of the
Agent's security interest therein, and may collect them directly. So long as an
Event of Default has occurred and is continuing, each Grantor, at the Agent's
request, shall execute and deliver to the Agent such documents as the Agent
shall require to grant the Agent access to any post office box in which
collections of Accounts are received.

          (b) If services are rendered for cash, each Grantor shall immediately
deliver to the Agent or deposit into a Payment Account the cash which such
Grantor receives.

          (c) All payments including immediately available funds received by the
Agent at a bank account designated by it, will be the Agent's sole property for
its benefit and the benefit of the Lenders.

     12. EQUIPMENT.

          (a) Each Grantor represents and warrants to the Agent and the Lenders
and agrees with the Agent and the Lenders that all of the Equipment owned by
such Grantor is and will be used or held for use in such Grantor's business, and
is and will be fit for such purposes. Each Grantor shall keep and maintain its
Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof.

          (b) Each Grantor shall promptly inform the Agent of any material
additions to or deletions from the Equipment. No Grantor shall permit any
Equipment to become a fixture with respect to any real property or to become an
accession with respect to other personal property with respect to which real or
personal property the Agent does not have a Lien. No Grantor will, without the
Agent's prior written consent, alter or remove any identifying symbol or number
on any of such Grantor's Equipment constituting Collateral.

          (c) Except as set forth in the Credit Agreement, no Grantor shall,
without the Agent's prior written consent, sell, license, lease as a lessor, or
otherwise dispose of any of such Grantor's Equipment.

     13. ASSIGNED CONTRACTS. Each Grantor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment; provided, however, that such Grantor shall not take any
action or fail to take any action with respect to its Assigned Contracts which
would cause the termination of a material Assigned Contract. Without limiting
the generality of the foregoing, each Grantor shall take all action necessary or
appropriate to permit, and shall not take any action which would have any
materially adverse effect upon, the full enforcement of all indemnification
rights under its Assigned Contracts. Each Grantor shall notify the Agent and the
Lenders in writing, promptly after such Grantor becomes aware thereof, of any
event or fact which could give rise to a material claim by it for
indemnification under any of its Assigned Contracts, and shall diligently pursue
such right and report to the Agent on all further developments with respect
thereto. Each Grantor shall deposit into the Payment Account or remit directly
to the Agent for application to the Obligations in such order as the Required


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Lenders shall determine, all amounts received by such Grantor as indemnification
or otherwise pursuant to its Assigned Contracts. If a Grantor shall fail after
the Agent's demand to pursue diligently any right under its Assigned Contracts,
or if an Event of Default then exists, the Agent may, and at the direction of
the Required Lenders shall, directly enforce such right in its own or such
Grantor's name and may enter into such settlements or other agreements with
respect thereto as the Agent or the Required Lenders, as applicable, shall
determine. In any suit, proceeding or action brought by the Agent for the
benefit of the Lenders under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, the Grantors, jointly and severally, shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by such Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from
such Grantor to or in favor of such obligor or its successors. All such
obligations of such Grantor shall be and remain enforceable only against such
Grantor and shall not be enforceable against the Agent or the Lenders.
Notwithstanding any provision hereof to the contrary, each Grantor shall at all
times remain liable to observe and perform all of its duties and obligations
under its Assigned Contracts, and the Agent's or any Lender's exercise of any of
their respective rights with respect to the Collateral shall not release such
Grantor from any of such duties and obligations. Neither the Agent nor any
Lender shall be obligated to perform or fulfill any of such Grantor's duties or
obligations under its Assigned Contracts or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to collect or
enforce any performance, any payment of any amounts, or any delivery of any
property.

     14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and
warrants to the Agent and the Lenders that (a) all Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, Letter of
Credit Rights and Chattel Paper are and will be owned by such Grantor, free and
clear of all Liens other than Permitted Liens. If any Grantor retains possession
of any Chattel Paper or Instruments with Agent's consent, such Chattel Paper and
Instruments shall be marked with the following legend: "This writing and the
obligations evidenced or served hereby are subject to the security interest of
Bank of America, N.A., as Agent, for the benefit of Agent and certain Lenders."

     15. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Required Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Grantor fails to pay or do, including payment of
any judgment against such Grantor, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's or bailee's claim, and any
other Lien upon or with respect to the Collateral. All payments that the Agent
makes under this Section 15 and all out-of-pocket costs and expenses that the
Agent pays or incurs in connection with any action taken by it hereunder shall
be charged to such Grantor. Any payment made or other action taken by the Agent
under this Section 15 shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed thereafter as herein provided.


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     16. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the
Agent's designee as such Grantor's attorney, with power, upon the occurrence and
during the continuance of a Default or an Event of Default: (a) to endorse such
Grantor's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent's or any Lender's possession;
(b) to sign such Grantor's name on any invoice, bill of lading, warehouse
receipt or other negotiable or non-negotiable Document constituting Collateral,
on drafts against customers, on assignments of Accounts, on notices of
assignment, financing statements and other public records and to file any such
financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default has occurred and is continuing, to notify the post office
authorities to change the address for delivery of such Grantor's mail to an
address designated by the Agent and to receive, open and dispose of all mail
addressed to such Grantor; (d) to send requests for verification of Accounts to
customers or Account Debtors; (e) to complete in the Grantor's name or the
Agent's name, any order, sale or transaction, obtain the necessary Documents in
connection therewith, and collect the proceeds thereof; (f) to the extent that
the authorization given by such Grantor in Section 3(g) of this Security
Agreement is not sufficient, to file such financing statements with respect to
this Security Agreement, with or without such Grantor's signature, or to file a
photocopy of this Security Agreement in substitution for a financing statement,
as the Agent may deem appropriate and to execute in such Grantor's name such
financing statements and amendments thereto and continuation statements which
may require such Grantor's signature; and (g) to do all things necessary to
carry out the Credit Agreement and this Security Agreement. Each Grantor
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law except for their willful misconduct.
This power, being coupled with an interest, is irrevocable until the Credit
Agreement has been terminated and the Obligations have been fully satisfied.

     17. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.

          (a) Each Grantor assumes all responsibility and liability arising from
or relating to the use, sale, license or other disposition of the Collateral.
The Obligations shall not be affected by any failure of the Agent or any Lender
to take any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release such Grantor
from any of the Obligations. Following the occurrence and during the
continuation of an Event of Default, the Agent may (but shall not be required
to), and at the direction of the Required Lenders shall, without notice to or
consent from the Grantor, sue upon or otherwise collect, extend the time for
payment of, modify or amend the terms of, compromise or settle for cash, credit,
or otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of the Grantor for the Obligations or under
the Credit Agreement or any other agreement now or hereafter existing between
the Agent and/or any Lender and any Grantor(s).

          (b) It is expressly agreed by each Grantor that, anything herein to
the contrary notwithstanding, such Grantor shall remain liable under each of its
contracts and each of its


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<PAGE>

licenses to observe and perform all the conditions and obligations to be
observed and performed by it thereunder. Neither Agent nor any Lender shall have
any obligation or liability under any contract or license by reason of or
arising out of this Security Agreement or the granting herein of a Lien thereon
or the receipt by Agent or any Lender of any payment relating to any contract or
license pursuant hereto. Neither Agent nor any Lender shall be required or
obligated in any manner to perform or fulfill any of the obligations of such
Grantor under or pursuant to any contract or license, or to make any payment, or
to make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any contract or
license, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

          (c) Agent may at any time after a Default or an Event of Default has
occurred and be continuing (or if any rights of set-off (other than set-offs
against an Account arising under the contract giving rise to the same Account)
or contra accounts may be asserted with respect to the following), without prior
notice to any Grantor, notify Account Debtors, and other Persons obligated on
the Collateral that Agent has a security interest therein, and that payments
shall be made directly to Agent, for itself and the benefit of Lenders. Upon the
request of Agent, each Grantor shall so notify Account Debtors and other Persons
obligated on Collateral. Once any such notice has been given to any Account
Debtor or other Person obligated on the Collateral, such Grantor shall not give
any contrary instructions to such Account Debtor or other Person without Agent's
prior written consent.

          (d) Agent may at any time, after the occurrence and during the
continuance of a Default or an Event of Default, in Agent's own name or in the
name of any Grantor communicate with Account Debtors, parties to Contracts and
obligors in respect of Instruments to verify with such Persons, to Agent's
satisfaction, the existence, amount and terms of Accounts, payment intangibles,
Instruments or Chattel Paper. If a Default or Event of Default shall have
occurred and be continuing, each Grantor, at its own expense, shall cause the
independent certified public accountants then engaged by such Grantor to prepare
and deliver to Agent and each Lender at any time and from time to time promptly
upon Agent's request the following reports with respect to such Grantor: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Agent may request.
Each Grantor, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which such Grantor may in its discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory.

     18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.

          (a) Schedule III sets forth all Patent registrations and applications,
Trademark registrations and applications, and Copyright registrations and
applications owne by Grantors. This Security Agreement is effective to create a
valid and continuing Lien on and, upon filing of the Copyright Security
Agreement with the United States Copyright Office and filing of the Patent
Security Agreements and Trademark Security Agreements with the United States
Patent and Trademark Office, perfected Liens in favor of Agent on each Grantor's
Patents, Trademarks and Copyrights set forth in Schedule III and the schedules
attached to the respective security agreements and such perfected Liens are
enforceable as such as against any and all creditors of


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                            Lakes Security Agreement

<PAGE>

and purchasers from such Grantor. Upon filing of the Copyright Security
Agreements with the United States Copyright Office and filing of the Patent
Security Agreements and Trademark Security Agreements with the United States
Patent and Trademark Office and the filing of appropriate financing statements,
all action necessary or desirable to protect and perfect Agent's Lien on each
Grantor's Patents, Trademarks or Copyrights set forth in Schedule III shall have
been duly taken.

          (b) Each Grantor shall notify Agent immediately if it knows or has
reason to know that any application or registration relating to any Patent,
Trademark or Copyright (now or hereafter existing) may become abandoned or
dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding such Grantor's ownership of any Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.

          (c) Each Grantor, shall notify Agent of any application filed by it
for the registration of any material Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency, and, upon request of Agent, such Grantor shall
execute and deliver any and all copyright security agreements (each a "COPYRIGHT
SECURITY AGREEMENT SUPPLEMENT"), Patent Security Agreements (each a "PATENT
SECURITY AGREEMENT SUPPLEMENT") or Trademark Security Agreements (each a
"TRADEMARK SECURITY AGREEMENT SUPPLEMENT") as Agent may reasonably request to
evidence Agent's Lien on such Patent, Trademark or Copyright, and the General
Intangibles of such Grantor relating thereto or represented thereby.

          (d) Each Grantor shall take all commercially reasonable actions
necessary or requested by Agent to maintain and pursue each application, to
obtain the relevant registration and to maintain the registration of each of its
material Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation
proceedings.

          (e) In the event that any of the material patent, trademark or
copyright Collateral is infringed upon, or misappropriated or diluted by a third
party, each Grantor shall notify Agent promptly after such Grantor learns
thereof. Each Grantor shall, unless it shall reasonably determine that such
patent, trademark or copyright Collateral is in no way material to the conduct
of its business or operations, promptly sue for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other commercially reasonable
actions as Agent shall reasonably deem appropriate under the circumstances to
protect such patent, trademark or copyright Collateral.

     19. INDEMNIFICATION. In any suit, proceeding or action brought by Agent or
any Lender relating to any Collateral for any sum owing with respect thereto or
to enforce any rights or claims with respect thereto, the Grantors, jointly and
severally, will save, indemnify and keep Agent and Lenders harmless from and
against all expense (including reasonable attorneys' fees and expenses), loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by any Grantor of any
obligation thereunder or arising


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                            Lakes Security Agreement

<PAGE>

out of any other agreement, indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from any Grantor, except in the case
of Agent or any Lender, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct of Agent or
such Lender as finally determined by a court of competent jurisdiction. All such
obligations of the Grantors shall be and remain enforceable against and only
against the Grantors and shall not be enforceable against Agent or any Lender.

     20. LIMITATION ON LIENS ON COLLATERAL. No Grantor will create, permit or
suffer to exist, and each Grantor will defend the Collateral against, and take
such other action as is necessary to remove, any Lien on the Collateral except
Permitted Liens, and each Grantor will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.

     21. NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent promptly,
in reasonable detail, (i) of any Lien (other than Permitted Liens) or claim made
or asserted against any of the Collateral, and (ii) of the occurrence of any
other event which would have a Material Adverse Effect.

     22. REMEDIES; RIGHTS UPON DEFAULT.

          (a) In addition to all other rights and remedies granted to it under
this Security Agreement, the Credit Agreement, the other Loan Documents and
under any other instrument or agreement securing, evidencing or relating to any
of the Obligations, if any Event of Default shall have occurred and be
continuing, Agent may exercise all rights and remedies of a secured party under
the UCC (subject to--in the case of certain equipment--the Johnson Act, 15
U.S.C. Sections 1171 et seq., tribal-state class III gaming compacts, and other
laws or regulations applicable to the possession, transportation use and sale of
gaming equipment). Without limiting the generality of the foregoing, each
Grantor expressly agrees that in any such event Agent, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
such Grantor or any other Person (all and each of which demands, advertisements
and notices are hereby expressly waived to the maximum extent permitted by the
UCC and other applicable law), may forthwith enter upon the premises of such
Grantor where any Collateral is located through self-help, without judicial
process, without first obtaining a final judgment or giving such Grantor or any
other Person notice and opportunity for a hearing on Agent's claim or action and
may collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, license, assign,
give an option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for the benefit of Agent and Lenders,
the whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. Agent
shall have the right to conduct such sales on any Grantor's premises or
elsewhere and shall have the right to use any Grantor's premises without charge
for such time or times as Agent deems necessary or advisable.


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<PAGE>

          (b) Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at a place or places designated by
Agent which are reasonably convenient to Agent and such Grantor, whether at such
Grantor's premises or elsewhere. Until Agent is able to effect a sale, lease, or
other disposition of Collateral, Agent shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Agent. Agent shall have no obligation to any Grantor to maintain
or preserve the rights of such Grantor as against third parties with respect to
Collateral while Collateral is in the possession of Agent. Agent may, if it so
elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of Agent's remedies (for the benefit of Agent and
Lenders), with respect to such appointment without prior notice or hearing as to
such appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Credit Agreement, and only after so paying over such net
proceeds, and after the payment by Agent of any other amount required by any
provision of law, need Agent account for the surplus, if any, to such Grantor.
To the maximum extent permitted by applicable law, each Grantor waives all
claims, damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees or other
expenses incurred by Agent or any Lender to collect such deficiency.

          (c) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

          (d) To the extent that applicable law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for the Agent (a) to fail to
incur expenses reasonably deemed significant by the Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to obtain
or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against Account Debtors
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Grantor, for expressions of
interest in acquiring all or any portion of such Collateral, (g) to hire one or
more professional auctioneers or liquidators to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of


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<PAGE>

doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (k) to purchase insurance or
credit enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Grantor acknowledges
that the purpose of this Section 22(d) is to provide non-exhaustive indications
of what actions or omissions by the Agent would not be commercially unreasonable
in the Agent's exercise of remedies against the Collateral and that other
actions or omissions by the Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 22(d). Without
limitation upon the foregoing, nothing contained in this Section 22(d) shall be
construed to grant any rights to any of the Grantors or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 22(d).

     23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of
enabling Agent to exercise rights and remedies under Section 22 hereof
(including, without limiting the terms of Section 22 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, to be effective at such time as Agent is lawfully entitled to
exercise its rights with respect to the Collateral under this Agreement, and
only to the extent permitted, for the benefit of Agent and Lenders, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor) to use, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.

     24. LIMITATION ON AGENT'S AND LENDERS' AND LENDERS' DUTY IN RESPECT OF
COLLATERAL. Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender, or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto.

     25. MISCELLANEOUS.

          (a) REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should such Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of such Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In


                                       18
                            Lakes Security Agreement

<PAGE>

the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

          (b) NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give and
serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement.

          (c) SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Agent, Lenders and the
Grantors with respect to the matters referred to herein and therein.

          (d) NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any Lender shall
by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder, and no waiver shall be valid unless in writing,
signed by Agent and then only to the extent therein set forth. A waiver by Agent
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Agent would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Agent or any Lender, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Agent and the
Grantors.

          (e) LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.

          (f) TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 25(a)
hereof, this Security Agreement shall terminate upon the payment in full of all
other Obligations (other than indemnification Obligations as to which no claim
has been asserted).


                                       19
                            Lakes Security Agreement

<PAGE>

          (g) SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of the Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of any
Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the Lien granted to Agent, for the benefit of
Agent and Lenders, hereunder. No Grantor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security Agreement.

          (h) COUNTERPARTS. This Security Agreement may be authenticated in any
number of separate counterparts, each of which shall collectively and separately
constitute one and the same agreement. This Security Agreement may be
authenticated by manual signature, facsimile or, if approved in writing by
Agent, electronic means, all of which shall be equally valid.

          (i) GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE
GRANTORS HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK COUNTY, CITY OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY GRANTOR, AGENT AND LENDERS
PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND THE GRANTORS ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER


                                       20
                            Lakes Security Agreement

<PAGE>

PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT
THE ADDRESS REFERRED TO IN SECTION 11.02 OF THE CREDIT AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.

          (j) WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND
GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

          (k) SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

          (l) NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

          (m) ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of Section 25(i) and Section 25(j), with its counsel.

          (n) BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall
be for the benefit of Agent and Lenders, and all proceeds or payments realized
from Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Credit Agreement.

                  [Remainder of page intentionally left blank]


                                       21
                            Lakes Security Agreement

<PAGE>

          IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.

                                    LAKES GAMING AND RESORTS, LLC
                                    LAKES ENTERTAINMENT, INC.
                                    BORDERS LAND COMPANY, LLC
                                    GREAT LAKES GAMING OF MICHIGAN, LLC
                                    LAKES CLOVERDALE, LLC
                                    LAKES GAME DEVELOPMENT, LLC
                                    LAKES GAMING - MISSISSIPPI, LLC
                                    LAKES IOWA CONSULTING, LLC
                                    LAKES IOWA MANAGEMENT, LLC
                                    LAKES JAMUL DEVELOPMENT, LLC
                                    LAKES JAMUL, INC.
                                    LAKES KAR SHINGLE SPRINGS, LLC
                                    LAKES KEAN ARGOVITZ RESORTS -CALIFORNIA, LLC
                                    LAKES KICKAPOO CONSULTING, LLC
                                    LAKES KICKAPOO MANAGEMENT, LLC
                                    LAKES NIPMUC, LLC
                                    LAKES PAWNEE CONSULTING, LLC
                                    LAKES PAWNEE MANAGEMENT, LLC
                                    LAKES POKER TOUR, LLC
                                    LAKES SHINGLE SPRINGS, INC.


                                    By: /s/ Timothy Cope
                                        ----------------------------------------
                                    Name: Timothy Cope
                                    Title:President and Chief Financial Officer
                                          --------------------------------------


                                       22
                            Lakes Security Agreement

<PAGE>

                                    BANK OF AMERICA, N.A.,
                                    as Agent


                                    By: /s/ Donna F. Kimbraugh
                                        ----------------------------------------
                                    Name: Donna F. Kimbraugh
                                    Title: Assistant Vice President


                                       23
                            Lakes Security Agreement
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>c06339exv10w3.txt
<DESCRIPTION>PLEDGE AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

                                PLEDGE AGREEMENT

      THIS PLEDGE AGREEMENT (as amended (including any amendment and restatement
hereof), supplemented or otherwise modified from time to time, this "Pledge
Agreement") is made and entered into as of June 22, 2006 by and among each of
the undersigned pledgors (each, individually a "Pledgor" and, collectively, the
"Pledgors") in favor of BANK OF AMERICA, N.A. ("BofA"), in its capacity as
collateral agent for the Secured Parties (as defined in the Credit Agreement
referred to below) (the "Agent").

                                   WITNESSETH:

      WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof by and among the Borrower, Holdings, Agent and Lenders (including all
annexes, exhibits and schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), Lenders have agreed
to make the Loans on behalf of the Borrower;

      WHEREAS, Holdings and the Subsidiary Grantors have executed guarantees to
the Lenders in respect of the obligations of the Borrower;

      WHEREAS, each Pledgor is the owner of the outstanding shares of stock,
membership interests, limited liability company interests, partnership interests
or other equity interests (the "Pledged Shares") set forth on Schedule I hereto
(as amended from time to time, "Schedule I") of each of the Persons listed on
Schedule I hereto (the "Issuers"), and is the holder of those certain promissory
notes set forth on Schedule II hereto (as amended from time to time, "Schedule
II") (the "Pledged Notes"; and together with the Pledged Shares, the "Pledged
Securities");

      WHEREAS, in order to induce the Agent and the Lenders to enter into the
Credit Agreement and the other Loan Documents and make the extensions of credit
to the Borrower, each Pledgor has agreed to grant a continuing Lien on and
security interest in the Pledged Collateral (as hereinafter defined) to secure
its Obligations (as defined in the Credit Agreement);

                                    AGREEMENT

      NOW THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans to the Borrower, each Pledgor hereby agrees with Agent as
follows:

      SECTION 1 DEFINED TERMS. The following terms shall have the following
respective meanings:

      "Foreign Subsidiary" has the meaning specified in Section 2 hereof.

      "Issuers" has the meaning specified in the recitals hereof.

      "Pledged Collateral" has the meaning specified in Section 2 hereof.

      "Pledged Debt" has the meaning specified in Section 2 hereof.

<PAGE>

      "Pledged Note" has the meaning specified in the recitals hereof.

      "Pledged Securities" has the meaning specified in the recitals hereof.

      "Pledged Shares" has the meaning specified in the recitals hereof.

      "Proxy" has the meaning specified in Section 4 hereof.

      "Secured Obligations" has the meaning specified in Section 3 hereof.

      "Securities Act" has the meaning specified in Section 13 hereof.

All other capitalized terms used herein and not otherwise defined herein shall
have the meanings given in the Credit Agreement, or, if not defined therein, the
meanings set forth in the UCC, except where the context otherwise requires.

      SECTION 2 PLEDGE. Each Pledgor hereby pledges to Agent, for its benefit
and the benefit of the Lenders, and grants to Agent, for its benefit and the
benefit of the Lenders, a continuing first priority and perfected security
interest in, its right, title and interest in and to the following
(collectively, the "Pledged Collateral"):

            (a) the Pledged Shares and any certificates representing the Pledged
Shares, and all products and proceeds of any of the Pledged Shares, including,
without limitation, all dividends, cash, instruments, subscriptions, warrants
and any other rights and options and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;

            (b) all additional shares of stock, membership interests, limited
liability company interests, and partnership interest of, or other equity
interest in, any other Person (which shall be an "Issuer" under and as defined
in this Pledge Agreement) from time to time acquired by such Pledgor in any
manner, and all certificates representing such additional shares (any such
additional shares shall constitute part of the Pledged Shares under and as
defined in this Pledge Agreement), and all products and proceeds of any of such
additional Pledged Shares, including, without limitation, all dividends,
distributions, cash, instruments, subscriptions, warrants and any other rights
and options and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
additional Pledged Shares;

            (c) all voting rights in respect of the Pledged Shares and all
rights to manage and administer the business of the Issues, together with all
other rights and interests arising out of or related to the interests in the
Pledged Shares;

            (d) the Pledged Notes and the instruments representing the Pledged
Notes and any collateral security at any time held by such Pledgor for any such
Pledged Note, and all products and proceeds of the Pledged Notes, including,
without limitation, all interest and principal payments, instruments, and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for the Pledged Notes;

                                       2

<PAGE>

            (e) all additional promissory notes from time to time held by such
Pledgor in any manner, and the instruments representing such additional
promissory notes (any such additional promissory notes shall constitute part of
the Pledged Notes under and as defined in this Pledge Agreement) and all
products and proceeds of any such additional promissory notes, including,
without limitation, all interest and principal payments, instruments, and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any such additional promissory notes together with
the Pledged Notes, the "Pledged Debt"; and

            (f) all other claims of any kind or nature and any instruments,
certificates, chattel paper or other writings evidencing such claims, whether in
contract or tort and whether arising by operation of law, consensual agreement
or otherwise, at any time acquired by such Pledgor against any of its direct and
indirect Subsidiaries;

provided, however, that the foregoing clauses (a) through (c) shall not apply
(i) to the capital stock of any Foreign Subsidiary (as hereinafter defined), to
the extent (and only to the extent) that the application of such clauses would
require the pledge hereunder of more than 65% (or such other maximum amount as
may be pledged under Section 956 of the Code (as the same may be amended after
the date hereof) without causing such Foreign Subsidiary to be treated as
holding United States property for purposes of Section 956 of the Code) of each
class of the voting capital stock of any Foreign Subsidiary, (ii) the capital
stock of any Subsidiary owned directly or indirectly by a Foreign Subsidiary,
(For purposes hereof, the term "Foreign Subsidiary" means any "controlled
foreign corporation" within the meaning of Section 957(a) of the Code, as to
which any Pledgor is a "United States shareholder" as defined in Section 951(b)
of the Code.) (iii) the stock of any Excluded Subsidiaries, (iv) Excluded Debt
and (v) World Poker Shares.

      SECTION 3 SECURITY FOR OBLIGATIONS. This Pledge Agreement secures, and the
Pledged Collateral of each Pledgor is collateral security for, the prompt
payment and performance in full when due, whether at stated maturity, by
declaration, acceleration or otherwise (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), or any successor
provision thereto, whether or not an allowed claim), of all Obligations of the
applicable Pledgor now or hereafter existing under the Credit Agreement
(including the guarantee contained in the Credit Agreement) or any of the other
Loan Documents and all amendments, extensions or renewals thereof, whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy, would accrue on such Obligations, whether or
not an allowed claim), fees, expenses or otherwise, whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly owed with
others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred (all such Obligations of the Pledgors being
collectively referred to herein as the "Secured Obligations").

      SECTION 4 DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of the Agent pursuant hereto. Such certificates or instruments
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed acknowledgments of the Issuers of the Pledged Shares in
substantially the form of Exhibit A hereto, and instruments of transfer

                                       3

<PAGE>

or assignment in blank (or such other documents or agreements necessary to give
the Agent "control" within the meaning of the UCC), all in form and substance
reasonably satisfactory to the Agent. Each Pledgor shall execute and deliver to
the Agent a proxy, substantially in the form of Exhibit B hereto (a "Proxy"),
for each Issuer of the Pledged Shares pledged by it. Each Proxy shall be
irrevocable until the security interests granted in the Pledged Collateral are
terminated in accordance with this Pledge Agreement. If no Event of Default has
occurred and is continuing, such Collateral delivered pursuant to this Section,
4, held by the Agent in respect of a Project in accordance with the Terms of the
Loan Documents shall be returned to the applicable Loan Party within two (2)
Business Days from the date such Loan Party notifies the Agent that an Amendment
to such Collateral is to be made, it being understood that such Loan Party
shall, within two (2) Business Days of receipt thereof, return the amended
Collateral to the Agent.

      SECTION 5 REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants as to the Pledged Collateral pledged by it as follows:

            (a) Its Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable. Its Pledged Notes have been duly
authorized and executed by the respective issuers thereof and constitute the
legal, valid and binding obligations of such respective issuers.

            (b) Such Pledgor is the legal and beneficial owner of the Pledged
Collateral pledged by it, free and clear of any Lien on the Pledged Collateral
except for Permitted Liens under clause (b) of the definition of Permitted
Liens.

            (c) Upon the delivery to the Agent of the Pledged Collateral pledged
by such Pledgor and the filing of a UCC-1 financing statement, the pledge of
such Pledged Collateral pursuant to this Pledge Agreement will create a valid
and perfected first priority Lien in such Pledged Collateral securing the
payment of such Pledgor's Obligations for the benefit of the Agent and the
Lenders.

            (d) No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority is required either (i) for the pledge
by such Pledgor of Pledged Collateral pursuant to this Pledge Agreement or for
the execution, delivery or performance of this Pledge Agreement by such Pledgor
or (ii) for the exercise by the Agent of the voting or other rights provided for
in this Pledge Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Pledge Agreement (except as may be required in connection with
any disposition of the Pledged Securities by laws affecting the offering and
sale of securities generally).

            (e) Such Pledgor has full power and authority to enter into this
Pledge Agreement and has the right to vote, pledge and grant a security interest
in the Pledged Shares pledged by it and to pledge and grant a security interest
in the Pledged Notes and the other Pledged Collateral pledged by it, in each
case as provided by this Pledge Agreement.

            (f) This Pledge Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency,

                                       4

<PAGE>

reorganization, receivership, moratorium or other laws affecting the rights and
remedies of creditors generally and by general equitable principles.

            (g) The Pledged Shares constitute the percentage of the authorized,
issued and outstanding capital stock of the applicable Issuers set forth on
Schedule I hereto and constitute no less than 65% (or such other maximum amount
as may be pledged under Section 956 of the Code (as the same may be amended
after the date hereof) without causing such Foreign Subsidiary to be treated as
holding United States property for purposes of Section 956 of the Code) of the
outstanding voting capital stock of each direct Foreign Subsidiary and no less
than 100% of the outstanding capital stock of each other Subsidiary of such
Pledgor, unless such Subsidiary is owned directly or indirectly by a Foreign
Subsidiary.

            (h) The Pledged Notes listed on Schedule II hereto constitute the
only promissory notes held by such Pledgor as of the date hereof.

            (i) Except for the Pledged Securities, there are no instruments,
certificates, securities or other writings, or any chattel paper, evidencing or
representing any interest in or claim of such Pledgor against any direct or
indirect Subsidiary of such Pledgor).

            (j) The terms of each of the Pledged Shares constituting interests
in a partnership or limited liability company and the terms of each partnership
agreement or limited liability company agreement of each Issuer expressly
provide that they are securities governed by Article 8 of the Uniform Commercial
Code as in effect in each applicable jurisdiction.

      SECTION 6 FURTHER ASSURANCES. Each Pledgor agrees that at any time and
from time to time, at its expense, it will promptly execute and deliver, or
cause to be executed and delivered, all stock powers, note powers, allonges,
endorsements, proxies, assignments, acknowledgments, financing statements,
instruments and documents and take all further action, at the Agent's request,
that the Agent reasonably deems necessary or advisable in order to perfect any
security interest granted or purported to be granted hereby or to enable the
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral and to carry out the provisions and purposes hereof. Each
Pledgor will, promptly upon request, provide to the Agent all information and
evidence it may reasonably request concerning the Pledged Collateral to enable
the Agent to enforce the provisions of this Pledge Agreement.

SECTION 7 VOTING RIGHTS; DIVIDENDS; ETC.

            (a) Until the Agent terminates a Pledgor's rights to exercise its
voting and other consensual rights pursuant to Section 7(g) hereof, such Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Pledged Shares or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement, the Credit Agreement or
the other Loan Documents; provided, however, that no Pledgor shall exercise or
shall refrain from exercising any such right if such action or inaction could
reasonably be expected to have a Material Adverse Effect, could reasonably be
expected to adversely affect the value of any of the Pledged Collateral or the
validity, priority or perfection of the security interests granted hereunder or
the enforceability hereof or would otherwise be inconsistent with

                                       5

<PAGE>

or violate any provisions of this Pledge Agreement, the Credit Agreement or any
of the other Loan Documents.

            (b) So long as no Event of Default shall have occurred and be
continuing, the Pledgors shall be entitled to receive all cash payments of
interest and principal paid from time to time with respect to the Pledged Notes
to the extent permitted to be paid under the Credit Agreement.

            (c) So long as no Event of Default shall have occurred and be
continuing, the Pledgors shall be entitled to receive all cash dividends paid
from time to time in respect of the Pledged Shares to the extent permitted to be
paid under the Credit Agreement.

            (d) Except as otherwise provided in the Credit Agreement, upon the
occurrence and during the continuance of an Event of Default any and all (i)
dividends or other distributions and interest or principal paid or payable in
the form of instruments and other property (other than cash interest and
principal payments permitted under Section 7(b) hereof and cash dividends
permitted under Section 7(c) hereof) received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral, (ii)
dividends and other distributions paid or payable in cash received, receivable
or otherwise distributed in respect of any Pledged Shares in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and (iii) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged Shares,
shall in each case be delivered forthwith to the Agent to hold as Pledged
Collateral and shall, if received by a Pledgor, be received in trust for the
benefit of the Agent, be segregated from the other property or funds of such
Pledgor, and be forthwith delivered to the Agent as Pledged Collateral in the
same form as so received (with any necessary or requested endorsement).

            (e) Upon the occurrence and during the continuance of an Event of
Default, the Agent shall execute and deliver (or cause to be executed and
delivered) to each Pledgor all such proxies and other instruments as such
Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to Section 7(a) above.

            (f) Upon the occurrence and during the continuance of an Event of
Default, all dividends or other distributions and all interest and principal
payments which are received by any Pledgor contrary to the provisions of this
Section 7 shall be received in trust for the benefit of the Agent and the
Lenders, shall be segregated from other funds of such Pledgor and shall be
forthwith paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary or requested endorsement).

            (g) Upon the occurrence and during the continuance of an Event of
Default, the Agent may terminate any Pledgor's rights to exercise the voting and
other consensual rights which such Pledgor would otherwise be entitled to
exercise pursuant to Section 7(a) either by giving written notice of such
termination to such Pledgor or by transferring such Pledged Collateral into the
name of the Agent or its nominee and the Agent shall thereupon have the sole
right to exercise such voting and other consensual rights.

                                       6

<PAGE>

            (h) Upon the occurrence and during the continuance of an Event of
Default, all cash payments of interest and principal with respect to the Pledged
Notes and all cash dividends or other distributions payable in respect of the
Pledged Shares shall be paid directly to the Agent and, if received by any
Pledgor, shall be received in trust for the benefit of the Agent and the
Lenders, shall be segregated from other funds of such Pledgor, and shall be
forthwith paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary or requested endorsements) and each Pledgor's right
to receive such cash payments pursuant to Sections 7(b) and 7(c) hereof shall
immediately cease.

            (i) Notwithstanding any other provision of this Pledge Agreement,
this Pledge Agreement shall not in any way be deemed to obligate the Agent, its
nominee or any purchaser at any foreclosure sale to assume any Pledgor's
obligations, duties, expenses or liabilities under any partnership agreement or
limited liability company agreement or any other agreement unless the Agent,
such nominee or such purchaser expressly agrees in writing to assume such
obligations. Neither the grant of a security interest in the Pledged Shares nor
the exercise by the Agent of any of its rights and remedies hereunder nor any
action in connection with a foreclosure on the Pledged Shares shall be deemed to
constitute the Agent a partner of any partnership or a member of any limited
liability company; provided, however, that in the event that the Agent, or its
nominee or any purchaser of Pledged Shares at a foreclosure sale elects to
become a substituted partner or member in place of a Pledgor, the Agent, such
nominee or such purchaser may elect to do so and shall agree in writing to be
bound by the terms of the applicable partnership or limited liability company
agreement.

      SECTION 8 TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.

            (a) Each Pledgor agrees that it will not (i) sell or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
except as permitted under the Credit Agreement; (ii) create or permit to exist
any Lien upon or with respect to any of the Pledged Collateral, except for the
security interest granted under this Pledge Agreement or under the Security
Agreement and except for Permitted Liens under clause (b) of the definition of
Permitted Liens; or (iii) except as otherwise permitted by the Credit Agreement,
enter into any agreement or understanding that purports to or may restrict or
inhibit the Agent's rights or remedies hereunder, including, without limitation,
the Agent's right to sell or otherwise dispose of the Pledged Collateral.

            (b) Subject to the proviso of Section 2, each Pledgor agrees that it
will pledge and deliver to the Agent hereunder, promptly upon its acquisition
(directly or indirectly) thereof, any and all additional shares of stock or
other equity interests, notes or other securities of the Issuers or any other
Person and all other Pledged Collateral.

            (c) Subject to the proviso of Section 2, each Pledgor will, promptly
upon the purchase or acquisition of any additional shares of stock, membership
interests, limited liability company interests, partnership interests or other
ownership interests of any Person or any promissory notes or other instruments,
deliver to the Agent such Pledged Shares (or a control agreement with respect to
any uncertificated Pledged Shares) or Pledged Notes as required by Section 4
above, together (in the case of any Pledged Shares) with a Proxy, and (in either
case) a Pledge Amendment, duly executed by such Pledgor, in substantially the
form of Exhibit C hereto

                                       7

<PAGE>

(a "Pledge Amendment"), in respect of the additional shares or instruments which
are to be pledged pursuant to this Pledge Agreement, and if any Pledged Shares
are capital stock of a Person organized under the laws of any jurisdiction other
than a state of the United States, such other agreements and instruments as may
be required to create and perfect a valid Lien under the laws of such
jurisdiction. Each Pledgor hereby authorizes the Agent to attach each Pledge
Amendment to this Pledge Agreement and agrees that all shares or instruments
listed on any Pledge Amendment delivered to the Agent shall for all purposes
hereunder be considered Pledged Collateral.

            (d) Each Pledgor with respect to any Issuer which is a partnership
or a limited liability company covenants that it will not agree to amend or
repeal any provision of any Pledged Share or any partnership or limited
liability company agreement providing that the applicable Pledged Shares are
securities subject to Article 8 of the applicable UCC.

            (e) Each Pledgor which is a partner in a partnership or a member of
a limited liability company and has pledged its Pledged Shares therein hereby
agrees that the Agent may exercise all of its rights and remedies hereunder,
including the voting rights and rights to manage and administer the Issuer, upon
the occurrence and during the continuance of an Event of Default and in
accordance with Section 7(g) hereof.

      SECTION 9 AGENT APPOINTED ATTORNEY-IN-FACT. Effective upon the occurrence
and during the continuance of an Event of Default, each Pledgor hereby appoints
the Agent as such Pledgor's attorney-in-fact, with full authority in the place
and stead of such Pledgor and in the name of such Pledgor or otherwise, from
time to time in the Agent's discretion to take any action and to execute any
instrument which the Agent may deem necessary or advisable to further perfect
and protect the security interest granted hereby, including, without limitation,
to receive, endorse and collect all instruments made payable to such Pledgor
representing any dividend, interest or principal payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same.

      SECTION 10 AGENT MAY PERFORM. If any Pledgor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith shall be payable by such Pledgor under Section 14 hereof.

      SECTION 11 NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and powers
granted to the Agent hereunder are being granted in order to preserve and
protect the Agent's security interest in and to the Pledged Collateral granted
hereby and shall not be interpreted to, and shall not, impose any duties on the
Agent in connection therewith except the duty to exercise reasonable care in the
custody and preservation of the Pledged Collateral in its possession. The Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property, it being understood that the Agent shall not have any
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.

                                       8

<PAGE>

      SECTION 12 SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. Each Pledgor
represents to the Agent that it has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, payments of interest and/or principal, reorganization or other
exchanges, tender offers and voting rights), and each Pledgor agrees that the
Agent shall have no responsibility or liability for informing such Pledgor of
any such changes or potential changes or for taking any action or omitting to
take any action with respect thereto.

      SECTION 13 REMEDIES UPON DEFAULT. If any Event of Default shall have
occurred and be continuing, the Agent shall, in addition to all other rights
given by law or by this Pledge Agreement, the Credit Agreement, the other Loan
Documents, or otherwise, have all of the rights and remedies with respect to the
Pledged Collateral of a secured party under the UCC in effect in the State of
New York at that time and all rights and remedies of a secured creditor under
any other applicable laws and the Agent may, without notice and at its option,
transfer or register, and each Pledgor shall register or cause to be registered
upon request therefor by the Agent, the Pledged Collateral or any part thereof
on the books of the Issuers thereof into the name of the Agent or the Agent's
nominee(s), indicating that such Pledged Collateral is subject to the security
interest hereunder. In addition, with respect to any Pledged Collateral which
shall then be in or shall thereafter come into the possession or custody of the
Agent, the Agent may sell or cause the same to be sold at any broker's board or
at any public or private sale, in one or more sales or lots, at such price or
prices as the Agent may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk, all in accordance with the terms and
provisions of the Credit Agreements and this Pledge Agreement. The purchaser of
any or all Pledged Collateral so sold shall thereafter hold the same absolutely,
free from any claim, encumbrance, Lien or right of any kind whatsoever. Unless
any of the Pledged Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Agent will give the
applicable Pledgor reasonable notice of the time and place of any public sale
thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such notice is
mailed to Pledgors as provided in Section 16.1 below, at least ten (10) days
before the time of the sale or disposition. Any other requirement of notice,
demand or advertisement for sale is, to the greatest extent permitted by law,
waived. The Agent may, in its own name or in the name of a designee or nominee,
buy any of the Pledged Collateral at any public sale and, if permitted by
applicable law, at any private sale. All expenses (including court costs and
reasonable attorneys' fees, expenses and disbursements) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Pledged Collateral. The Agent
shall be under no obligation to delay a sale of any of the Pledged Collateral
for the period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act of 1933, as
from time to time amended (the "Securities Act"), or under any other applicable
securities laws, even if the applicable Issuer would agree to do so. In view of
the fact that the Securities Act and other applicable securities laws may impose
certain restrictions on the method by which a sale of the Pledged Collateral may
be effected after an Event of Default, each Pledgor agrees that upon the
occurrence and during the continuation of any Event of Default, the Agent may,
from time to time, attempt to

                                       9

<PAGE>

sell all or any part of the Pledged Collateral by means of a private sale,
restricting the prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. Each
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Agent than those obtainable through a public sale without
such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act or other
applicable securities laws) and, notwithstanding such circumstances, each
Pledgor agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Pledged
Collateral for the period of time necessary to permit the Issuer thereof to
register it for a form of public sale requiring registration under the
Securities Act or under any other applicable securities laws. Each Pledgor
waives any claims against the Agent arising by reason of the fact that the price
at any private sale was less than the price that might have been obtained at a
public sale, or was less than the Secured Obligations of the applicable Pledgor,
even if the Agent shall accept the first offer received and does not offer the
Pledged Collateral to more than one prospective purchaser.

      In addition, upon the occurrence and during the continuance of an Event of
Default, all rights of each Pledgor to exercise the voting and other rights
which it would otherwise be entitled to exercise may cease, and all such rights
shall thereupon become vested in the Agent as provided in and subject to the
terms of Section 7(g) hereof.

      SECTION 14 EXPENSES. The Pledgors will, upon demand, jointly and
severally, pay to the Agent the amount of any and all reasonable costs and
expenses, including, without limitation, the reasonable fees, expenses and
disbursements of its counsel, of any investment banking firm or business broker
and of any other experts and agents retained by the Agent, which the Agent may
incur in connection with (i) the administration of this Pledge Agreement, (ii)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or (iv) the failure by
any Pledgor to perform or observe any of the provisions hereof.

      SECTION 15 SECURITY INTEREST ABSOLUTE. All rights of the Agent and the
security interests hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional irrespective of, and unaffected by:

            (a) any lack of validity or enforceability of any Loan Document;

            (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any Loan Document;

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

            (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any other Pledgor

                                       10

<PAGE>

            (e) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect of this Pledge Agreement, the Credit Agreement
or any other Loan Document; or

            (f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the Secured
Obligations or of this Pledge Agreement except for the defense of termination of
this Agreement in accordance with Section 16.11.

      SECTION 16 MISCELLANEOUS PROVISIONS.

      Section 16.1 NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Pledgors (or any of them), and to the Agent, at
their respective addresses set forth in Section 11.02 of the Credit Agreement.

      Section 16.2 HEADINGS. The headings in this Pledge Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any provision of this Pledge Agreement.

      Section 16.3 SEVERABILITY. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.

      Section 16.4 AMENDMENTS, WAIVERS AND CONSENTS. Any amendment of this
Pledge Agreement shall not be effective unless the same shall be in writing and
signed by the Agent and the Pledgors. Any waiver of any provision of this Pledge
Agreement and any consent to any departure by the Pledgors from any provision of
this Pledge Agreement shall not be effective unless the same shall be in writing
and signed by the Agent and then such amendment or waiver shall be effective
only in the specific instance and for the specific purposes for which given.

      Section 16.5 INTERPRETATION OF AGREEMENT. Time is of the essence in each
provision of this Pledge Agreement of which time is an element. To the extent a
term or provision of this Pledge Agreement conflicts with the Credit Agreement
and is not dealt with herein with more specificity, the Credit Agreement shall
control with respect to the subject matter of such term or provision. Acceptance
of or acquiescence in a course of performance rendered under this Pledge
Agreement shall not be relevant in determining the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.

      Section 16.6 CONTINUING SECURITY INTEREST; TRANSFER OF NOTES AND SECURED
OBLIGATIONS. This Pledge Agreement shall create a continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect until
full and final payment and performance (including after the Maturity Date) of
the Secured Obligations (other than contingent indemnification obligations as to
which no claim has been made) and termination of all Commitments, (ii) be
binding upon each Pledgor, its successors, transferees and assigns, and

                                       11

<PAGE>

(iii) inure, together with the rights and remedies of the Agent hereunder, to
the benefit of the successors, transferees and assigns of the Agent and the
Lenders. Without limiting the generality of clause (iii), above, the Agent or
any Lender may, except as limited by the express terms of the Credit Agreement,
assign or otherwise transfer any Secured Obligation held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Agent or Lenders herein, as
applicable.

      Section 16.7 REINSTATEMENT. To the maximum extent permitted by law, this
Pledge Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any amount received by the Agent or any Lender in respect
of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Agent upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Pledgor or any other Person or upon the appointment of
any receiver, intervenor, conservator, trustee or similar official for any
Pledgor or any other Person or any substantial part of its assets, or otherwise,
all as though such payments had not been made.

      Section 16.8 SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of the Pledgors contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the full
payment and performance by the Pledgors of the Secured Obligations (other than
contingent indemnification obligations as to which no claim has been made) and
termination of all Commitments.

      Section 16.9 SETOFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists and is continuing or the Loans
have been accelerated, each Lender is authorized at any time and from time to
time, without prior notice to the Pledgors, any such notice being waived by the
Pledgors to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Pledgor
against any and all Obligations owing to such Lender by any Pledgor, now or
hereafter existing, irrespective of whether or not the applicable agent or such
Lender shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Pledgors and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY
PLEDGOR HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.

      Section 16.10 AUTHORITY OF THE AGENT. The Agent shall have and be entitled
to exercise all powers hereunder which are specifically granted to the Agent by
the terms hereof, together with such powers as are reasonably incident thereto.
The Agent may perform any of its duties hereunder or in connection with the
Pledged Collateral by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of counsel concerning all
such matters. The Agent and its directors, officers, employees, attorneys and
agents shall be entitled to rely on any communication, instrument or document
reasonably believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.

                                       12

<PAGE>

      Section 16.11 RELEASE; TERMINATION OF AGREEMENT. Subject to the provisions
of Sections 16.7 and 16.8 hereof, this Pledge Agreement shall terminate upon
full payment and performance of all the Secured Obligations (other than
contingent indemnification obligations as to which no claim has been made) and
termination of all Commitments. At such time, the Agent shall, at the request
and expense of the Pledgors, reassign and redeliver to the Pledgors all of the
Pledged Collateral hereunder which has not been sold, disposed of, retained or
applied by the Agent in accordance with the terms hereof and any and all proxies
and other materials related thereto. Such reassignment and redelivery shall be
without warranty by or recourse to the Agent, except as to the absence of any
prior assignments by the Agent of its interest in the Pledged Collateral, and
shall be at the expense of the Pledgors.

      Section 16.12 COUNTERPARTS. This Pledge Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be deemed an
original but all of which shall together constitute one and the same agreement.

      Section 16.13 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY
TRIAL WAIVER.

            (a) GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS PLEDGE AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE
GRANTORS HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK COUNTY, CITY OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR, AGENT AND LENDERS
PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND THE PLEDGORS ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH PLEDGOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH PLEDGOR HEREBY WAIVES

                                       13

<PAGE>

PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PLEDGOR AT
THE ADDRESS REFERRED TO IN SECTION 11.02 OF THE CREDIT AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.

            (b) ARBITRATION PROVISION. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE
REQUEST OF ANY PARTY HERETO BE DETERMINED BY BINDING ARBITRATION. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether an issue
is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuant to a
provisional or ancillary remedy shall not constitute a waiver of the right of
either party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

            (c) CONSENT OF PARTIES. Notwithstanding the provisions of (b) above,
no controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or is related to an obligation to the Lenders which is secured
by real estate property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in Section 16(f).

            (d) JUDICIAL REFERENCE. At the request of either party a controversy
or claim which is not submitted to arbitration as provided and limited in
Section 16(b) and (c) shall be determined by judicial reference. If such an
election is made, the parties shall designate to the court a referee or referees
selected under the auspices of the AAA in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of the panel, or
the referee if there is a single referee, shall be an active attorney or retired
judge. Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced.

            (e) SELF-HELP REMEDIES. No provision of Sections (jb) through (f)
shall limit the right of the Agent or the Lenders to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal property
collateral or security, or obtaining

                                       14

<PAGE>

provisional or ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding. The
exercise of a remedy does not waive the right of either party to resort to
arbitration or reference. At the Agent's option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power of sale under
the deed of trust or mortgage or by judicial foreclosure.

            (f) WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION
16(j), THE PLEDGORS, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE PLEDGORS, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

      Section 16.14 LIMITATION OF LIABILITY. No claim may be made by any Pledgor
against the Agent or any Lender, or the affiliates, directors, officers,
officers, employees, or agents of the Agent or any Lender for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Loan Document, or any
act, omission or event occurring in connection therewith, and each Pledgor
hereby waives, releases and agrees not to sue upon any claim for such special,
indirect, consequential or punitive damages, whether or not accrued and whether
or not known or suspected to exist in its favor.

      Section 16.15 SURETYSHIP WAIVERS IN LOAN DOCUMENTS. Each of the suretyship
waivers by each Pledgor in the Credit Agreement or any other Loan Document are
hereby incorporated herein by this reference as if fully set forth herein.

                            [SIGNATURE PAGES FOLLOW]

                                       15

<PAGE>

      IN WITNESS WHEREOF, Pledgors and the Agent have each caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.

                            AGENT:

                            BANK OF AMERICA, N.A., as Agent

                            By:  /s/ Donna F. Kimbrough
                                 -----------------------------------------------
                            Name: Donna F. Kimbrough
                                  ----------------------------------------------
                            Title: Assistant Vice President
                                   ---------------------------------------------

                            PLEDGORS:

                                    LAKES NIPMUC, LLC
                                    GREAT LAKES GAMING OF MICHIGAN, LLC
                                    LAKES ENTERTAINMENT, INC.
                                    LAKES GAMING AND RESORTS, LLC

                                    By: /s/ Timothy Cope
                                        ----------------------------------------
                                    Name: Timothy Cope
                                          --------------------------------------
                                    Title: President and Chief Financial Officer
                                           -------------------------------------

                               [Pledge Agreement]

                                      S-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>c06339exv10w4.txt
<DESCRIPTION>CONTINUING GUARANTY
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                               CONTINUING GUARANTY

      FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and
in consideration of credit and/or financial accommodation heretofore or
hereafter from time to time made or granted to Lakes Gaming and Resorts, LLC
(the "Borrower") by the Lenders (as defined in the Credit Agreement)
(collectively the "Lenders"), the undersigned Guarantors (whether one or more
the "Guarantor", and if more than one jointly and severally) hereby furnishes
its guaranty of the Guaranteed Obligations (as hereinafter defined) as follows:

      1. GUARANTY. The Guarantor hereby absolutely and unconditionally
guarantees, as a guaranty of payment and performance and not merely as a
guaranty of collection, prompt payment when due, whether at stated maturity, by
required prepayment, upon acceleration, demand or otherwise, and at all times
thereafter, of any and all existing and future indebtedness and liabilities of
every kind, nature and character, direct or indirect, absolute or contingent,
liquidated or unliquidated, voluntary or involuntary and whether for principal,
interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of
the Borrower to the Secured Parties, arising under that certain Credit Agreement
dated June 22, 2006 between the Borrower, Holdings, the Lenders and Bank of
America, N.A. as administrative agent (the "Credit Agreement") and any other
Loan Documents (including all renewals, extensions, amendments, refinancings and
other modifications thereof and all costs, attorneys' fees and expenses incurred
by the Secured Parties in connection with the collection or enforcement
thereof), and whether recovery upon such indebtedness and liabilities may be or
hereafter become unenforceable or shall be an allowed or disallowed claim under
any proceeding or case commenced by or against the Guarantor or the Borrower
under the Bankruptcy Code (Title 11, United States Code), any successor statute
or any other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally (collectively, "Debtor Relief Laws"), and including interest
that accrues after the commencement by or against the Borrower of any proceeding
under any Debtor Relief Laws (collectively, the "Guaranteed Obligations"). The
Lender's books and records showing the amount of the Guaranteed Obligations
shall be admissible in evidence in any action or proceeding, and shall be
binding upon the Guarantor and conclusive for the purpose of establishing the
amount of the Guaranteed Obligations. This Guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Guaranteed
Obligations or any instrument or agreement evidencing any Guaranteed
Obligations, or by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact or
circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to the obligations of the Guarantor under this Guaranty,
and the Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to any or all of the foregoing.

      2. NO SETOFF OR DEDUCTIONS; TAXES; PAYMENTS. The Guarantor represents and
warrants that it is organized and resident in the United States of America. The
Guarantor shall make all payments hereunder without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
the Guarantor is compelled by law to make such deduction or withholding. If any
such obligation (other than one arising with respect to taxes based on or
measured by the income or profits of the Secured Parties) is imposed upon the
Guarantor with respect to any amount payable by it hereunder, the Guarantor will
pay to the Secured Parties, on the date on which such amount is due and payable
hereunder, such additional amount in U.S. dollars as shall be necessary to
enable the

                               Guaranty Agreement

<PAGE>

Secured Parties to receive the same net amount which the Secured Parties would
have received on such due date had no such obligation been imposed upon the
Guarantor. The Guarantor will deliver promptly to the Secured Parties
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Guarantor hereunder. The
obligations of the Guarantor under this paragraph shall survive the payment in
full of the Guaranteed Obligations and termination of this Guaranty. Anything
contained herein to the contrary notwithstanding, the obligations of the
Guarantor hereunder at any time shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of the
Bankruptcy Code (Title 11, United States Code) or any comparable provisions of
any similar federal or state law.

      3. RIGHTS OF LENDER. The Guarantor consents and agrees that the Secured
Parties may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or continuing effectiveness hereof: (a)
amend, extend, renew, compromise, discharge, accelerate or otherwise change the
time for payment or the terms of the Guaranteed Obligations or any part thereof;
(b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any security for the payment of this Guaranty or any
Guaranteed Obligations; (c) apply such security and direct the order or manner
of sale thereof as the Administrative Agent and the Lenders in their sole
discretion may determine; and (d) release or substitute one or more of any
endorsers or other guarantors of any of the Guaranteed Obligations. Without
limiting the generality of the foregoing, the Guarantor consents to the taking
of, or failure to take, any action which might in any manner or to any extent
vary the risks of the Guarantor under this Guaranty or which, but for this
provision, might operate as a discharge of the Guarantor.

      4. CERTAIN WAIVERS. The Guarantor waives (a) any defense arising by reason
of any disability or other defense of the Borrower or any other guarantor, or
the cessation from any cause whatsoever (including any act or omission of any
Secured Party) of the liability of the Borrower; (b) any defense based on any
claim that the Guarantor's obligations exceed or are more burdensome than those
of the Borrower; (c) the benefit of any statute of limitations affecting the
Guarantor's liability hereunder; (d) any right to require the Secured Parties to
proceed against the Borrower, proceed against or exhaust any security for the
Indebtedness, or pursue any other remedy in the Secured Parties' power
whatsoever; (e) any benefit of and any right to participate in any security now
or hereafter held by any Secured Party; and (f) to the fullest extent permitted
by law, any and all other defenses or benefits that may be derived from or
afforded by applicable law limiting the liability of or exonerating guarantors
or sureties. The Guarantor expressly waives all setoffs and counterclaims and
all presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the
existence, creation or incurrence of new or additional Guaranteed Obligations.
The Guarantor waives any rights and defenses that are or may become available to
the Guarantor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of
the California Civil Code. As provided below, this Guaranty shall be governed
by, and construed in accordance with, the laws of the State of New York. The
foregoing waivers and the provisions hereinafter set forth in this Guaranty
which pertain to California law are included solely out of an abundance of
caution, and shall not be construed to mean that any of the above referenced
provisions of California law are in any way applicable to this Guaranty or the
Guaranteed Obligations.

      5. OBLIGATIONS INDEPENDENT. The obligations of the Guarantor hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.

                               Guaranty Agreement

<PAGE>

      6. SUBROGATION. The Guarantor shall not exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty have been indefeasibly paid and
performed in full and any commitments of the Lenders or facilities provided by
the Lender with respect to the Guaranteed Obligations are terminated. If any
amounts are paid to the Guarantor in violation of the foregoing limitation, then
such amounts shall be held in trust for the benefit of the Secured Parties and
shall forthwith be paid to the Secured Parties to reduce the amount of the
Guaranteed Obligations, whether matured or unmatured.

      7. TERMINATION; REINSTATEMENT. This Guaranty is a continuing and
irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and
shall remain in full force and effect until all Guaranteed Obligations and any
other amounts payable under this Guaranty are indefeasibly paid in full in cash
and any commitments of the Lenders or facilities provided by the Lenders with
respect to the Guaranteed Obligations are terminated. Notwithstanding the
foregoing, this Guaranty shall continue in full force and effect or be revived,
as the case may be, if any payment by or on behalf of the Borrower or the
Guarantor is made, or any Lender exercises its right of setoff, in respect of
the Guaranteed Obligations and such payment or the proceeds of such setoff or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Secured Parties in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Laws or otherwise, all as if such payment had not been made or
such setoff had not occurred and whether or not the Secured Parties is in
possession of or has released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction. The obligations of the
Guarantor under this paragraph shall survive termination of this Guaranty.

      8. SUBORDINATION. The Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to the Guarantor, whether now
existing or hereafter arising, including but not limited to any obligation
(other than, unless a Default or Event of Default has occurred and is
continuing, any cash management arrangements entered into in the ordinary course
of business and consistent with past practice) of the Borrower to the Guarantor
as subrogee of the Secured Parties or resulting from the Guarantor's performance
under this Guaranty, to the indefeasible payment in full in cash of all
Guaranteed Obligations. If the Secured Parties so request, any such obligation
or indebtedness of the Borrower to the Guarantor shall be enforced and
performance received by the Guarantor as trustee for the Secured Parties and the
proceeds thereof shall be paid over to the Secured Parties on account of the
Guaranteed Obligations, but without reducing or affecting in any manner the
liability of the Guarantor under this Guaranty.

      9. STAY OF ACCELERATION. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed, in connection with any
case commenced by or against the Guarantor or the Borrower under any Debtor
Relief Laws, or otherwise, all such amounts shall nonetheless be payable by the
Guarantor immediately upon demand by the Secured Parties.

      10. EXPENSES. The Guarantor shall pay on demand all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and expenses but
excluding the allocated cost and disbursements of internal legal counsel) in any
way relating to the enforcement or protection of the Secured Parties' rights
under this Guaranty or in respect of the Guaranteed Obligations, including any
incurred during any "workout" or restructuring in respect of the Guaranteed
Obligations and any incurred in the preservation, protection or enforcement of
any rights of the Secured Parties in any proceeding any Debtor Relief Laws. The
obligations of the Guarantor under this paragraph shall survive the payment in
full of the Guaranteed Obligations and termination of this Guaranty.

                               Guaranty Agreement

<PAGE>

      11. MISCELLANEOUS. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by the Secured
Parties and the Guarantor. No failure by the Secured Parties to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy or
power hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law or in equity. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein. Unless
otherwise agreed by the Secured Parties and the Guarantor in writing, this
Guaranty is not intended to supersede or otherwise affect any other guaranty now
or hereafter given by the Guarantor for the benefit of the Secured Parties or
any term or provision thereof.

      12. CONDITION OF BORROWER. The Guarantor acknowledges and agrees that it
has the sole responsibility for, and has adequate means of, obtaining from the
Borrower and any other guarantor such information concerning the financial
condition, business and operations of the Borrower and any such other guarantor
as the Guarantor requires, and that none of the Secured Parties has any duty,
and the Guarantor is not relying on the Secured Parties at any time, to disclose
to the Guarantor any information relating to the business, operations or
financial condition of the Borrower or any other guarantor (the guarantor
waiving any duty on the part of the Secured Parties to disclose such information
and any defense relating to the failure to provide the same).

      13. SETOFF. If and to the extent any payment is not made when due
hereunder, the Secured Parties may setoff and charge from time to time any
amount so due against any or all of the Guarantor's accounts or deposits with
the Secured Parties.

      14. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
that (a) it is duly organized and in good standing under the laws of the
jurisdiction of its organization and has full capacity and right to make and
perform this Guaranty, and all necessary authority has been obtained; (b) this
Guaranty constitutes its legal, valid and binding obligation enforceable in
accordance with its terms; (c) the making and performance of this Guaranty does
not and will not violate the provisions of any applicable law, regulation or
order, and does not and will not result in the breach of, or constitute a
default or require any consent under, any material agreement, instrument, or
document to which it is a party or by which it or any of its property may be
bound or affected; and (d) all consents, approvals, licenses and authorizations
of, and filings and registrations with, any governmental authority required
under applicable law and regulations for the making and performance of this
Guaranty have been obtained or made and are in full force and effect.

      15. INDEMNIFICATION AND SURVIVAL. Without limitation on any other
obligations of the Guarantor or remedies of the Secured Parties under this
Guaranty, the Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless the Secured Parties from and
against, and shall pay on demand, any and all damages, losses, liabilities and
expenses (including attorneys' fees and expenses and the allocated cost and
disbursements of internal legal counsel) that may be suffered or incurred by the
Secured Parties in connection with or as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms. The
obligations of the Guarantor under this paragraph shall survive the payment in
full of the Guaranteed Obligations and termination of this Guaranty.

      16. GOVERNING LAW; ASSIGNMENT; JURISDICTION; NOTICES. THIS GUARANTY SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK. This Guaranty shall (a) bind the Guarantor and its

                               Guaranty Agreement

<PAGE>

successors and assigns, provided that the Guarantor may not assign its rights or
obligations under this Guaranty without the prior written consent of the Secured
Parties (and any attempted assignment without such consent shall be void), and
(b) inure to the benefit of the Secured Parties and its successors and assigns
and the Secured Parties may, without notice to the Guarantor and without
affecting the Guarantor's obligations hereunder, assign, sell or grant
participations in the Guaranteed Obligations and this Guaranty, in whole or in
part. The Guarantor hereby irrevocably (i) submits to the non-exclusive
jurisdiction of any United States Federal or State court sitting in New York,
New York in any action or proceeding arising out of or relating to this
Guaranty, and (ii) waives to the fullest extent permitted by law any defense
asserting an inconvenient forum in connection therewith. Service of process by
the Secured Parties in connection with such action or proceeding shall be
binding on the Guarantor if sent to the Guarantor by registered or certified
mail at its address specified below or such other address as from time to time
notified by the Guarantor. The Guarantor agrees that the Secured Parties may
disclose to any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations of all or part of the
Guaranteed Obligations any and all information in the Secured Parties'
possession concerning the Guarantor, this Guaranty and any security for this
Guaranty. All notices and other communications to the Guarantor under this
Guaranty shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier to the
Guarantor at its address set forth below or at such other address in the United
States as may be specified by the Guarantor in a written notice delivered to the
Secured Parties at such office as the Secured Parties may designate for such
purpose from time to time in a written notice to the Guarantor.

      17. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY
APPLICABLE LAW, THE GUARANTOR AND THE SECURED PARTIES EACH IRREVOCABLY WAIVES
TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON, ARISING
OUT OF OR RELATING TO THIS GUARANTY OR THE GUARANTEED OBLIGATIONS. THIS GUARANTY
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                  [Remainder of page intentionally left blank]

                               Guaranty Agreement

<PAGE>

      Executed as of the date first written above.

                  Borders Land Company, LLC
                  Great Lakes Gaming of Michigan, LLC
                  Lakes Cloverdale, LLC
                  Lakes Game Development, LLC
                  Lakes Gaming -- Mississippi, LLC
                  Lakes Iowa Consulting, LLC
                  Lakes Iowa Management, LLC
                  Lakes Jamul Development, LLC
                  Lakes Jamul, Inc.
                  Lakes KAR- Shingle Springs, LLC
                  Lakes Kean Argovitz Resorts - California, LLC
                  Lakes Kickapoo Consulting, LLC
                  Lakes Kickapoo Management, LLC
                  Lakes Nipmuc, LLC
                  Lakes Pawnee Consulting, LLC
                  Lakes Pawnee Management, LLC
                  Lakes Poker Tour, LLC
                  Lakes Shingle Springs, Inc.


                  By: /s/ Timothy J. Cope
                      ----------------------------------------
                  Name:  Timothy J. Cope
                        --------------------------------------
                  Title: President and Chief Financial Officer
                         -------------------------------------

                               Guaranty Agreement
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>c06339exv10w5.txt
<DESCRIPTION>MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.5

          MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
                               AND FIXTURE FILING

                                     made by
                            LAKES ENTERTAINMENT, INC.
                                   (MORTGAGOR)

                                   IN FAVOR OF
                 BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
                                   (MORTGAGEE)

                               PROPERTY LOCATION:
                          130 CHESHIRE LANE, MINNETONKA
                           HENNEPIN COUNTY, MINNESOTA

                           DATED AS OF JUNE 22, 2006

           THIS MORTGAGE WAS PREPARED BY AND WHEN RECORDED, RETURN TO:

                              Latham & Watkins LLP
                                885 Third Avenue
                            New York, New York 10022
                        Attention: Elizabeth Jaffe, Esq.
                              Ref No.: 024819-0034

                Notwithstanding anything to the contrary herein,
                enforcement of this mortgage is limited to a debt
                amount of $10,920,000 under chapter 287 of
                Minnesota Statutes.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     PAGE
                                                                                                     ----
<S>                                                                                                  <C>
ARTICLE I.        DEFINITIONS..................................................................        1
     Section 1.01 Terms Defined Above..........................................................        1
     Section 1.02 Definitions..................................................................        2
     Section 1.03 Terminology; Other Defined Terms.............................................        5

ARTICLE II.       GRANT OF LIEN AND SECURITY INTEREST..........................................        5
     Section 2.01 Grant of Lien................................................................        5
     Section 2.02 Grant of Security Interest...................................................        6
     Section 2.03 No Obligation of Mortgagee...................................................        6
     Section 2.04 Fixture Filing...............................................................        6
     Section 2.05 Future Advances..............................................................        7

ARTICLE III.      ASSIGNMENT OF LEASES AND RENTS...............................................        7
     Section 3.01 Assignment...................................................................        7
     Section 3.02 Revocable License............................................................        7
     Section 3.03 Enforcement of Leases........................................................        8
     Section 3.04 Direction to Tenants.........................................................        8
     Section 3.05 Appointment of Attorney-in-Fact..............................................        9
     Section 3.06 No Liability of Mortgagee....................................................        9
     Section 3.07 Mortgagor's Indemnities......................................................       10
     Section 3.08 No Modification of Mortgagor's Obligations...................................       10

ARTICLE IV.       REPRESENTATIONS AND WARRANTIES...............................................       10
     Section 4.01 Title to Mortgaged Property and Lien of this Mortgage........................       11
     Section 4.02 Taxes and Other Payments.....................................................       11
     Section 4.03 Power to Create Lien and Security............................................       11
     Section 4.04 Loan and Loan Documents......................................................       11
     Section 4.05 Compliance with Laws.........................................................       11
     Section 4.06 No Condemnation..............................................................       12
     Section 4.07 Flood Zone...................................................................       12

ARTICLE V.        AFFIRMATIVE COVENANTS........................................................       12
     Section 5.01 Lien Status..................................................................       12
     Section 5.02 Payment of Impositions.......................................................       12
     Section 5.03 Repair.......................................................................       13
     Section 5.04 Insurance and Application of Insurance Proceeds..............................       13
     Section 5.05 Condemnation and Application of Condemnation Proceeds........................       16
     Section 5.06 Maintenance of Rights-of-Way, Easements, Licenses and Other Rights...........       17
     Section 5.07 Payment and Performance of Obligations.......................................       18
     Section 5.08 Compliance with Permitted Liens and Other Obligations........................       18
     Section 5.09 Additional Affirmative Covenants.............................................       18
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                   <C>
ARTICLE VI.       NEGATIVE COVENANTS...........................................................       18
     Section 6.01 Use Violations...............................................................       18
     Section 6.02 Waste........................................................................       18
     Section 6.03 Alterations..................................................................       19
     Section 6.04 No Further Encumbrances......................................................       19
     Section 6.05 Transfer Restrictions........................................................       19
     Section 6.06 Additional Negative Covenants................................................       19

ARTICLE VII.      EVENTS OF DEFAULT AND REMEDIES...............................................       19
     Section 7.01 Event of Default.............................................................       19
     Section 7.02 Acceleration.................................................................       20
     Section 7.03 Foreclosure and Sale.........................................................       20
     Section 7.04 Mortgagee'S Agents...........................................................       21
     Section 7.05 Judicial Foreclosure.........................................................       21
     Section 7.06 Receiver.....................................................................       21
     Section 7.07 Foreclosure for Installments.................................................       21
     Section 7.08 Separate Sales...............................................................       22
     Section 7.09 Possession of Mortgaged Property.............................................       22
     Section 7.10 Occupancy After Acceleration.................................................       22
     Section 7.11 Remedies Cumulative, Concurrent and Nonexclusive.............................       23
     Section 7.12 No Release of Obligations....................................................       23
     Section 7.13 Release of and Resort to Collateral..........................................       23
     Section 7.14 Waiver of Redemption, Notice and Marshalling of Assets.......................       24
     Section 7.15 Discontinuance of Proceedings................................................       24
     Section 7.16 Application of Proceeds......................................................       24
     Section 7.17 Uniform Commercial Code Remedies.............................................       25
     Section 7.18 Indemnity....................................................................       25

ARTICLE VIII.     MISCELLANEOUS................................................................       26
     Section 8.01 Instrument Construed as Mortgage, Etc........................................       26
     Section 8.02 Performance at Mortgagor's Expense...........................................       26
     Section 8.03 Survival of Obligations......................................................       26
     Section 8.04 Further Assurances...........................................................       26
     Section 8.05 Notices......................................................................       26
     Section 8.06 No Waiver....................................................................       26
     Section 8.07 Mortgagee's Right to Perform; Mortgagee's Expenditures.......................       27
     Section 8.08 Successors and Assigns.......................................................       27
     Section 8.09 Severability.................................................................       27
     Section 8.10 Entire Agreement and Modification............................................       28
     Section 8.11 Applicable Law...............................................................       28
     Section 8.12 Satisfaction of Prior Encumbrance............................................       28
     Section 8.13 No Partnership...............................................................       28
     Section 8.14 Headings.....................................................................       28
     Section 8.15 Release of Mortgage..........................................................       28
     Section 8.16 Limitation of Obligations with Respect to Mortgaged Property.................       29
     Section 8.17 Inconsistency with Credit Agreement..........................................       29
     Section 8.18 Limitation on Interest Payable...............................................       29
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                   <C>
     Section 8.19 Covenants To Run With the Land...............................................       30
     Section 8.20 Last Dollar..................................................................       30
     Section 8.21 Defense of Claims............................................................       30
     Section 8.22 Exculpation Provisions.......................................................       31
     Section 8.23 No Merger of Estates.........................................................       31
     Section 8.24 Counterparts.................................................................       31
     Section 8.25 Maturity Date................................................................       31

ARTICLE IX.       STATE SPECIFIC PROVISIONS....................................................       31
     Section 9.01 Application of Rents and Proceeds............................................       31
     Section 9.02 WAIVER OF CONSTITUTIONAL RIGHTS..............................................       32
     Section 9.03 Wells and Sewer Systems......................................................       33
     Section 9.04 Future Advances..............................................................       33
</TABLE>

                                      iii

<PAGE>

          MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
                               AND FIXTURE FILING

      THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (hereinafter, together with any and all amendments, supplements,
modifications or restatements of any kind, referred to as this "Mortgage"), is
made as of June 22, 2006, by LAKES ENTERTAINMENT, INC., a Minnesota
corporation ("Mortgagor"), having its principal place of business at 130
Cheshire Lane, Suite 101, Minnetonka, Minnesota 55305, Attention: Damon E.
Schramm, Esq., in favor of BANK OF AMERICA, N.A., having its principal place of
business at 100 N. Tyron Street, Charlotte, North Carolina 28255-0001,
Attention: Douglas Jones, as Administrative Agent (in such capacity, together
with its successors and assigns, "Mortgagee"), for itself and for each of the
financial institutions and their respective successors and assigns which from
time to time shall be a "Lender" under the Credit Agreement (as hereinafter
defined).

                                    RECITALS:

      WHEREAS, Mortgagor is the owner and holder of fee simple title in and to
the Land (as hereinafter defined) described on Exhibit A attached hereto and
made a part hereof;

      WHEREAS, on the date hereof, Mortgagor, Lakes Gaming and Resorts, LLC, the
"Borrower"), and the Guarantors (as defined in the Credit Agreement), entered
into that certain Credit Agreement, dated of even date herewith (as the same may
be amended, modified or otherwise supplemented and in effect from time to time,
the "Credit Agreement"), Mortgagee, the Lenders party thereto and Banc of
America Securities LLC, as sole lead arranger and sole book manager pursuant to
which the Lenders agree to extend to the Borrowers certain term loan facilities
in the aggregate original principal amount of up to One Hundred and Five Million
and 00/100 Dollars ($105,000,000.00) (collectively, the "Loan");

      WHEREAS, Mortgagor will derive direct economic benefit from the Loan;

      WHEREAS, as a condition to Mortgagee executing the Credit Agreement,
Mortgagee is requiring that Mortgagor grant to Mortgagee a security interest in
and a first mortgage lien upon the Mortgaged Property (as hereinafter defined),
to secure (a) the payment of all of the Obligations of Mortgagor under the Loan
Documents, and (b) the performance by Mortgagor of all terms, covenants,
conditions, provisions, agreements and liabilities contained in this Mortgage,
the Credit Agreement, the Guaranty, and the other Loan Documents (as defined in
the Credit Agreement).

      NOW, THEREFORE, in order consideration for the Loan and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby covenants and agrees as follows:

                                   ARTICLE I.

                                   DEFINITIONS

            SECTION 1.01 Terms Defined Above. As used in this Mortgage,

<PAGE>

the terms defined in the introductory paragraph to this Mortgage and in the
Recitals set forth above shall have the meanings respectively assigned to such
terms in such paragraph and Recitals.

            SECTION 1.02 Definitions. As used herein, the following terms shall
have the following meanings:

      "Applicable UCC" means the Uniform Commercial Code as presently in effect
in the State or Commonwealth where the Mortgaged Property is located.

      "Buildings" means any and all buildings, structures, garages, utility
sheds, workrooms, air conditioning towers, open parking areas and other
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

      "Default" has the meaning assigned to such term in the Credit Agreement.

      "Default Rate" has the meaning assigned to such term in the Credit
Agreement.

      "Event of Default" has the meaning assigned to such term in Section 7.01
hereof.

      "Fixtures" means all materials, supplies, equipment, apparatus and other
items of Personalty now or hereafter acquired by Mortgagor and incorporated into
the Mortgaged Property so as to constitute fixtures under the Applicable UCC or
otherwise under the laws of the state or commonwealth in which such items are
located.

      "Governmental Authority" has the meaning assigned to such term in the
Credit Agreement.

      "Governmental Requirements" means any and all present and future judicial
decisions, statutes, rulings, rules, regulations, permits, certificates or
ordinances of any Governmental Authority in any way applicable to Mortgagor or
the Mortgaged Property, including the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof.

      "Guarantors" has the meaning assigned to such term in the Credit
Agreement. "Guarantor" means any of the Guarantors.

      "Impositions" means any and all real estate and personal property taxes;
water, gas, sewer, electricity and other utility rates and charges; charges for
any easement, license or agreement maintained for the benefit of the Mortgaged
Property; and any and all other taxes, charges and assessments, whether general
or special, ordinary or extraordinary, foreseen or unforeseen, of any kind and
nature whatsoever which at any time prior to or after the execution hereof may
be assessed, levied or imposed upon the Mortgaged Property or the ownership,
use, occupancy, benefit or enjoyment thereof, together with any interest, costs
or penalties that may become payable in connection therewith.

      `"Indemnified Parties" means, with respect to any Person entitled to the
benefit of an indemnity, such Person and its officers, directors, shareholders,
partners, members, managers,

                                       2

<PAGE>

employees, agents, representatives, attorneys, accountants and experts. The term
"Indemnified Party" means any one of such Persons.

      "Indemnitees" has the meaning assigned to such term in the Credit
Agreement.

      "Land" means the real property or interest therein described in Exhibit A
attached hereto, and all rights, titles and interests appurtenant thereto.

      "Leases" means any and all leases, master leases, subleases, licenses,
concessions or other agreements (whether written or oral, and whether now or
hereafter in effect) which grant to third Persons a possessory interest in and
to, or the right to use, all or any part of the Mortgaged Property, together
with all security and other deposits made in connection therewith and any
guarantee of the obligations of the landlord or the tenant thereunder.

      "License" has the meaning assigned to such term in Section 3.02(a) hereof.

      "Lien" has the meaning assigned to such term in the Credit Agreement.

      "Loan Documents" has the meaning assigned to such term in the Credit
Agreement.

      "Losses" means all obligations, damages, claims, causes of action, costs,
fines, fees, charges, penalties, deficiencies, losses, diminutions in value,
expenses (including court costs, fees and expenses of attorneys, accountants,
consultants and other experts) and other liabilities, and, with respect to any
indemnity, includes all attorneys' fees and expenses in connection with the
enforcement and collection of such indemnity. The term "Loss" means any such
Losses.

      "Mortgaged Property" means all of Mortgagor's right, title, interest and
estate, whether now owned or hereafter acquired, in and to the Land, the
Buildings, the Fixtures and the Personalty, together with:

      (i) all rights, privileges, tenements, hereditaments, rights-of-way,
      easements, air rights, development rights or credits, zoning rights,
      appendages and appurtenances in anywise appertaining thereto, and all
      right, title and interest of Mortgagor in and to any streets, ways,
      alleys, strips or gores of land adjoining the Land or any part thereof,
      and all right, title and interest of Mortgagor, if any, in and to all
      rights, royalties and profits with respect to all minerals, coal, oil, gas
      and other substances of any kind or character on or underlying the Land,
      together with all right, title and interest of Mortgagor in and to all
      water and water rights (whether riparian, appropriative or otherwise and
      whether or not appurtenant);

      (ii) all rights of Mortgagor (but not its obligations) under any contracts
      and agreements, including, without limitation, construction contracts and
      architectural agreements, relating to the Land, the Buildings, the
      Fixtures or the Personalty;

      (iii) all of Mortgagor's right, title and interest in and to all permits,
      licenses, franchises, certificates, authorizations, consents, approvals
      and other rights and

                                       3

<PAGE>

      privileges (each, a "Permit") obtained in connection with the Land, the
      Buildings, the Fixtures or the Personalty or the use or operation thereof;

      (iv) all of Mortgagor's right, title and interest in and to all plans and
      specifications, designs, schematics, drawings and other information,
      materials and matters heretofore or hereafter prepared relating to the
      Land, the Buildings, the Fixtures or the Personalty;

      (v) all of Mortgagor's right, title and interest in and to all proceeds
      arising from or by virtue of the sale, lease or other disposition of the
      Land, the Buildings, the Fixtures or the Personalty or any part thereof or
      any interest therein or from the operation thereof;

      (vi) all of Mortgagor's right, title and interest in and to all Leases now
      or hereafter in effect and all Rents, royalties, bonuses, issues, profits,
      revenues or other benefits arising from or attributable to the Land, the
      Buildings, the Fixtures or the Personalty;

      (vii) all of Mortgagor's right, title and interest in and to all
      betterments, additions, alterations, appurtenances, substitutions,
      replacements and revisions to the Land, the Buildings, the Fixtures or the
      Personalty and all reversions and remainders relating thereto;

      (viii) all of Mortgagor's right, title and interest in and to any and all
      other security and collateral of any nature whatsoever, whether now or
      hereafter given, for the repayment, performance and discharge of the
      Obligations (as hereinafter defined);

      (ix) all of Mortgagor's right, title and interest in and to all claims,
      awards, payments, remuneration, settlements or compensation now or
      hereafter made by any Governmental Authority pertaining to, and all other
      proceeds of, any taking, conversion, or like act, whether voluntary or
      involuntary, of any of the Land, the Buildings, the Fixtures, the
      Personalty or any of the property and rights described in the foregoing
      clauses (i) through (viii), including those arising from or attributable
      to any vacation of, or change of grade in, any streets affecting the Land
      or the Buildings, and all insurance and tort claims, refunds of real
      estate taxes and assessments, rent claims and other obligations
      dischargeable in cash or cash equivalents; and

      (x) all other property and rights of Mortgagor of every kind and character
      relating to and/or used or to be used in connection 'with the foregoing,
      and all proceeds and products of any of the foregoing.

As used in this Mortgage, the term "Mortgaged Property" shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

      "Obligations" has the meaning assigned to such term in the Credit
Agreement.

                                       4

<PAGE>

      "Permitted Liens" has the meaning assigned to such term in the Credit
Agreement to the extent that such definition applies to the Mortgaged Property.

      "Person" has the meaning assigned to such term in the Credit Agreement.

      "Personalty" means all of Mortgagor's right, title and interest in and to
all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Mortgagor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private including all refundable, returnable or reimbursable tap fees,
utility deposits, commitment fees and development costs, and all other personal
property (other than Fixtures of any kind or character), and including all such
property that is now or hereafter located or to be located upon, within or about
the Land and the Buildings, or which are or may be used in or related to the
planning, development, financing of or operation of the Mortgaged Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

      "Principal Balance" has the meaning assigned to such term in Section 7.02
hereof.

      "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Mortgagor acquires title
thereto), and other benefits paid or payable by parties (other than Mortgagor)
for using, leasing, licensing, possessing, operating from, residing in,
benefiting from or otherwise enjoying all or any part of the Land, the
Buildings, the Fixtures and/or the Personalty.

            SECTION 1.03 Terminology; Other Defined Terms. Any capitalized term
used in this Mortgage and not otherwise defined herein shall have the meaning
assigned to such term in the Credit Agreement. The rules of construction set
forth in Section 1.02 of the Credit Agreement shall apply hereto as if
incorporated at length herein.

                                   ARTICLE II.

                       GRANT OF LIEN AND SECURITY INTEREST

            SECTION 2.01 Grant of Lien. To secure the full and timely payment,
performance and discharge of all of the Obligations, Mortgagor hereby
irrevocably GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS, MORTGAGES, CONVEYS AND
CONFIRMS unto Mortgagee, WITH POWER OF SALE and right of entry and possession,
for the use and benefit of Mortgagee, as Administrative Agent for the Lenders
pursuant to the Credit Agreement, all right, title, interest and estate in, to
and under the Mortgaged Property, subject, however, to the Permitted Liens; TO
HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, subject to the terms and
conditions of this Mortgage, with POWER OF SALE, forever, and Mortgagor does
hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the
title to the Mortgaged Property unto Mortgagee against every Person whomsoever
lawfully claiming or to claim the same or any part thereof; provided, however,
that

                                       5

<PAGE>

if Mortgagor shall pay (or cause to be paid) and perform and discharge (or cause
to be performed and discharged) all of the Obligations on or before the date on
which the same are to be paid, performed and discharged, then the Liens, estates
and rights granted by this Mortgage shall cease and terminate.

            SECTION 2.02 Grant of Security Interest. This Mortgage shall be
construed as a mortgage on the Land and the Buildings and it shall also
constitute and serve as a "security agreement" within the meaning of, and shall
constitute a first and prior security interest under, the Applicable UCC with
respect to the Personally and the Fixtures. To this end, Mortgagor by these
presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER AND SET OVER unto
Mortgagee, as Administrative Agent for the Lenders pursuant to the Credit
Agreement, a security interest in all of Mortgagor's right, title and interest
in, to and under the Personalty and the Fixtures, to secure the full and timely
payment, performance and discharge of the Obligations. Mortgagor hereby consents
to Mortgagee filing and recording Financing statements (and continuations
thereof) with the appropriate filing and recording offices in order to perfect
(and maintain the perfection of) the security interests granted herein.

            SECTION 2.03 No Obligation of Mortgagee. The assignment and security
interest herein granted to Mortgagee shall not be deemed or construed to
constitute Mortgagee as a mortgagee-in-possession of the Mortgaged Property,
obligate Mortgagee to lease the Mortgaged Property or attempt to do the same, or
to take any action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever.

            SECTION 2.04 Fixture Filing. Without in any manner limiting the
generality of any of the other provisions of this Mortgage: (a) some portions of
the goods described or to which reference is made herein are or are to become
fixtures on the Land described or to which reference is made herein or on
Exhibit A attached to this Mortgage; (b) this Mortgage is to be filed of record
in the real estate records as a Financing statement and shall constitute a
"fixture filing" for purposes of the Applicable UCC; and (c) Mortgagor is the
record owner of the real estate or interests in the real estate constituting the
Mortgaged Property hereunder. Information concerning the security interest
herein granted may be obtained at the addresses set forth on the first page
hereof. The addresses of the Secured Party (Mortgagee) and of the Debtor
(Mortgagor) are set forth on the first page hereof. In that regard, the
following information is provided:

  Name of Debtor:           Lakes Entertainment, Inc.

  Type of Organization:     Corporation

  State:                    Minnesota

  FEIN:                     41-1913991

  Organizational ID Number: 10E-882

  Name of Secured Party:    Bank of America, N.A.

                                       6

<PAGE>

  Address of Secured Party: 100 North Tyron Street
                            Charlotte, North Carolina 28255-0001

  Attention:                Douglas Jones

            SECTION 2.05 Future Advances. It is the intention of Mortgagor and
Mortgagee that this Mortgage (as renewed and extended from time to rime) shall
secure future advances and readavances, and the lien and security interest
created by this Mortgage shall attach upon execution and have priority from the
time of recording as to all advances, whether obligatory or discretionary, until
this Mortgage is released of record.

                                  ARTICLE III.

                         ASSIGNMENT OF LEASES AND RENTS

            SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Credit
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Mortgagor has presently, absolutely and irrevocably GRANTED,
BARGAINED, SOLD, ASSIGNED, TRANSFERRED, CONVEYED and CONFIRMED, and by these
presents does presently, absolutely and irrevocably GRANT, BARGAIN, SELL,
ASSIGN, TRANSFER, CONVEY and CONFIRM, unto Mortgagee, as Administrative Agent
for the Lenders pursuant to the Credit Agreement, as security for the payment,
performance and discharge of the Obligations, all of the Leases and Rents (if
any), subject only to the Permitted Liens applicable thereto and the License (as
hereinafter defined); TO HAVE AND TO HOLD the Leases and the Rents unto
Mortgagee; forever, and Mortgagor does hereby bind itself, its successors and
assigns to warrant and forever defend the title to the Leases and the Rents unto
Mortgagee against every Person whomsoever lawfully claiming or to claim the same
or any part thereof; provided, however, that if Mortgagor shall pay (or cause to
be paid) and perform and discharge (or cause to be performed and discharged) all
of the Obligations on or before the date on which the same are to be paid,
performed and discharged, then this assignment shall terminate, and all rights,
titles and interests conveyed pursuant to this assignment shall become vested in
Mortgagor.

            SECTION 3.02 Revocable License.

      (a) Mortgagee hereby grants to Mortgagor a revocable license (the
"License"), nonexclusive with the rights of Mortgagee reserved in Sections
3.02(b), 3.04 and 3.05 hereof, to exercise and enjoy all incidences of the
status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor. Mortgagor hereby agrees to receive all Rents and hold the same as a
trust fund to be applied, and to apply the Rents so collected, except to the
extent otherwise provided in the Credit Agreement, first to the payment,
performance and discharge of the Obligations and then to the payment of the

                                       7

<PAGE>

Impositions. Thereafter, Mortgagor may use the balance of the Rents collected in
any manner not inconsistent with the Loan Documents.

      (b) If an Event of Default shall occur and be continuing, the License
shall immediately and automatically terminate without the necessity of any
action by Mortgagee or any other Person, and Mortgagee shall have the right in
such event to exercise the rights and remedies provided under this Mortgage or
otherwise available to Mortgagee under applicable law. Upon demand by Mortgagee
at any time that an Event of Default shall have occurred, Mortgagor shall
promptly pay to Mortgagee all security deposits under the Leases and all Rents
allocable to any period commencing from and after the occurrence of such Event
of Default. Any Rents received hereunder by Mortgagee shall be applied and
disbursed to the payment, performance and discharge of the Obligations, subject
to the terms of the Credit Agreement; provided, however, that, subject to any
applicable requirement of law, any security deposits actually received by
Mortgagee shall be held, applied and disbursed as provided in the applicable
Leases.

            SECTION 3.03 Enforcement of Leases. Mortgagor shall (a) submit any
and all proposed Leases which individually grant the use of more than 3,000
square feet (including any subleases which individually grant the use of more
than 3,000 square feet) provided to Mortgagor for approval to Mortgagee for
approval prior to the execution thereof or consent thereto, as applicable; (b)
duly and punctually perform and comply with any and all representations,
warranties, covenants and agreements expressed as binding upon the lessor under
any Lease; (c) maintain each Lease in full force and effect during the term
thereof; (d) provide Mortgagee with prompt notice of each notice of default sent
to a tenant under a Lease, provide Mortgagee with prompt notice of each notice
of default received from (or relating to) a tenant under a Lease, and otherwise
promptly reasonably indicate that a material default or termination of a Lease
may occur (other than by reason of the expiration of the term of such Lease);
(e) appear in and defend any action or proceeding in any manner connected with
any of the Leases; (f) deliver to Mortgagee true and complete copies of all
Leases; and (g) deliver to Mortgagee all such further information, and execute
and deliver to Mortgagee such further assurances and assignments, with respect
to the Leases as Mortgagee may from time to time reasonably request. Without
Mortgagee's prior written consent, Mortgagor shall not (i) do or knowingly
permit to be done anything to materially impair the value of any of the Leases;
(ii) except for security or similar deposits, collect any of the Rent more than
one (1) month in advance of the time when the same becomes due under the terms
of any Lease; (iii) discount any future accruing Rents; (iv) amend or modify any
of the Leases so as to reduce the length of the Lease terms or the Rents due
thereunder, or accept the surrender of or terminate any of the Leases; or (v)
assign or grant a security interest in or to the License or any of the Leases or
Rents.

            SECTION 3.04 Direction to Tenants. Upon and at any time following
the occurrence and during the continuance of an Event of Default, Mortgagor
hereby authorizes and directs, and shall, at the direction of Mortgagee, further
authorize and direct, in writing, the tenant under each Lease to pay directly
to, or as directed by, Mortgagee all Rents accruing or due under its Lease,
without proof to the tenant of the occurrence and continuance of such Event of
Default. Mortgagor hereby authorizes the tenant under each Lease to rely upon
and comply with any notice or demand from Mortgagee for payment of Rents to
Mortgagee, and Mortgagor shall

                                       8

<PAGE>

have no claim against any tenant for Rents paid by such tenant to Mortgagee
pursuant to such notice or demand. All Rents actually collected by Mortgagee
pursuant to this Section 3.04 shall be applied in accordance with the Credit
Agreement.

            SECTION 3.05 Appointment of Attorney-in-Fact.

      (a) Mortgagor hereby constitutes and appoints Mortgagee the true and
lawful attorney-in-fact, coupled with an interest, of Mortgagor and Mortgagor
hereby confers upon Mortgagee the right, in the name, place and stead of
Mortgagor, to, upon the occurrence and during the continuance of an Event of
Default, demand, sue for, attach, levy, recover and receive any of the Rents and
any premium or penalty payable upon the exercise by any third Person under any
Lease of a privilege of cancellation originally provided in such Lease and to
give proper receipts, releases and acquittances therefor and, after deducting
expenses of collection, to apply the net proceeds as provided in the Credit
Agreement. Mortgagor hereby authorizes and directs any such third Person to
deliver such payment to Mortgagee in accordance with this Article III, and
Mortgagor hereby ratifies and confirms all that its said attorney-in-fact, the
Mortgagee, shall do or cause to be done in accordance with this Mortgage and by
virtue of the powers granted hereby. The foregoing appointment is irrevocable
and continuing, and such rights, powers and privileges shall be exclusive in
Mortgagee, and its successors and assigns, so long as any part of the
Obligations remains unpaid or unperformed and undischarged;

      (b) Mortgagor hereby constitutes and appoints Mortgagee the true and
lawful attorney-in-fact, coupled with an interest, of Mortgagor and Mortgagor
hereby confers upon Mortgagee the right, in the name, place and stead of
Mortgagor, to subject and subordinate at any time and from time to time any
Lease or any part thereof to the lien, assignment and security interest of this
Mortgage and to the terms hereof, or to any other mortgage, deed of trust,
assignment or security agreement, or to any ground lease or surface lease, with
respect to all or a portion of the Mortgaged Property, or to request or require
such subordination, where such reservation, option or authority was reserved to
Mortgagor under any such Lease, or in any case where Mortgagor otherwise would
have the right, power or privilege so to do. The foregoing appointment is
irrevocable and continuing, and such rights, powers and privileges shall be
exclusive in Mortgagee, and its successors and assigns, so long as any part of
the Obligations remains unpaid or unperformed and undischarged. Mortgagor hereby
represents and warrants that it has not at any time prior to the date hereof
exercised (or appointed any Person as attorney-in-fact to exercise) any of the
rights described in this Section 3.05, and Mortgagor hereby covenants not to
exercise (or appoint any other Person as attorney-in-fact to exercise) any such
right, nor (except at Mortgagee's written request) to subordinate any such Lease
to the lien of this Mortgage or to any other mortgage, deed of trust, assignment
or security agreement or to any ground lease or surface lease.

            SECTION 3.06 No Liability of Mortgagee. Neither the acceptance
hereof nor the exercise of the rights and remedies hereunder nor any other
action on the part of Mortgagee or any Person exercising the rights of Mortgagee
or any Lender hereunder shall be construed to: (a) be an assumption by Mortgagee
or any such Person or to otherwise make Mortgagee or such Person liable or
responsible for the performance of any of the obligations of Mortgagor under or
with respect to the Leases or for any Rent, security deposit or other amount
delivered to Mortgagor, provided that Mortgagee or any such Person exercising
the rights of

                                       9

<PAGE>

Mortgagee shall be accountable for any Rents, security deposits or other amounts
actually received by Mortgagee or such Person, as the case may be; or (b)
obligate Mortgagee or any such Person to take any action under or with respect
to the Leases or with respect to the Mortgaged Property, to incur any expense or
perform or discharge any duty or obligation under or with respect to the Leases
or with respect to the Mortgaged Property, to appear in or defend any action or
proceeding relating to the Leases or the Mortgaged Property, to constitute
Mortgagee as a mortgagee-in-possession (unless Mortgagee actually enters and
takes possession of the Mortgaged Property), or to be liable in any way for any
injury or damage to Persons or property sustained by any Person in or about the
Mortgaged Property, other than to the extent caused by the gross negligence or
willful misconduct of Mortgagee or any Person exercising the rights of Mortgagee
hereunder.

            SECTION 3.07 Mortgagor's Indemnities. Mortgagor hereby agrees to
protect, indemnify and hold harmless Mortgagee and each of the other Indemnitees
and each Indemnified Party related to Mortgagee or such other Indemnitees from
and against any and all Losses which Mortgagee or any such other Indemnitees or
Indemnified Party may incur under or by reason of this Article III, or for any
action taken by Mortgagee or any such other Lender or Indemnified Party
hereunder, or by reason or in defense of any and all claims and demands
whatsoever which may be asserted against Mortgagee or any such other Indemnitees
or Indemnified Party arising out of the Leases, including, without limitation,
any claim by any third Person for credit on account of Rents paid to and
received by Mortgagor, but not delivered to Mortgagee or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Mortgagee
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Mortgagee or any such
other Indemnitees or Indemnified Party. In the event that Mortgagee or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys' fees, with interest thereon at the Default Rate, shall be
payable by Mortgagor to Mortgagee within ten (10) days after demand therefor,
and shall be secured hereby and by all other security for the payment and
performance of the Obligations, including, without limitation, the lien and
security interest of this Mortgage. The liabilities of Mortgagor as set forth in
this Section 3.07 shall survive the termination of this Mortgage and the
repayment of the Obligations.

            SECTION 3.08 No Modification of Mortgagor's Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Mortgagor to
make prompt payment of all Obligations as and when the same become due,
regardless of whether the Rents described in this Article III are sufficient to
pay the Obligations, and the security provided to Mortgagee pursuant to this
Article III shall be cumulative of all other security of any and every character
now or hereafter existing to secure payment of the Obligations.

                                   ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

      Mortgagor hereby unconditionally represents and warrants to Mortgagee (but
to the extent any representation or warranty in this Article IV is substantively
the same as a

                                       10

<PAGE>

representation or warranty contained in Article V of the Credit Agreement and
such representation or warranty is qualified by a materiality or other qualifier
in the Credit Agreement, such representation or warranty herein shall be subject
to the same materiality or other qualifier as in Article V of the Credit
Agreement) as follows:

            SECTION 4.01 Title to Mortgaged Property and Lien of this Mortgage.
Mortgagor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good, marketable and indefeasible title to the Fixtures,
the Personalty and the other Mortgaged Property. The Mortgaged Property is free
and clear of any and all Liens, charges, encumbrances, security interests and
adverse claims whatsoever, except for (i) all Liens, charges, encumbrances,
security interests and adverse claims specifically identified as exceptions in
Schedule B of the policy of title insurance accepted by Mortgagee in connection
herewith or (ii) those Liens set forth in Section 5.08 of the Credit Agreement.

            SECTION 4.02 Taxes and Other Payments. Mortgagor has filed all
federal, state, commonwealth, county, municipal and city income and other
material tax returns required to have been filed by it and has paid all taxes
and other Impositions which have become due pursuant to such returns or pursuant
to any assessments or charges received by it, and Mortgagor does not know of any
basis for any additional assessment or charge in respect of any such taxes or
other Impositions. Mortgagor has paid in full all sums owing or claimed for
labor, material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Mortgaged Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

            SECTION 4.03 Power to Create Lien and Security. Mortgagor has full
power and lawful authority to grant, bargain, sell, assign, transfer, mortgage
and convey a Lien and security interest in all of the Mortgaged Property in the
manner and form herein provided and without obtaining the authorization,
approval, consent or waiver of any grantor, lessor, sublessor, Governmental
Authority or other Person whomsoever.

            SECTION 4.04 Loan and Loan Documents. Mortgagor has received a copy
of and is fully familiar with the terms and provisions of the Credit Agreement
and the other Loan Documents. All representations and warranties made by
Mortgagor in the Credit Agreement and the other Loan Documents are incorporated
herein by reference and are hereby made by Mortgagor as to itself and the
Mortgaged Property as though such representations and warranties were set forth
at length herein as the representations and warranties of Mortgagor.

            SECTION 4.05 Compliance with Laws. All of the improvements on the
Land (i) comply with all material requirements of all applicable laws and
ordinances with respect to zoning, subdivision, construction, building and land
use, including, without limitation, requirements with respect to parking, access
and certificates of occupancy (and similar certificates) and (ii) comply with,
and shall remain in compliance with, applicable health, fire and building codes.
All of the Buildings lie wholly within the boundaries and building restriction
lines of the Land. No improvements on adjoining properties encroach upon the
Land, and no easements or other encumbrances upon the Land encroach upon or
under any of the Buildings or any portion of the Mortgaged Property. All of the
Buildings and the use of the

                                       11

<PAGE>

Mortgaged Property materially comply with, and shall remain in material
compliance with, all applicable statutes, rules, regulations and private
covenants now or hereafter relating to the ownership, construction, use or
operation of the Mortgaged Property, including all applicable statutes, rules
and regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use. All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Mortgaged Property have been obtained
and are in full force and effect. Mortgagor has not received any notice of, or
other communication with respect to, an alleged violation with respect to any of
the foregoing.

            SECTION 4.06 No Condemnation. No part of any property subject to
this Mortgage has been taken in condemnation or other like proceeding nor is any
proceeding pending, threatened or known to be contemplated for the partial or
total condemnation or taking of the Mortgaged Property.

            SECTION 4.07 Flood Zone. The Mortgaged Property is not located in an
area identified by the Federal Emergency Management Agency ("FEMA") as having
special flood hazards or if the Land or any part thereof is identified by the
Federal Emergency Management Agency as an area having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone V),
then Mortgagor has obtained the insurance required under Section 5.04(a)(v) of
this Mortgage.

                                   ARTICLE V.

                              AFFIRMATIVE COVENANTS

      Mortgagor hereby unconditionally covenants and agrees with Mortgagee as
follows:

            SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Credit Agreement, Mortgagor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Mortgaged Property, or any
portion thereof or interest therein, with any other Lien or security interest of
any nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Mortgage, and, if any
such Lien or security interest is asserted against the Mortgaged Property,
Mortgagor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Mortgagor
in good faith and as and to the extent permitted in accordance with the terms of
the Credit Agreement) or take such other action as may be necessary to cause the
same to be released of record and otherwise, and (b) within ten (10) days after
the date on which Mortgagor receives notice of such Lien or security interest,
give Mortgagee notice of such Lien or security interest. Such notice shall
specify who is asserting such Lien or security interest and shall detail the
origin and nature of the underlying claim giving rise to such asserted Lien or
security interest.

            SECTION 5.02 Payment of Impositions. Mortgagor shall duly pay and

                                       12

<PAGE>

discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however that Mortgagor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Mortgaged Property, pay the Impositions in
installments. Notwithstanding the foregoing, Mortgagor may in good faith, by
appropriate proceedings and upon notice to Mortgagee, contest the validity,
applicability or amount of any asserted tax or assessment, subject to any more
restrictive provisions applicable to any such contest contained in the Credit
Agreement and (without limiting the foregoing) so long as (a) such contest is
diligently pursued, (b) Mortgagee determines, in its opinion reasonably
exercised, that such contest suspends the obligation to pay the tax and that
nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Mortgaged Property or any part thereof or any
interest of Mortgagee therein, and (c) unless expressly provided to the contrary
in the Credit Agreement, prior to the earlier of the commencement of such
contest or the delinquency date of the asserted tax or assessment, Mortgagor
deposits with Mortgagee an amount determined by Mortgagee to be adequate to
cover the payment of such tax or assessment and a reasonable additional sum to
cover possible interest, costs and penalties; provided, however, that Mortgagor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment becomes final (and, subject to Mortgagee's rights and
remedies during an Event of Default, Mortgagee shall make any sum deposited
pursuant to clause (c) above available for such payment); and provided, further
that in any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order
is issued under which the Mortgaged Property may be sold, lost or forfeited.

            SECTION 5.03 Repair. Mortgagor shall keep the Mortgaged Property in
good order and condition (reasonable wear and tear excepted) and shall make all
repairs, replacements and improvements thereof and thereto, interior and
exterior, structural and non-structural, ordinary and extraordinary, which are
necessary to keep the same in such order and condition. Mortgagor shall also use
reasonable efforts to prevent any act or occurrence which might impair the value
or usefulness of the Mortgaged Property for its intended usage.

            SECTION 5.04 Insurance and Application of Insurance Proceeds.

      (a) During the term of this Mortgage, Mortgagor, at its sole cost and
expense, shall maintain or cause to be maintained all insurance on the Mortgaged
Property that is required to be maintained under the Credit Agreement. In
addition, Mortgagor, at its sole cost and expense, shall maintain or cause to be
maintained such other insurance as may, from time to time, be required by
Mortgagee in order to protect its interests in the Mortgaged Property.

      (b) All such insurance policies with respect to the Mortgaged Property
shall contain a standard, non-contributory mortgagee clause naming Mortgagee,
and its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Mortgagor shall not take out separate insurance
with respect to the Mortgaged Property concurrent in form or contributing in the
event of loss with

                                       13

<PAGE>

that required to be maintained hereunder or under the Credit Agreement unless
Mortgagee is named as an additional insured thereon under a standard mortgagee
clause acceptable to Mortgagee and each such policy is otherwise in form and
substance acceptable to Mortgagee.

      (c) In the event of the foreclosure of this Mortgage, or in the event of
any transfer of title to the Mortgaged Property, or any part thereof, by
foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Mortgaged Property, or such part thereof, shall succeed to all
of Mortgagor's rights with respect to the Mortgaged Property, including any
rights to unexpired, unearned or returnable insurance premiums, subject to
limitations on the assignment of blanket policies, but limited to such rights as
relate to the Mortgaged Property or such part thereof. If Mortgagee acquires
title to the Mortgaged Property, or any part thereof, in any manner, Mortgagee
shall thereupon (as between Mortgagor and Mortgagee) become the sole and
absolute owner of the insurance policies with respect to the Mortgaged Property,
and all insurance proceeds payable thereunder with respect to the Mortgaged
Property, with the sole right to collect and retain all unearned or returnable
premiums thereon with respect to the Mortgaged Property, or such part thereof,
if any.

      (d) If any damage to, destruction or loss of or other casualty with
respect to any of the Mortgaged Property shall occur, Mortgagor shall file and
prosecute its claim or claims for any insurance proceeds in good faith and with
due diligence and cause the same to be collected and paid over to Mortgagee, and
Mortgagor hereby irrevocably authorizes and empowers Mortgagee, in the name of
Mortgagor or otherwise, to collect and receipt for any such insurance proceeds
and to adjust any insurance claims and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Mortgagor shall, upon demand of Mortgagee, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such insurance proceeds to Mortgagee, free and clear of
any Liens whatsoever. Mortgagor hereby irrevocably appoints Mortgagee as
Mortgagor's attorney-in-fact for each such purpose (which appointment is coupled
with an interest) and authorizes any Person to act upon the foregoing
appointment.

      (e) Following any damage to, destruction or loss of or other casualty with
respect to any of the Mortgaged Property, Mortgagee shall apply the entire
amount of any insurance proceeds in accordance with the provisions of the Credit
Agreement or, if there is no provision contained in the Credit Agreement
governing how the same are to be applied, then Mortgagee shall apply the entire
amount thereof to the payment of the Obligations, whether or not then due and
payable, in such manner and order as Mortgagee may elect. Unless expressly
provided to the contrary in the Credit Agreement, Mortgagor hereby covenants and
agrees to promptly commence and to diligently prosecute the restoration of the
Mortgaged Property upon the occurrence of any casualty loss affecting the
Mortgaged Property, without regard to the availability or adequacy of insurance
proceeds, but in all events in a manner approved by Mortgagee. Notwithstanding
any damage to, destruction or loss of or other casualty with respect to any of
the Mortgaged Property, Mortgagor shall continue to pay the Obligations at the
time and in the manner provided for in the Credit Agreement and the other Loan
Documents until the Obligations have been paid in full. Notwithstanding anything
to the contrary in this Section 5.04 but subject to the final sentence of this
Section 5.04(e), if any damage to, destruction or loss of or other casualty with
respect to the Mortgaged Property results in damage or loss of $50,000.00 or
less, provided that no Default exists under the Loan Documents, Mortgagor shall
be allowed to

                                       14

<PAGE>

settle such claims with no involvement by Mortgagee, retain any proceeds, and
apply them to restoration of the Mortgaged Property. Furthermore, subject to the
final sentence of this Section 5.04(e), in the event of any damage to or
destruction of the Mortgaged Property or any part thereof to an extent that the
cost of restoration is greater than $50,000 but less than twenty-five percent
(25%) of the fair market value of the Mortgaged Property, Mortgagee shall make
the net insurance proceeds payable by reason of such damage or destruction
available for restoration and repair of the Mortgaged Property to its original
condition ("restoration"), provided that the following conditions are satisfied
to the reasonable satisfaction of Mortgagee within one hundred twenty (120) days
after such damage or destruction:

            (i) Mortgagor shall submit to Mortgagee schematic plans and
   specifications for the restoration, which plans and specifications shall be
   consistent with the condition of the Mortgaged Property immediately prior to
   such damage or destruction, subject to modifications approved by Mortgagee;

            (ii) Mortgagor shall enter into a fixed or guaranteed maximum cost
   contract for the restoration with a contractor reasonably acceptable to
   Mortgagee;

            (iii) Mortgagor shall obtain all necessary governmental permits and
   approvals for the restoration;

            (iv) Mortgagor shall deposit with Mortgagee such sums of money as
   are necessary, when added to the net insurance proceeds and earnings thereon,
   to pay the full cost of the restoration;

            (v) The contract for performance of the restoration shall provide
   that the restoration shall be substantially complete within one (1) year
   after the date of the damage or destruction; and

            (vi) Mortgagor shall agree to comply with such additional
   construction disbursement conditions and procedures as are customary for such
   projects.

The net insurance proceeds and any sums deposited by Mortgagor pursuant to (iv)
above shall be held by Mortgagee in a separate interest-bearing account
established at Mortgagor's expense in the name of Mortgagee but for the benefit
of Mortgagor, and all earnings on such deposits shall be added to such account.
Mortgagor shall pay to Mortgagee a fee for Mortgagee's internal staff expense of
monitoring such disbursements equal to one percent (1%) of the amount deposited
in such account, and Mortgagor shall pay all out-of-pocket fees and expenses
paid by Mortgagee to title insurance companies and consulting engineers and
architects, for endorsements to title policies, review of plans, inspections and
disbursing services in connection with such application of net insurance
proceeds to the restoration. After completion of the restoration, any balance
remaining in such account up to the amount of any sums deposited by Mortgagor
pursuant to (iv) above plus $50,000 shall be paid to Mortgagor, and any balance
remaining in such account in excess of such amounts shall be paid to Mortgagee
for application to the Obligations in such order as Mortgagee shall determine.
If the Mortgaged Property is sold, through foreclosure or otherwise, prior to
the receipt by Mortgagee of such insurance proceeds, Mortgagee shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought,

                                       15

<PAGE>

recovered or denied, to receive such insurance proceeds, or a portion thereof
sufficient to pay the then unpaid Obligations, whichever is less.

            SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

      (a) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Mortgaged Property, or any portion thereof or interest therein, Mortgagor
shall notify Mortgagee of such proceeding. Mortgagor shall then, if requested by
Mortgagee, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the Credit
Agreement, cause any awards or settlements to be paid over to Mortgagee for
disposition pursuant to the terms of this Mortgage. Mortgagee shall be entitled
to participate in any such proceeding, at Mortgagor's sole cost and expense, and
Mortgagor shall deliver or cause to be delivered to Mortgagee such instruments
as may be requested by Mortgagee from time to time to permit such participation.

      (b) If the Mortgaged Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement payable to Mortgagor by virtue of its
interest in the Mortgaged Property shall be, and by these presents is, assigned,
transferred and set over unto Mortgagee to be held by Mortgagee, subject to the
Lien and security interest of this Mortgage, and disbursed in accordance with
the provisions of the Credit Agreement or, if there is no provision contained in
the Credit Agreement governing how the same is to be disbursed, then Mortgagee
shall apply the entire amount thereof to the payment of the Obligations, whether
or not then due and payable, in such manner and order as Mortgagee may elect. In
all events, unless otherwise expressly provided to the contrary in the Credit
Agreement, Mortgagor hereby covenants and agrees to commence and diligently to
prosecute the restoration of the Mortgaged Property upon the occurrence of any
condemnation or other taking affecting the Mortgaged Property, without regard to
the availability or adequacy of any award or settlement. Notwithstanding any
condemnation or other taking of any of the Mortgaged Property, Mortgagor shall
continue to pay the Obligations at the time and in the manner provided for in
the Credit Agreement and the other Loan Documents until any condemnation award
or settlement shall have been actually received and applied by Mortgagee to the
discharge of the Obligations. Notwithstanding anything to the contrary in this
Section 5.05 but subject to the final sentence of this Section 5.05(b), if the
Mortgaged Property or any part thereof is taken or diminished in value, or if a
consent settlement is entered by or under threat of such proceeding, and the
award or settlement payable to Mortgagor by virtue of its interest in the
Mortgaged Property is $50,000.00 or less, provided that no Default exists under
the Loan Documents, Mortgagor shall be entitled to retain that part of any such
award or settlement that is designated for restoration of the Mortgaged Property
and shall apply it accordingly, and the balance shall be paid to Mortgagee for
application to the Obligations in such order as Mortgagee shall determine.
Furthermore, subject to the final sentence of this Section 5.05(b), in the event
the Mortgaged Property or any part thereof is taken or diminished in value, or
if a consent settlement is entered by or under threat of such proceeding, and
the award or settlement payable to Mortgagor by virtue of its interest in the
Mortgaged Property is greater than $50,000 but less than twenty-five percent
(25%) of the fair market value of the Mortgaged Property, Mortgagee shall make
that portion of any such award or settlement that is designated

                                       16

<PAGE>

for restoration of the Mortgaged Property available for restoration and repair
of the Mortgaged Property to a complete architectural unit ("restoration"),
provided that the following conditions are satisfied to the reasonable
satisfaction of Mortgagee within one hundred twenty (120) days after such
taking:

            (i) Mortgagor shall submit to Mortgagee schematic plans and
   specifications for the restoration, which plans and specifications shall be
   consistent with the condition of the Mortgaged Property immediately prior to
   such taking, subject to modifications approved by Mortgagee;

            (ii) Mortgagor shall enter into a fixed or guaranteed maximum cost
   contract for the restoration with a contractor reasonably acceptable to
   Mortgagee;

            (iii) Mortgagor shall obtain all necessary governmental permits and
   approvals for the restoration;

            (iv) Mortgagor shall deposit with Mortgagee such sums of money as
   are necessary, when added to the award proceeds and earnings thereon, to pay
   the full cost of the restoration;

            (v) The contract for performance of the restoration shall provide
   that the restoration shall be substantially complete within one (1) year
   after the date of the taking; and

            (vi) Mortgagor shall agree to comply with such additional
   construction disbursement conditions and procedures as are customary for such
   projects.

The award or settlement amount and any sums deposited by Mortgagor pursuant to
(iv) above shall be held by Mortgagee in a separate interest-bearing account
established at Mortgagor's expense in the name of Mortgagee but for the benefit
of Mortgagor, and all earnings on such deposits shall be added to such account.
Mortgagor shall pay to Mortgagee a fee for Mortgagee's internal staff expense of
monitoring such disbursements equal to one percent (1%) of the amount deposited
in such account, and Mortgagor shall pay all out-of-pocket fees and expenses
paid by Mortgagee to title insurance companies and consulting engineers and
architects, for endorsements to title policies, review of plans, inspections and
disbursing services in connection with such application of award proceeds to the
restoration. After completion of the restoration, any balance remaining in such
account up to the amount of any sums deposited by Mortgagor pursuant to (iv)
above plus $50,000 shall be paid to Mortgagor, and any balance remaining in such
account in excess of such amounts shall be paid to Mortgagee for application to
the Obligations in such order as Mortgagee shall determine. If the Mortgaged
Property is sold, through foreclosure or otherwise, prior to the receipt by
Mortgagee of such condemnation award or settlement, Mortgagee shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such condemnation award or settlement,
or a portion thereof sufficient to pay the Obligations, whichever is less.

            SECTION 5.06 Maintenance of Rights-of-Way, Easements, Licenses and
Other Rights. Mortgagor shall maintain, preserve and renew all rights-of-way,
easements, tenements, hereditaments, development rights and credits, zoning
rights, grants, privileges,

                                       17

<PAGE>

appurtenances, licenses, franchises and other rights reasonably necessary for
the use or operation of the Mortgaged Property from time to time, or otherwise
relevant to the value thereof, and Mortgagor shall not, without the prior
written consent of Mortgagee, initiate, join in or consent to any private
restrictive covenant or other public or private restriction as to the present or
future use or operation of the Mortgaged Property. Mortgagor shall, however,
comply with all restrictive covenants which may at any time affect the Mortgaged
Property, all applicable zoning ordinances and all other public or private
restrictions relating to the use of the Mortgaged Property.

            SECTION 5.07 Payment and Performance of Obligations. Mortgagor shall
duly and punctually pay and perform all of the Obligations.

            SECTION 5.08 Compliance with Permitted Liens and Other Obligations.
Mortgagor shall comply in all material respects with any and all obligations,
restrictions and requirements that may be set forth in each and every document
constituting a Permitted Lien. In addition, Mortgagor shall comply in all
material respects with each and every obligation legally imposed upon it and/or
relating to the Mortgaged Property pursuant to applicable law (including,
without limitation, all matters described in Section 4.05 hereof), contract or
other agreement. It is hereby acknowledged that Mortgagee's consent to a
Permitted Lien as of the date hereof shall in no way be deemed to constitute
approval of any future Lien which may be imposed upon any portion of the
Mortgaged Property, or any other enforcement action affecting Mortgagor or the
Mortgaged Property, as a result of Mortgagor's failure to perform or comply with
its obligations under any document constituting a Permitted Lien as of the date
hereof.

            SECTION 5.09 Additional Affirmative Covenants. All affirmative
covenants made by the Borrowers or Guarantors or any of them in the Credit
Agreement are incorporated herein by reference and are hereby also made by
Mortgagor as to itself and the Mortgaged Property as though such covenants were
set forth at length herein as the covenants of Mortgagor.

                                   ARTICLE VI.

                               NEGATIVE COVENANTS

      Mortgagor hereby covenants and agrees with Mortgagee that, until all of
the Obligations shall have been paid or performed in full and discharged:

            SECTION 6.01 Use Violations. Mortgagor shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Mortgaged Property in any manner which (a) violates in any material respect any
Governmental Requirement, (b) may be dangerous unless safeguarded as required by
applicable law, (c) constitutes a public or private nuisance, or (d) makes void,
voidable or cancelable, or increases, substantially in excess of commercially
reasonably rates, the premium of, any insurance then in force with respect
thereto.

            SECTION 6.02 Waste. Mortgagor shall not commit or permit any waste
with respect to the Mortgaged Property.

                                       18

<PAGE>

            SECTION 6.03 Alterations. Mortgagor shall notify Mortgagee, in
writing and in advance, with respect to all proposed alterations, improvements
or additions to the Mortgaged Property (collectively, "Alterations") which are
of a material nature, and, unless and to the extent otherwise expressly provided
in the Credit Agreement, Mortgagor shall not effect any material Alterations to
the Mortgaged Property without the prior written consent of Mortgagee.
Notwithstanding the foregoing, Mortgagor shall have the right to perform
Alterations to the Mortgaged Property without obtaining the prior written
consent of the Mortgagee pursuant to (i) its normal course of tenant improvement
activities pursuant to any Leases; and (ii) non-structural Alterations the costs
of which in the aggregate do not exceed $100,000.00 in any given year.

            SECTION 6.04 No Further Encumbrances. Mortgagor shall not, without
the prior written consent of Mortgagee, create, place or permit to be created or
placed, or through any act or failure to act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, Lien (statutory, constitutional or
contractual), security interest, encumbrance or charge on, or conditional sale
or other title retention agreement with respect to, the Mortgaged Property, or
any portion thereof or interest therein, other than the Permitted Liens,
regardless of whether the same are subordinate to the Lien(s) and security
interest(s) created by this Mortgage. Notwithstanding the foregoing, Mortgagor
shall be permitted to place or create purchase money liens on equipment acquired
or held by Mortgagor in the ordinary course of its business to secure the
purchase price of such equipment or indebtedness incurred solely for the purpose
of financing the acquisition of such equipment or liens existing on such
equipment at the time of its acquisition; provided that no such lien shall
extend to or cover any other Mortgaged Property, the principal amount of the
indebtedness secured by any such lien shall not exceed the lesser of 100% of the
fair market value or the cost of the property so held or acquired, and the
aggregate principal amount of indebtedness secured by any or all such liens
shall not exceed at any one time outstanding $160,000.00.

            SECTION 6.05 Transfer Restrictions. Mortgagor shall not sell, lease,
assign, transfer or otherwise dispose of or abandon all or any part of the
Mortgaged Property (or any interest therein), except as expressly permitted by,
and in accordance with the terms of, the Credit Agreement or as permitted
pursuant to Section 3.03 herein.

            SECTION 6.06 Additional Negative Covenants. All negative covenants
made by the Borrowers or Guarantors or any of them in the Credit Agreement and
the other Loan Documents are incorporated herein by reference and are hereby
also made by Mortgagor as to itself and the Mortgaged Property as though such
negative covenants were set forth at length herein as the negative covenants of
Mortgagor.

                                  ARTICLE VII.

                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Credit Agreement are hereby incorporated herein as if fully
set forth herein, and, without limiting the generality of the foregoing, the
occurrence of an "Event of Default" under the Credit Agreement or any other Loan
Document shall constitute an "Event of Default"

                                       19

<PAGE>

hereunder.

            SECTION 7.02 Acceleration. Upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights, powers or
remedies conferred herein or by operation of law, Mortgagee, in its sole
judgment and discretion, may declare the then unpaid principal balance of the
Loan (the "Principal Balance"), the accrued interest thereon and any other
accrued but unpaid portion of the Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
Mortgagor.

            SECTION 7.03 Foreclosure and Sale. If an Event of Default shall
occur and be continuing, Mortgagee shall have the right and option to take
possession of the Mortgaged Property and/or proceed with foreclosure and to
sell, to the extent and in the manner permitted by applicable law, all or any
portion of the Mortgaged Property at one or more sales, as an entirety or in
parcels, at such place or places, in such manner and upon such notice as may be
required by applicable law, or, in the absence of any such requirement, as
Mortgagee may deem appropriate, and to make conveyance to the purchaser or
purchasers. Where the Mortgaged Property is situated in more than one county,
notice as above provided shall be posted and filed in all such counties (if such
notices are required by applicable law), and all such Mortgaged Property may be
sold in any such county and any such notice shall designate the county where
such Mortgaged Property is to be sold. Nothing contained in this Section 7.03
shall be construed so as to limit in any way Mortgagee's rights to sell the
Mortgaged Property, or any portion thereof, by private sale if, and to the
extent that, such private sale is permitted under the laws of the applicable
jurisdiction or by public or private sale after entry of a judgment by any court
of competent jurisdiction so ordering. Mortgagor hereby irrevocably appoints
Mortgagee to be the attorney-in-fact of Mortgagor (coupled with an interest) and
in the name and on behalf of Mortgagor to execute and deliver any deeds,
transfers, conveyances, assignments, assurances and notices which Mortgagor
ought to execute and deliver, and to do and perform any other acts or things
which Mortgagor ought to do and perform under the covenants herein contained
and, generally, to use the name of Mortgagor in the exercise of any of the
powers hereby conferred on Mortgagee. At any such sale: (a) whether made under
the power herein contained or any other legal enactment, or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for Mortgagee to have physically present, or to have constructive
possession of, the Mortgaged Property (Mortgagor hereby covenanting and agreeing
to deliver to Mortgagee any portion of the Mortgaged Property not actually or
constructively possessed by Mortgagee immediately upon demand by Mortgagee) and
the title to and right of possession of any such property shall pass to the
purchaser thereof as completely as if the same had been actually present and
delivered to purchaser at such sale; (b) each instrument of conveyance executed
by Mortgagee shall contain a general warranty of title, binding upon Mortgagor
and its successors and assigns; (c) each and every recital contained in any
instrument of conveyance made by Mortgagee shall conclusively establish the
truth and accuracy of the matters recited therein, including, without
limitation, nonpayment and/or nonperformance of the Obligations and
advertisement and conduct of such sale in the manner provided herein and
otherwise required by applicable law; (d) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed; (e) the
receipt of Mortgagee, or of such other Person or officer making the sale, shall
be a sufficient discharge to the purchaser for its purchase money and neither
such purchaser nor its assigns or personal

                                       20

<PAGE>

representatives shall thereafter be obligated to see to the application of such
purchase money, or be in any way answerable for any loss, misapplication or
non-application thereof; (f) to the fullest extent permitted by applicable law,
Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, estate, claim and demand whatsoever, either at law or in equity
(including any statutory or common law right of redemption, which is hereby
waived to the fullest extent permitted by applicable law), in and to the
property sold in any such event, and such sale shall be a perpetual bar, both at
law and in equity, against Mortgagor and any and all other Persons claiming by,
through or under Mortgagor; and (g) to the extent and under such circumstances
as are permitted by applicable law, Mortgagee may be a purchaser at any such
sale, and shall have the right, after paying or accounting for all costs of said
sale or sales, to credit the amount of the then unpaid Obligations to the amount
of its bid (in the order of priority set forth in Section 7.16 hereof) in lieu
of cash payment. Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

            SECTION 7.04 Mortgagee's Agents. Mortgagee may appoint or delegate
any one or more Persons as agent to perform any act or acts necessary or
incident to any sale held by Mortgagee, including the posting of notices and the
conduct of sale, but in the name and on behalf of Mortgagee.

            SECTION 7.05 Judicial Foreclosure. If any Event of Default shall
occur and be continuing, Mortgagee shall have the right and power to proceed by
a suit or suits in equity or at law, whether for the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, or for any foreclosure hereunder or for the sale of the
Mortgaged Property under the judgment or decree of any court or courts of
competent jurisdiction, or for the enforcement of any other appropriate legal or
equitable remedy.

            SECTION 7.06 Receiver. If any Event of Default shall occur and be
continuing, Mortgagee may apply for and obtain as a matter of right and without
notice to Mortgagor, which notice is hereby expressly waived by Mortgagor, the
appointment of a receiver to collect the Rents of the Mortgaged Property and to
preserve the security hereof; either before or after any foreclosure sale or the
sale of the Mortgaged Property under the order of a court or courts of competent
jurisdiction or under executory or other legal process, without regard to the
value of the Mortgaged Property as security for the amount then due to
Mortgagee, or the solvency of any entity or entities, person or persons
primarily or secondarily liable for the payment of such amounts; the Rents of
the Mortgaged Property, in any such event, having heretofore been assigned to
Mortgagee pursuant to Section 3.01 as additional security for the payment of the
Obligations secured hereby. Any money advanced by Mortgagee in connection with
any such receivership shall be a demand obligation (which obligation Mortgagor
hereby expressly promises to pay) owing by Mortgagor to Mortgagee and shall be
subject to the provisions of Section 8.07(b) hereof.

            SECTION 7.07 Foreclosure for Installments. To the extent allowed by
applicable law, Mortgagee shall also have the option to proceed with foreclosure
in satisfaction of any installments of the Obligations which have not been paid
when due, either through the

                                       21

<PAGE>

courts or otherwise, by non-judicial power of sale in satisfaction of the
matured but unpaid portion of the Obligations as if under a full foreclosure,
conducting the sale as herein provided and without declaring the entire
principal balance and accrued interest due. Such sale may be made subject to the
unmatured portion of the Obligations, and any such sale shall not in any manner
affect the unmatured portion of the Obligations, but as to such unmatured
portion of the Obligations this Mortgage shall remain in full force and effect
just as though no sale had been made hereunder. It is further agreed that
several sales may be made hereunder without exhausting the right of sale for any
unmatured part of the Obligations, it being the intent and purpose hereof to
provide for a foreclosure and sale of the security for any matured portion of
the Obligations without exhausting the power to foreclose and sell the Mortgaged
Property for any subsequently maturing portion of the Obligations.

            SECTION 7.08 Separate Sales. To the extent allowed by applicable
law, the Mortgaged Property may be sold in one or more parcels and in such
manner and order as Mortgagee, in its sole discretion, may elect, it being
expressly understood and agreed that the right of sale arising out of any Event
of Default shall not be exhausted by any one or more sales.

            SECTION 7.09 Possession of Mortgaged Property. Mortgagor agrees to
the full extent that it lawfully may, that, in case one or more of the Events of
Default shall have occurred and be continuing, then, and in every such case,
Mortgagee shall have the right and power to enter into and upon and take
possession of all or any part of the Mortgaged Property in the possession of
Mortgagor, its successors or assigns, or its or their agents or servants, and
may exclude Mortgagor, its successors or assigns, and all Persons claiming by,
through or under Mortgagor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Mortgagee may use, administer, manage, operate
and control the Mortgaged Property and conduct the business thereof to the same
extent as Mortgagor, its successors or assigns, might at the time do and may
exercise all rights and powers of Mortgagor, in the name, place and stead of
Mortgagor, or otherwise as Mortgagee shall deem best. All costs, expenses and
liabilities of every character incurred by Mortgagee in administering, managing,
operating and controlling the Mortgaged Property shall constitute a demand
obligation (which obligation Mortgagor hereby expressly promises to pay) owing
by Mortgagor to Mortgagee and shall be subject to the provisions of Section
8.07(b) hereof. Mortgagor hereby irrevocably constitutes and appoints Mortgagee
as Mortgagor's attorney-in-fact (coupled with an interest) to perform such acts
and execute such documents as Mortgagee, in its sole discretion, shall deem
appropriate, including endorsement of Mortgagor's name on any instruments.
Regardless of any provision of this Mortgage, the Credit Agreement or any other
Loan Document, Mortgagee shall not be considered to have accepted any property
other than cash or immediately available funds in satisfaction of any obligation
of Mortgagor to Mortgagee, unless Mortgagee shall have given express written
notice of Mortgagee's election to the contrary.

            SECTION 7.10 Occupancy After Acceleration. In the event that there
is an acceleration of the Loan and Mortgagor or Mortgagor's representatives,
successors or assigns or any other Person claiming any interest in the Mortgaged
Property by, through or under Mortgagor, continues to occupy or use the
Mortgaged Property or any part thereof, each and all shall immediately become
the tenant of Mortgagee (or its successor, if applicable), which tenancy shall
be a tenancy from day-to-day, terminable at the will of either the landlord or
tenant, at a rent to be determined by Mortgagee (which may be in excess of fair
market value); provided,

                                       22

<PAGE>

however that until Mortgagee sets forth the amount of such rent, such rent shall
be a fair market rental per day based upon the value of the Mortgaged Property
as a whole; and such rental shall be due daily to the Mortgagee (or its
successor, if applicable). To the extent permitted by applicable law, Mortgagee
(or its successor, if applicable), notwithstanding any language herein to the
contrary, shall have the sole option to demand immediate possession or to permit
the occupants to remain as tenants at will. In the event that the tenant fails
to surrender possession of said property upon demand, Mortgagee (and its
successor, if applicable) shall be entitled to institute and maintain a summary
action for possession of the Mortgaged Property (such as an action for forcible
entry and detainer) in any court having appropriate jurisdiction.

            SECTION 7.11 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Mortgagee shall be cumulative and in
addition to every other right, power and remedy herein specifically given or now
or hereafter existing in equity, at law or by statute (including specifically
those granted by the Applicable UCC). Each such right, power and remedy, whether
specifically herein given or otherwise existing, may be exercised from time to
time and so often and in such order as may be deemed expedient by Mortgagee, and
the exercise, or the beginning of the exercise, of any such right, power or
remedy shall not be deemed a waiver of the right to exercise, at the same time
or thereafter, any other right, power or remedy. Mortgagee shall be entitled to
collect all costs and expenses incurred in pursuing such remedies. No delay or
omission by Mortgagee in the exercise of any such right, power or remedy shall
impair any such right, power or remedy or operate as a waiver thereof or of any
other right, power or remedy then or thereafter existing.

            SECTION 7.12 No Release of Obligations. Neither Mortgagor nor any
Borrower, Guarantor or other Person now or hereafter obligated for the payment
or performance of all or any part of the Obligations shall be relieved of any
such obligation by reason of (a) the failure of Mortgagee to comply with any
request of Mortgagor or any Borrower, Guarantor or other Person so obligated to
foreclose the Lien of this Mortgage or to enforce any provision hereunder or
under the Loan Agreement; (b) the release, regardless of consideration, of the
Mortgaged Property or any portion thereof or interest therein or the addition of
any other property to the Mortgaged Property; (c) any agreement or stipulation
between any subsequent owner of the Mortgaged Property and Mortgagee extending,
renewing, rearranging or in any other way modifying the terms of this Mortgage
without first having obtained the consent of, given notice to or paid any
consideration to Mortgagor or any Borrower, Guarantor or other Person, and in
any such event Mortgagor and all Borrowers, Guarantors and such other Persons
shall continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Mortgagee; or (d) any other act or occurrence save and except the
complete payment and performance of all of the Obligations.

            SECTION 7.13 Release of and Resort to Collateral. Mortgagee may
release, regardless of consideration, any part of the Mortgaged Property
without, as to the remainder, in any way impairing, affecting, subordinating or
releasing the Lien or security interest created in or evidenced by this Mortgage
or its stature as a first and prior Lien and security interest in and to the
Mortgaged Property, and without in any way releasing or diminishing the
liability of any Person liable for the payment or performance of the
Obligations. Mortgagee may resort to any other security for the Obligations held
by Mortgagee in such

                                       23

<PAGE>

manner and order as Mortgagee may elect.

            SECTION 7.14 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Mortgagor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Mortgagor by virtue of any present or future moratorium law or other law
exempting the Mortgaged Property from attachment, levy or sale on execution or
providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption or extension of time for payment; (b) except for
notices expressly provided for herein or in the Credit Agreement, all notices of
any Event of Default or of Mortgagee's intention to accelerate maturity of the
Obligations or of Mortgagee's election to exercise or actual exercise of any
right, remedy or recourse provided for hereunder or under the Credit Agreement;
and (c) any right to a marshalling of assets or a sale in inverse order of
alienation; and (d) any and all conflicts with any provisions of any of the Loan
Documents. If any law referred to in this Mortgage and now in force, of which
Mortgagor or its successor or successors might take advantage despite the
provisions hereof, shall hereafter be repealed or cease to be in force, such law
shall thereafter be deemed not to constitute any part of the contract herein
contained or to preclude the operation or application of the provisions hereof.

            SECTION 7.15 Discontinuance of Proceedings. In case Mortgagee shall
have proceeded to invoke any right, remedy or recourse permitted hereunder or
under the Credit Agreement and shall thereafter elect to discontinue or abandon
same for any reason, Mortgagee shall have the unqualified right so to do and, in
such an event, Mortgagor and Mortgagee shall be restored to their former
positions with respect to the Obligations, this Mortgage, the Credit Agreement,
the Mortgaged Property and otherwise, and the rights, remedies, recourses and
powers of Mortgagee shall continue as if same had never been invoked.

            SECTION 7.16 Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of and
any other amounts generated by the holding, leasing, operating or other use of
the Mortgaged Property shall be applied by Mortgagee (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Credit Agreement or, if not so provided, then in the
following order of priority, except to the extent otherwise required by
applicable law:

      (a) first, to the payment of the reasonable and necessary costs and
expenses of taking possession of the Mortgaged Property and of holding, using,
leasing, repairing, improving the same, including reasonable (i) receivers'
fees, (ii) court costs, (iii) attorneys' and accountants' fees, (iv) costs of
advertisement and title search fees, and (v) the payment of any and all
Impositions, Liens, security interests or other rights, titles or interests
equal or superior to the Lien and security interest of this Mortgage (except
those to which the Mortgaged Property has been sold subject to and without in
any way implying Mortgagee's prior consent to the creation thereof);

      (b) second, to the payment of all amounts other than the Principal Balance
and accrued but unpaid interest which may be due to Mortgagee hereunder or under
the other Loan Documents, together with interest thereon as provided herein;

                                       24

<PAGE>

      (c) third, to the payment of the Obligations in such order and manner as
Mortgagee determines in its sole discretion; and

      (d) fourth, to Mortgagor or as otherwise required by any Governmental
Requirement.

Mortgagor shall be liable for any deficiency remaining.

            SECTION 7.17 Uniform Commercial Code Remedies. Mortgagee shall have
all of the rights, remedies and recourses with respect to the Personalty and the
Fixtures afforded to it by the Applicable UCC, including, without limitation,
the right to take possession of the Personalty and the Fixtures or any part
thereof, and to take such other measures as Mortgagee may deem necessary for the
care, protection and preservation of the Personalty and the Fixtures, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded by this Mortgage and the other Loan Documents.

            SECTION 7.18 Indemnity. In connection with any action taken by
Mortgagee pursuant to this Mortgage, neither Mortgagee nor any Indemnified
Person shall be liable for any Loss sustained by Mortgagor, including those
resulting from (a) any assertion that Mortgagee or any Indemnified Person
received funds from the operations of the Mortgaged Property claimed by third
Persons, or (b) any act or omission of Mortgagee or such Indemnified Person in
administering, managing, operating or controlling the Mortgaged Property,
including in either case such Loss as may result from the ordinary negligence of
Mortgagee or such Indemnified Person or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence or willful misconduct of Mortgagee or such Indemnified Person,
nor shall Mortgagee or such Indemnified Person be obligated to perform or
discharge any obligation, duty or liability of Mortgagor. Mortgagor shall and
does hereby agree to indemnify Mortgagee and each Indemnified Person for, and to
hold Mortgagee and each such Indemnified Person harmless from, any and all
Losses which may or might be incurred by Mortgagee or any Indemnified Person by
reason of this Mortgage or the exercise of rights or remedies hereunder,
including such Losses as may result from the ordinary negligence of Mortgagee or
any Indemnified Person or which may result from strict liability, whether under
applicable law or otherwise, unless such Loss is caused by the gross negligence
or willful misconduct of Mortgagee or such Indemnified Person. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO MORTGAGEE AND EACH
INDEMNIFIED PERSON WITH RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF MORTGAGEE, SUCH INDEMNIFIED
PERSON OR ANY OTHER PERSON. Should Mortgagee or any Indemnified Person make any
expenditure on account of any such Losses, the amount thereof, including costs,
expenses and reasonable attorneys' fees, shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to
Mortgagee and shall be subject to the provisions of Section 8.07(b) hereof.
Mortgagor hereby assents to, ratifies and confirms any and all actions of
Mortgagee with respect to the Mortgaged Property taken under this Mortgage. This
Section 7.18 shall survive the termination of this Mortgage and the payment and
performance of the Obligations.

                                       25

<PAGE>

                                  ARTICLE VIII.

                                  MISCELLANEOUS

            SECTION 8.01 Instrument Construed as Mortgage, Etc. This Mortgage
may be construed as a mortgage, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, Financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

            SECTION 8.02 Performance at Mortgagor's Expense. The cost and
expense of performing or complying with any and all of the Obligations shall be
borne solely by Mortgagor, and no portion of such cost and expense shall be, in
any way or to any extent, credited against any installment on or portion of the
Obligations.

            SECTION 8.03 Survival of Obligations. Each and all of the
Obligations shall survive the execution and delivery of this Mortgage and shall
continue in full force and effect until all of the Obligations shall have been
fully satisfied.

            SECTION 8.04 Further Assurances. Mortgagor, upon the request of
Mortgagee, shall execute, acknowledge, deliver and record and/or file such
further instruments, including Financing statements, and do such further acts as
may be reasonably necessary, desirable or proper to carry out more effectively
the purpose of this Mortgage and to subject to the Liens and security interests
hereof any property intended by the terms hereof to be covered hereby, including
any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Mortgaged Property.

            SECTION 8.05 Notices. All notices or other communications required
or permitted to be given pursuant to this Mortgage shall be in writing and shall
be considered properly given if given in the manner and to the addresses
prescribed by Section 11.02 of the Credit Agreement to the parties and at the
addresses set forth in the first paragraph of this Mortgage, and to each of the
parties to the Credit Agreement at the addresses set forth in Section 11.02
thereof. Any party shall have the right to change its address for notice
hereunder to any other location within the continental United States by the
giving of ten (10) days' notice to the other party in the manner set forth
above.

            SECTION 8.06 No Waiver. Any failure by Mortgagee to insist, or any
election by Mortgagee not to insist, upon strict performance by Mortgagor of any
of the terms, provisions or conditions of this Mortgage shall not be deemed to
be a waiver of the same or of any other terms, provision or condition hereof,
and Mortgagee shall have the right, at any time or times thereafter, to insist
upon strict performance by Mortgagor of any and all of such terms, provisions
and conditions. Mortgagee may, in Mortgagee's sole and absolute discretion, (i)
in the case of a Default, determine whether such Default has been cured, and
(ii) in the case of an Event of Default, accept or reject any proposed cure of
an Event of Default. In no event shall any provision of this Mortgage or any
other Loan Document which provides that Mortgagee shall have certain rights
and/or remedies only during the continuance of an Event of Default be construed
so as to require Mortgagee to accept a cure of any such Event of Default. Unless
and

                                       26

<PAGE>

until Mortgagee accepts any proposed cure of an Event of Default, such Event of
Default shall be deemed to be continuing for purposes of this Mortgage and the
other Loan Documents.

            SECTION 8.07 Mortgagee's Right to Perform; Mortgagee's Expenditures.

      (a) Mortgagor agrees that if Mortgagor fails to perform any act or take
any action which Mortgagor is required to perform or take hereunder or under the
Credit Agreement or to pay any money which Mortgagor is required to pay
hereunder or under the Credit Agreement, Mortgagee may, but shall not be
obligated to, perform or cause to be performed such act or take such action or
pay such money to the extent and only to the extent permitted under the Credit
Agreement.

      (b) All costs and expenses incurred by Mortgagee (or any Indemnified
Party), including, without limitation, attorneys fees and expenses, all monies
paid by (or on behalf of) Mortgagee and the monetary value of all services
performed by (or on behalf of Mortgagee) in connection with a Default or Event
of Default hereunder or under any other Loan Document, including, without
limitation, the (i) the enforcement of any term or provision of this Mortgage or
any other Loan Document, (ii) the performance by Mortgagee of any obligation of
Mortgagor under this Mortgage or any other Loan Document if Mortgagee elects to
so perform, in its sole and absolute discretion, and (iii) any action Mortgagee
elects to take, in its sole and absolute discretion, to protect its interest in
or the value of the Mortgaged Property, shall be a demand obligation owing by
Mortgagor to Mortgagee, as the case may be, and to the extent any payment is
made to a third Person, Mortgagee, upon making such payment, shall be subrogated
to all of the rights of the Person receiving such payment. All such costs and
expenses, monies and the monetary value of such services performed shall (x)
bear interest at the Default Rate from the date of such incurrence, payment or
performance, as applicable, until paid, and (y) (together with such interest)
constitute a portion of the Obligations and shall be secured by this Mortgage
and all of the other Loan Documents. If Mortgagee shall elect to pay any
Imposition or other sums due with reference to the Mortgaged Property, Mortgagee
may do so in reliance on any bill, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof.

            SECTION 8.08 Successors and Assigns. All of the terms hereof shall
apply to, be binding upon and inure to the benefit of the parties hereto, their
successors, assigns, heirs and legal representatives, and all other Persons
claiming by, through or under them; provided, however, that nothing herein shall
be deemed to imply any right on behalf of Mortgagor to assign its interest in
any of the Mortgaged Property except as may be expressly set forth in the Credit
Agreement.

            SECTION 8.09 Severability. This Mortgage is intended to be performed
in accordance with, and only to the extent permitted by, all applicable laws and
regulations of applicable Governmental Authorities and the provisions hereof are
intended to be limited to the extent necessary that they will not render this
Mortgage invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law. If any provision hereof or the
application thereof to any Person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of this Mortgage
nor the application of

                                       27

<PAGE>

such provision to other Persons or circumstances shall be affected thereby, but
rather shall be enforced to the greatest extent permitted by applicable law.

            SECTION 8.10 Entire Agreement and Modification. This Mortgage may
not be amended, revised, waived, discharged, released or terminated orally, but
only by a written instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

            SECTION 8.11 Applicable Law. THIS MORTGAGE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE IN WHICH THE
MORTGAGED PROPERTY IS LOCATED; PROVIDED, HOWEVER, THAT THE CREDIT AGREEMENT IS
AND EACH GUARANTY IS BY ITS TERMS, GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK AS PROVIDED THEREIN, AND, IN THE EVENT THAT IT BECOMES NECESSARY, IN
CONNECTION WITH THE ENFORCEMENT OF THIS MORTGAGE OR OTHERWISE, TO CONSTRUE OR
ENFORCE THE OBLIGATIONS (WHICH OBLIGATIONS ARE SECURED BY THIS MORTGAGE), THE
CREDIT AGREEMENT AND EACH GUARANTY SHALL BE CONSTRUED AND, ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

            SECTION 8.12 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Credit Agreement are used to pay indebtedness
secured by any outstanding Lien, security interest, charge or prior encumbrance
against the Mortgaged Property, such proceeds shall be deemed to have been
advanced by Mortgagee at Mortgagor's request, and Mortgagee shall be subrogated
to any and all rights, security interests and Liens owned by any owner or holder
of such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Mortgagee, Mortgagor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

            SECTION 8.13 No Partnership. Nothing contained in this Mortgage is
intended to, or shall be construed to, create to any extent and in any manner
whatsoever any partnership, joint venture, or association between Mortgagor and
Mortgagee, or in any way make Mortgagee a co-principal with Mortgagor with
reference to the Mortgaged Property, and any inferences to the contrary are
hereby expressly negated.

            SECTION 8.14 Headings. The Article, Section and Subsection headings
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

            SECTION 8.15 Release of Mortgage. If all of the Obligations shall be
paid, performed and discharged and the Credit Agreement is and each Guaranty is
terminated, Mortgagee shall forthwith cause satisfaction and discharge of this
Mortgage to be entered upon the record, at the sole cost and expense of
Mortgagor, and shall execute and deliver (or cause to

                                       28

<PAGE>

be executed and delivered) such instruments of satisfaction and discharge as may
be appropriate, such instruments to be duly acknowledged and in form for
recording, at the sole cost and expense of Mortgagor.

            SECTION 8.16 Limitation of Obligations with Respect to Mortgaged
Property.

      (a) Neither Mortgagee nor any Lender shall have any duty to protect or
preserve, or any liability with respect to the protection or preservation of,
any Mortgaged Property or to preserve rights pertaining thereto other than the
duty to use reasonable care in the custody and preservation of any Mortgaged
Property in its actual possession. Mortgagee shall be deemed to have exercised
reasonable care in the custody and preservation of any Mortgaged Property in its
possession if such Mortgaged Property is accorded treatment substantially equal
to that which Mortgagee accords its own like property. Mortgagee shall be
relieved of all responsibility for any Mortgaged Property in its possession upon
surrendering it, or tendering surrender of it, to Mortgagor or to such other
Person entitled thereto by applicable law.

      (b) Nothing contained in this Mortgage shall be construed as requiring or
obligating Mortgagee or any Lender, and neither Mortgagee nor any Lender shall
be required or obligated, to (i) make any demand or inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or
notice or take any action with respect to any Mortgaged Property or the monies
due or to become due in connection therewith, (ii) ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders, offers or other
matters relating to any Mortgaged Property, whether or not Mortgagee or any of
the other Lenders has or is deemed to have knowledge or notice thereof, (iii)
take any necessary steps to preserve rights against any prior parties with
respect to any Mortgaged Property, or (iv) notify Mortgagor or any other Person
of any decline in the value of any Mortgaged Property.

            SECTION 8.17 Inconsistency with Credit Agreement. To the fullest
extent possible, the terms and provisions of the Credit Agreement shall be read
together with the terms and provisions of this Mortgage such that the terms and
provisions of this Mortgage shall supplement, rather than conflict with, the
terms and provisions of the Credit Agreement; provided, however, that,
notwithstanding the foregoing, in the event any of the terms or provisions of
this Mortgage conflict with any of the terms or provisions of the Credit
Agreement, such that it is impractical for such terms or provisions to coexist,
the terms or provisions of the Credit Agreement shall govern and control for all
purposes; and, provided further, that the inclusion in this Mortgage of terms
and provisions, supplemental rights or remedies in favor of a secured party but
which are not addressed in the Credit Agreement shall not be deemed to be a
conflict with the Credit Agreement and all such additional terms, provisions,
supplemental rights or remedies contained herein shall be given full force and
effect.

            SECTION 8.18 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Mortgage is a part. All
agreements between Mortgagor and Mortgagee, or any Lender, whether now existing
or hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever shall the amount paid or agreed to
be paid by Mortgagor for the use, forbearance or detention of the money to be
loaned under

                                       29

<PAGE>

the Credit Agreement or any other Loan Document, or for the payment or
performance of any covenant or obligation contained herein or in the Credit
Agreement or any other Loan Document, exceed the maximum amount permissible
under applicable federal or state usury laws. If, under any circumstances,
fulfillment of any such provision, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity prescribed by
applicable law, then the obligation to be fulfilled shall be reduced to the
limit of such validity. If, under any circumstances, Mortgagor shall have paid
an amount of money which is deemed to be interest and such interest would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to Mortgagor. All sums paid
or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit by Mortgagee (or any Lender) shall, to the extent
permitted by applicable law, and to the extent necessary to preclude exceeding
the limit of validity prescribed by applicable law, be amortized, prorated,
allocated and spread from the date of this Mortgage until payment in full of the
Obligations so that the actual rate of interest on account of such principal
amounts is uniform throughout the term hereof.

            SECTION 8.19 Covenants To Run With the Land. All of the grants,
representations, warranties, undertakings, covenants, terms, provisions and
conditions in this Mortgage shall run with the Land and shall apply to and bind
the successors and assigns of Mortgagor. If there shall be more than one
mortgagor, the covenants, representations and warranties made herein shall be
deemed to be joint and several.

            SECTION 8.20 Last Dollar. So long as the balance of the Obligations
exceeds the portion of the Obligations secured by this Mortgage, no payment on
account of the Obligations shall be deemed to be applied against or to reduce
the portion of the Obligations secured by this Mortgage, but shall, instead, be
deemed to be applied against only such portions of the Obligations that are not
secured by this Mortgage.

            SECTION 8.21 Defense of Claims. Mortgagor shall promptly notify
Mortgagee in writing of the commencement of any legal proceedings affecting
Mortgagor's title to the Mortgaged Property or Mortgagee's Lien on or security
interest in the Mortgaged Property, or any part thereof, and shall take all such
action, employing attorneys agreeable to Mortgagee, as may be necessary to
preserve Mortgagor's and Mortgagee's rights affected thereby. If Mortgagor fails
or refuses to adequately or vigorously, in the sole judgment of Mortgagee,
defend Mortgagor's or Mortgagee's rights to the Mortgaged Property, Mortgagee
may take such action on behalf of and in the name of Mortgagor and at
Mortgagor's expense. Moreover, Mortgagee may take (or cause its agents to take)
such independent action in connection therewith as they may in their discretion
deem proper, including, without limitation, the right to employ independent
counsel and to intervene in any suit affecting the Mortgaged Property. All
costs, expenses and attorneys' fees incurred by Mortgagee (or its agents)
pursuant to this Section 8.21 or in connection with the defense by Mortgagee of
any claims, demands or litigation relating to Mortgagor, the Mortgaged Property
or the transactions contemplated in this Mortgage shall be paid by Mortgagor on
demand, plus interest thereon from the date of the advance by Mortgagee until
reimbursement of Mortgagee at the Default Rate.

                                       30

<PAGE>

            SECTION 8.22 Exculpation Provisions. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT IT
IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS
IN FACT READ THIS MORTGAGE AND IS FULLY INFORMED AND HAS FULL NOTICE AND
KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS MORTGAGE; THAT IT HAS
BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE AND HAS RECEIVED THE
ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS MORTGAGE; AND THAT IT RECOGNIZES
THAT CERTAIN OF THE TERMS OF THIS MORTGAGE RESULT IN ONE PARTY ASSUMING THE
LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER
PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE
OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."

            SECTION 8.23 No Merger of Estates. So long as any part of the
Obligations remain unpaid, unperformed or undischarged, the fee, easement and
leasehold estates to the Mortgaged Property shall not merge but rather shall
remain separate and distinct, notwithstanding the union of such estates either
in Mortgagor, Mortgagee, any lessee, any third-party purchaser or otherwise.

            SECTION 8.24 Counterparts. This Mortgage may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which, taken together, shall be deemed to constitute one single instrument,
except that, to facilitate recordation, portions of Exhibit A hereto which
describe properties situated in counties other than the county in which this
Mortgage is to be recorded may be omitted.

            SECTION 8.25 Maturity Date. The latest Obligation secured by this
Mortgage matures on June ___, 2010.

                                   ARTICLE IX.

                            STATE SPECIFIC PROVISIONS

            SECTION 9.01 Application of Rents and Proceeds. Notwithstanding any
provision of this Mortgage (including, without limitation, Section 3.02(b),
Section 3.04, Section 7.06 and Section 7.16 hereof) to the contrary, all Rents
received from the Mortgaged Property shall be applied as follows:

      (1) to payment of all reasonable fees of the receiver approved by the
   court;

      (2) to payment of all tenant security deposits then owing to tenants under
   any of the Leases pursuant to the provisions of Minn. Stat. 504B.178, if
   applicable;

                                       31

<PAGE>

      (3) to payment of all prior or current real estate taxes and special
   assessments with respect to the Mortgaged Property, or the escrow payments
   then due;

      (4) to payment of all premiums then due for the insurance required by the
   provisions of this Mortgage, or to the escrow payments then due;

      (5) to payment of all expenses to perform the covenants of any lessor or
   licensee pursuant to Minn. Stat. 504B.161, subd. 1, if applicable;

      (6) to payment of expenses incurred for normal maintenance and operation
   of the Mortgaged Property;

      (7) prior to commencement of any foreclosure, to Mortgagee for payment of
   the indebtedness secured by this Mortgage in such order as Mortgagee may
   elect, but no such payment made after acceleration of the indebtedness shall
   affect such acceleration;

      (8) after commencement of any foreclosure, to Mortgagee for payment of the
   amount required to be paid to effect a reinstatement prior to the foreclosure
   sale, but no such payment made after acceleration of the indebtedness shall
   affect such acceleration; and

      (9) after a foreclosure sale, at the option of Mortgagee, in its sole
   discretion, to payment of any deficiency or to the amount required to be paid
   to effect a redemption, with any excess to be paid to Mortgagor; provided,
   however, that if this Mortgage is not reinstated nor the Mortgaged Property
   redeemed, the entire amount received pursuant hereto, after deducting the
   amounts, if any, applied by Mortgagee to any deficiency, shall be the
   property of the purchaser of the Mortgaged Property at the foreclosure sale.

The rights and powers of the Mortgagee under this Mortgage and the application
of Rents under this Section shall continue until expiration of the redemption
period from any foreclosure sale, whether or not any deficiency remains after a
foreclosure sale. A receiver appointed pursuant to this Mortgage shall apply all
Rents in accordance with this section from the date of appointment of such
receiver through the entire redemption period following the foreclosure sale.

            SECTION 9.02 WAIVER OF CONSTITUTIONAL RIGHTS. MORTGAGOR UNDERSTANDS
AND AGREES THAT IF AN "EVENT OF DEFAULT" (AS DEFINED IN THE CREDIT AGREEMENT)
SHALL OCCUR, MORTGAGEE HAS THE RIGHT, INTER ALIA, TO FORECLOSE THIS MORTGAGE BY
ADVERTISEMENT PURSUANT TO MINNESOTA STATUTES, CHAPTER 580, AS HEREAFTER AMENDED,
OR PURSUANT TO ANY SIMILAR OR REPLACEMENT STATUTE HEREAFTER ENACTED; THAT IF
MORTGAGEE ELECTS TO FORECLOSE BY ADVERTISEMENT, IT MAY CAUSE THE MORTGAGED
PROPERTY, OR ANY PART THEREOF, TO BE SOLD AT PUBLIC AUCTION; THAT NOTICE OF SUCH
SALE MUST BE PUBLISHED AND GIVEN PERSONALLY TO THE PERSONS IN POSSESSION OF THE
MORTGAGED PROPERTY AS PROVIDED BY STATUTE; THAT MORTGAGOR WILL HAVE SUCH PERIOD
AS IS PROVIDED BY MINNESOTA STATUTES, Sections 580.23 OR 582.032, AS APPLICABLE,
OR ANY AMENDMENT THERETO, OR ANY SIMILAR OR REPLACEMENT STATUTE HEREAFTER
ENACTED, TO REDEEM THE MORTGAGED

                                       32

<PAGE>

PROPERTY SO SOLD BY PAYING THE SALE PRICE, ANY TAXES, ASSESSMENTS AND INSURANCE
PREMIUMS PAID BY THE PURCHASER AT SUCH SALE, AND OTHER SUMS PERMITTED BY LAW,
TOGETHER WITH INTEREST THEREON FROM THE DATE OF SALE OR PAYMENT AT THE HIGHEST
RATE PERMITTED BY LAW.

MORTGAGOR FURTHER UNDERSTANDS THAT IN THE EVENT OF SUCH DEFAULT, MORTGAGEE MAY
TAKE POSSESSION OF THE MORTGAGED PROPERTY WHICH IS SUBJECT TO THE SECURITY
INTEREST HEREINBEFORE GRANTED AND DISPOSE OF THE SAME BY SALE OR OTHERWISE IN
ONE OR MORE PARCELS, PROVIDED THAT AT LEAST (10) DAYS' PRIOR NOTICE OF SUCH
DISPOSITION MUST BE GIVEN TO MORTGAGOR, ALL AS PROVIDED FOR BY THE MINNESOTA
UNIFORM COMMERCIAL CODE, AS HEREAFTER AMENDED, OR BY ANY SIMILAR OR REPLACEMENT
STATUTE HEREAFTER ENACTED.

MORTGAGOR FURTHER UNDERSTANDS THAT UNDER THE CONSTITUTION OF THE UNITED STATES
IT MAY HAVE THE RIGHT TO NOTICE AND HEARING BEFORE THE MORTGAGED PROPERTY MAY BE
SOLD AND THAT THE PROCEDURE FOR FORECLOSURE BY ADVERTISEMENT DESCRIBED ABOVE
DOES NOT INSURE THAT NOTICE WILL BE GIVEN TO MORTGAGOR, AND NEITHER SAID
PROCEDURE FOR FORECLOSURE BY ADVERTISEMENT NOR THE MINNESOTA UNIFORM COMMERCIAL
CODE REQUIRES ANY HEARING OR OTHER JUDICIAL PROCEEDING.

MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY CONSTITUTIONAL RIGHTS TO
NOTICE AND HEARING BEFORE SALE OF THE MORTGAGED PROPERTY AND EXPRESSLY CONSENTS
AND AGREES THAT THE MORTGAGED PROPERTY MAY BE FORECLOSED BY ADVERTISEMENT AND
THAT THE PORTION THEREOF WHICH IS SUBJECT TO THE SECURITY INTEREST HEREINBEFORE
GRANTED MAY BE DISPOSED OF PURSUANT TO THE UNIFORM COMMERCIAL CODE, ALL AS
DESCRIBED ABOVE.

MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE
SIGNING THIS DOCUMENT THIS SECTION AND ITS CONSTITUTIONAL RIGHTS WERE FULLY
EXPLAINED BY SUCH COUNSEL AND THAT IT UNDERSTANDS THE NATURE AND EXTENT OF THE
RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER.

            SECTION 9.03 Wells and Sewer Systems. Mortgagor does not know of any
wells (as defined by Minnesota Statutes Section 103I.005, Subd. 21, as amended)
on the Land, nor of any individual sewage systems (within the meaning of
Minnesota Statutes Section 115.55, Subd. 1(g)) on or serving the Land.

            SECTION 9.04 Future Advances. The maximum principal amount of
indebtedness secured by this Mortgage at any one time, excluding advances made
by Mortgagee in protection of the Mortgaged Property or the lien of this
Mortgage, shall be $10,920,000. To the extent that this Mortgage secures future
advances, the amount of such advances is not currently known. The acceptance of
this Mortgage by Mortgagee, however, constitutes an acknowledgment that
Mortgagee is aware of the provisions of Minnesota Statutes Section 287.05,

                                       33

<PAGE>

Subd. 5, and intends to comply with the requirements contained therein. The
representations contained in this Section are made solely for the benefit of the
county recording authorities in determining the mortgage registry tax payable as
a prerequisite to the recording of this Mortgage. Mortgagor acknowledges that
such representations do not constitute or imply an agreement by Mortgagee to
make any future advances to Mortgagor.

                  [Remainder of Page Intentionally Left Blank.]

                                       34

<PAGE>

      IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date
first above written.

                                MORTGAGOR:

                                LAKES ENTERTAINMENT, INC.,
                                a Delaware limited liability company

                                By: /s/ Timothy J. Cope
                                    --------------------------------------
                                    Name: Timothy J. Cope
                                    Title: President and Chief Financial Officer

<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF NEW YORK   )
                    ) ss:
COUNTY OF NEW YORK  )

      The foregoing instrument was acknowledged before me this 22nd day of
June, 2006, by Timothy J. Cope, as Chief Financial Officer of Lakes
Entertainment, Inc., a Minnesota corporation, on behalf of the corporation.

                                            /s/  Thomas W. Caplis
                                       --------------------------------------
                                       Notary Public

                                       My Commission Expires: _______________

                                              [NOTARY PUBLIC STAMP]

<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

Lot 1, Block 1, Carlson Center East, Hennepin County, Minnesota.

Together with the benefits and easements created in Declaration of Easements and
Covenants dated December 18, 1996, filed December 20, 1996, as Document No.
2771390 and as amended by that certain First Amendment to the Declaration of
Easements and Covenants dated March 25, 1998, filed April 14, 1998 as Document
No. 3009312.

Together with the rights and easements created under the terms of that certain
Water Main Easement dated March 26, 1999, filed April 5, 1999, as Document No.
3141558.

Torrens Property
Certificate of Title No. 1077389

                                      A-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>c06339exv10w6.txt
<DESCRIPTION>DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SEUCRITY AGREEMENT AND FIXTURE FILING
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.6

THIS DEED OF TRUST WAS PREPARED BY
AND WHEN RECORDED, RETURN TO:

Latham & Watkins LLP
885 Third Avenue
New York, New York  10022
Attention:  Elizabeth Jaffe, Esq.
Reference No.:  024819 0034

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

                                     made by

                          LAKES GAMING-MISSISSIPPI, LLC
                                    (TRUSTOR)

                                       to

                              B. BLAKE TELLER, ESQ.
                                    (TRUSTEE)

                               for the benefit of

                              BANK OF AMERICA, N.A.
                                  (BENEFICIARY)

                               PROPERTY LOCATION:

                              Highway 61, Vicksburg
                           Warren County, Mississippi

                           DATED AS OF JUNE 22, 2006

      THIS ALSO CONSTITUTES FINANCING STATEMENTS FILED AS A FIXTURE FILING AND
FINANCING STATEMENT PURSUANT TO SECTIONS 9501(A)(1) AND 9502(B) AND (C) OF THE
MISSISSIPPI UNIFORM COMMERCIAL CODE AND IS RECORDED AS A FIXTURE FILING

THIS DEED OF TRUST SECURES A LINE OF CREDIT TO BE ADVANCED AND USED FOR BUSINESS
                            AND COMMERCIAL PURPOSES

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                     PAGE
                                                                                                                     ----
<S>                                                                                                                  <C>
ARTICLE I DEFINITIONS............................................................................................      2
         SECTION 1.01      Terms Defined Above...................................................................      2
         SECTION 1.02      Definitions...........................................................................      2
         SECTION 1.03      Terminology...........................................................................      5
         SECTION 1.04      Other Defined Terms...................................................................      6

ARTICLE II GRANT OF LIEN AND SECURITY INTEREST...................................................................      6
         SECTION 2.01      Grant of Lien.........................................................................      6
         SECTION 2.02      Grant of Security Interest............................................................      6
         SECTION 2.03      No Obligation of Beneficiary..........................................................      7
         SECTION 2.04      Fixture Filing........................................................................      7
         SECTION 2.05      Future Advances.......................................................................      7
         SECTION 2.06      Intentionally Omitted.................................................................      7

ARTICLE III ASSIGNMENT OF LEASES AND RENTS.......................................................................      7
         SECTION 3.01      Assignment............................................................................      7
         SECTION 3.02      Revocable License.....................................................................      8
         SECTION 3.03      Enforcement of Leases.................................................................      8
         SECTION 3.04      Direction to Tenants..................................................................      9
         SECTION 3.05      Appointment of Attorney-in-Fact.......................................................      9
         SECTION 3.06      No Liability of Beneficiary...........................................................     10
         SECTION 3.07      Trustor's Indemnities.................................................................     10
         SECTION 3.08      No Modification of Trustor's Obligations..............................................     10
         SECTION 3.09      Rights in Bankruptcy..................................................................     11
         SECTION 3.10      Right to Enforce Under California Civil Code Section 2938.............................     11

ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................     11
         SECTION 4.01      Title to Trust Property and Lien of this Deed of Trust................................     11
         SECTION 4.02      Taxes and Other Payments..............................................................     12
         SECTION 4.03      Power to Create Lien and Security.....................................................     12
         SECTION 4.04      Loan and Credit Agreements............................................................     12
         SECTION 4.05      Compliance with Laws..................................................................     12
         SECTION 4.06      No Condemnation.......................................................................     12
         SECTION 4.07      Flood Zone............................................................................     13
         SECTION 4.08      Additional Environmental Representation...............................................     13

ARTICLE V AFFIRMATIVE COVENANTS..................................................................................     13
         SECTION 5.01      Lien Status...........................................................................     13
         SECTION 5.02      Payment of Impositions................................................................     13
         SECTION 5.03      Repair................................................................................     14
         SECTION 5.04      Insurance and Application of Insurance Proceeds.......................................     14
         SECTION 5.05      Condemnation and Application of Condemnation Proceeds.................................     16
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         SECTION 5.06      Maintenance of Rights of Way, Easements, Licenses and Other Rights....................     17
         SECTION 5.07      Payment and Performance of Obligations................................................     17
         SECTION 5.08      Compliance with Permitted Liens and Other Obligations.................................     17
         SECTION 5.09      Additional Affirmative Covenants......................................................     18

ARTICLE VI NEGATIVE COVENANTS....................................................................................     18
         SECTION 6.01      Use Violations........................................................................     18
         SECTION 6.02      Waste.................................................................................     18
         SECTION 6.03      Alterations...........................................................................     18
         SECTION 6.04      No Further Encumbrances...............................................................     18
         SECTION 6.05      Transfer Restrictions.................................................................     18
         SECTION 6.06      Loan and Credit Agreements; Additional Negative Covenants.............................     18

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.......................................................................     19
         SECTION 7.01      Event of Default......................................................................     19
         SECTION 7.02      Acceleration..........................................................................     19
         SECTION 7.03      Foreclosure and Sale..................................................................     19
         SECTION 7.04      Trustee's Successors, Substitutes and Agents..........................................     20
         SECTION 7.05      Receivership..........................................................................     20
         SECTION 7.06      Judicial Foreclosure..................................................................     21
         SECTION 7.07      Separate Sales........................................................................     21
         SECTION 7.08      Possession of Trust Property..........................................................     21
         SECTION 7.09      Occupancy After Foreclosure...........................................................     22
         SECTION 7.10      Remedies Cumulative, Concurrent and Nonexclusive......................................     22
         SECTION 7.11      No Release of Obligations.............................................................     22
         SECTION 7.12      Release of and Resort to Collateral...................................................     23
         SECTION 7.13      Waiver of Redemption, Notice and Marshalling of Assets................................     23
         SECTION 7.14      Discontinuance of Proceedings.........................................................     23
         SECTION 7.15      Application of Proceeds...............................................................     23
         SECTION 7.16      Uniform Commercial Code Remedies......................................................     24
         SECTION 7.17      Indemnity.............................................................................     24
         SECTION 7.18      Waiver of Lien........................................................................     24
         SECTION 7.19      Action for Environmental Claims.......................................................     24

ARTICLE VIII TRUSTEE.............................................................................................     25
         SECTION 8.01      Duties, Rights, and Powers of Trustee.................................................     25
         SECTION 8.02      Successor Trustee.....................................................................     25
         SECTION 8.03      Retention of Moneys...................................................................     26
         SECTION 8.04      Reconveyance..........................................................................     26

ARTICLE IX MISCELLANEOUS.........................................................................................     26
         SECTION 9.01      Instrument Construed as Deed of Trust, Etc............................................     26
         SECTION 9.02      Performance at Trustor's Expense......................................................     26
         SECTION 9.03      Survival of Obligations...............................................................     26
         SECTION 9.04      Further Assurances....................................................................     26
         SECTION 9.05      Notices...............................................................................     26
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         SECTION 9.06      No Waiver.............................................................................     27
         SECTION 9.07      Beneficiary's Right to Perform; Beneficiary's Expenditures............................     27
         SECTION 9.08      Successors and Assigns................................................................     28
         SECTION 9.09      Severability..........................................................................     28
         SECTION 9.10      Subrogation of Trustee................................................................     28
         SECTION 9.11      Entire Agreement and Modification.....................................................     28
         SECTION 9.12      Applicable Law........................................................................     28
         SECTION 9.13      Satisfaction of Prior Encumbrance.....................................................     29
         SECTION 9.14      No Partnership........................................................................     29
         SECTION 9.15      Headings..............................................................................     30
         SECTION 9.16      Release of Deed of Trust..............................................................     30
         SECTION 9.17      Limitation of Obligations with Respect to Trust Property..............................     30
         SECTION 9.18      Inconsistency with Credit Agreement...................................................     30
         SECTION 9.19      Limitation on Interest Payable........................................................     31
         SECTION 9.20      Covenants To Run With the Land........................................................     31
         SECTION 9.21      Amount Secured; Last Dollar...........................................................     31
         SECTION 9.22      Defense of Claims.....................................................................     31
         SECTION 9.23      Exculpation Provisions................................................................     32
         SECTION 9.24      No Merger of Estates..................................................................     32
         SECTION 9.25      Suretyship Waivers....................................................................     32
         SECTION 9.26      Beneficiary Statement.................................................................     32
         SECTION 9.27      Request for Notice....................................................................     32
         SECTION 9.28      Release and Reconveyance..............................................................     32

EXHIBIT A  -  LEGAL DESCRIPTION
</TABLE>

                                      iii

<PAGE>

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

      THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (hereinafter, together with any and all amendments, supplements,
modifications or restatements of any kind, referred to as this "Deed of Trust"),
is made as of June 22, 2006, by LAKES GAMING-MISSISSIPPI, LLC, a Minnesota
limited liability company ("Trustor"), having its principal place of business at
c/o Lakes Entertainment, Inc., 130 Cheshire Lane, Suite 101, Minnetonka,
Minnesota 55309, Attention: Damon E. Schramm, Esq., to B. Blake Teller, Esq., an
individual, with an address at c/o Teller, Chaney, Hassell & Hopson, LLP,
Nogales Building, 1201 Cherry Street, Vicksburg, MS 39183 (including any
successor trustee at the time acting as such hereunder, "Trustee"), for the
benefit of BANK OF AMERICA, N.A., having its principal place of business at 100
N. Tyron Street, Charlotte, North Carolina 28255-0001, Attention: Douglas Jones
(in such capacity, together with its successors and assigns, "Beneficiary"), for
itself and in its capacity of Administrative Agent ("Administrative Agent") for
each of the financial institutions and their respective successors and assigns
which from time to time shall be a "Lender" under the Credit Agreement (as
hereinafter defined).

                                R E C I T A L S:

            WHEREAS, Trustor, a subsidiary of Parent, as hereinafter defined, is
the owner and holder of fee simple title in and to the Land (as hereinafter
defined) described on Exhibit A attached hereto and made a part hereof;

            WHEREAS, on the date hereof, Trustor, Lakes Entertainment, Inc.
("Parent"), Lakes Gaming and Resorts, LLC ("Borrower") and the Guarantors (as
defined in the Credit Agreement) entered into that certain Credit Agreement with
Beneficiary, the Lenders party thereto and Banc of America Securities LLC, as
sole lead arranger and sole book manager (as the same may be amended, modified
or otherwise supplemented and in effect from time to time, the "Credit
Agreement"), pursuant to which the Lenders agreed to extend to Borrower a
certain senior secured term loan facility in the aggregate original principal
amount of up to ONE HUNDRED AND FIVE MILLION and 00/100 Dollars
($105,000,000.00) (the "Loan");

            WHEREAS, Trustor will derive direct economic benefit from the Loan;

            WHEREAS, as a condition to Beneficiary executing the Credit
Agreement, Beneficiary is requiring that Trustor grant to Beneficiary, on behalf
of the Lenders, a security interest in and a first deed of trust lien upon the
Trust Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Credit Agreement, this Deed of Trust, and the
other Loan Documents (as hereinafter defined), and (b) the performance by
Trustor of all terms, covenants, conditions, provisions, agreements and
liabilities contained in the Credit Agreement, this Deed of Trust, and the other
Loan Documents.

                                       1
<PAGE>

            NOW, THEREFORE, in order to comply with the terms and conditions of
the Credit Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Trustor hereby agrees with
Beneficiary as follows:

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01 Terms Defined Above. As used in this Deed of Trust, the
terms defined in the introductory paragraph to this Deed of Trust and in the
Recitals set forth above shall have the meanings respectively assigned to them
above.

            SECTION 1.02 Definitions. As used herein, the following terms shall
have the following meanings:

            "Applicable UCC" means the Uniform Commercial Code as presently in
effect in the State or Commonwealth where the Trust Property is located.

            "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section. 101, et. seq.), as amended, and any successor statute.

            "Buildings" means any and all buildings, structures, garages,
utility sheds, workrooms, air conditioning towers, open parking areas and other
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

            "Default" has the meaning assigned to such term in the Credit
Agreement.

            "Default Rate" has the meaning assigned to such term in the Credit
Agreement.

            "Event of Default" has the meaning assigned to such term in Section
7.01 hereof.

            "Fixtures" means all materials, supplies, equipment, apparatus and
other items now or hereafter acquired by Trustor and incorporated into the Trust
Property so as to constitute fixtures under the laws of the state in which such
items are located.

            "Governmental Authority" has the meaning assigned to such term in
the Credit Agreement.

            "Governmental Requirements" means any and all present and future
judicial decisions, statutes, rulings, rules, regulations, permits, certificates
or ordinances of any Governmental Authority in any way applicable to Trustor or
the Trust Property, including the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof.

            "Impositions" means any and all real estate and personal property
taxes; water, gas, sewer, electricity and other utility rates and charges;
charges for any easement, license or agreement maintained for the benefit of the
Trust Property; any and all other taxes, charges and

                                       2
<PAGE>

assessments, whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of any kind and nature whatsoever which at any time prior to or
after the execution hereof may be assessed, levied or imposed upon the Trust
Property or the ownership, use, occupancy, benefit or enjoyment thereof,
together with any interest, costs or penalties that may become payable in
connection therewith.

            "Indemnified Parties" means, with respect to any Person entitled to
the benefit of an indemnity, such Person's officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, attorneys,
accountants and experts. The term "Indemnified Party" means any one of such
Persons.

            "Indemnitees" has the meaning assigned to such term in the Credit
Agreement.

            "Land" means the real property or interest therein described in
Exhibit A attached hereto, and all rights, titles and interests appurtenant
thereto.

            "Leases" means any and all leases, master leases, subleases,
licenses, concessions or other agreements (whether written or oral, and whether
now or hereafter in effect) which grant to third Persons a possessory interest
in and to, or the right to use, all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty, together with all security and other deposits
made in connection therewith and any guarantee of the obligations of the
landlord or the tenant thereunder.

            "License" has the meaning assigned to such term in Section 3.02(a)
hereof.

            "Lien" has the meaning assigned to such term in the Credit
Agreement.

            "Loan Documents" means, collectively, the Credit Agreement, this
Deed of Trust, and all other instruments, agreements and other documents
executed and delivered pursuant hereto or thereto or otherwise included in the
definition of the term "Loan Documents" in the Credit Agreement.

            "Losses" means all obligations, damages, claims, causes of action,
costs, fines, fees, charges, penalties, deficiencies, losses, diminutions in
value, expenses (including court costs, fees and expenses of attorneys,
accountants, consultants and other experts) and other liabilities, and, with
respect to any indemnity, includes all attorneys' fees, costs and expenses in
connection with the enforcement and collection of such indemnity. The term
"Loss" means any one of such Losses.

            "Trust Property" means all of Trustor's right, title, interest and
estate, whether now owned or hereafter acquired, in and to the Land, the
Buildings, the Fixtures and the Personalty, together with:

            (i)   all rights, privileges, tenements, hereditaments,
                  rights-of-way, easements, air rights, development rights or
                  credits, zoning rights, appendages and appurtenances in
                  anywise appertaining thereto, and all right, title and
                  interest of Trustor in and to any streets, ways, alleys,
                  strips or gores of land adjoining the Land or any part
                  thereof, and all right, title and interest

                                       3
<PAGE>

                  of Trustor, if any, in and to all rights, royalties and
                  profits with respect to all minerals, coal, oil, gas and other
                  substances of any kind or character on or underlying the Land,
                  together with all right, title and interest of Trustor in and
                  to all water and water rights (whether riparian, appropriative
                  or otherwise and whether or not appurtenant);

            (ii)  all rights of Trustor (but not its obligations) under any
                  contracts and agreements, including, without limitation,
                  construction contracts and architectural agreements, relating
                  to the Land, the Buildings, the Fixtures or the Personalty;

            (iii) all of Trustor's right, title and interest in and to all
                  permits, licenses, franchises, certificates, authorizations,
                  consents, approvals and other rights and privileges (each, a
                  "Permit") obtained in connection with the Land, the Buildings,
                  the Fixtures or the Personalty or the use or operation
                  thereof;

            (iv)  all of Trustor's right, title and interest in and to all plans
                  and specifications, designs, schematics, drawings and other
                  information, materials and matters heretofore or hereafter
                  prepared relating to the Land, the Buildings, the Fixtures or
                  the Personalty;

            (v)   all of Trustor's right, title and interest in and to all
                  proceeds arising from or by virtue of the sale, lease or other
                  disposition of the Land, the Buildings, the Fixtures or the
                  Personalty or any part thereof or any interest therein or from
                  the operation thereof;

            (vi)  all of Trustor's right, title and interest in and to all
                  Leases now or hereafter in effect and all Rents, royalties,
                  bonuses, issues, profits, revenues or other benefits arising
                  from or attributable to the Land, the Buildings, the Fixtures
                  or the Personalty;

            (vii) all of Trustor's right, title and interest in and to all
                  betterments, additions, alterations, appurtenances,
                  substitutions, replacements and revisions to the Land, the
                  Buildings, the Fixtures or the Personalty and all reversions
                  and remainders relating thereto;

            (viii) all of Trustor's right, title and interest in and to any
                  awards, remuneration, settlements or compensation now or
                  hereafter made by any Governmental Authority pertaining to the
                  Land, the Buildings, the Fixtures or the Personalty, including
                  those arising from or attributable to any vacation of, or
                  change of grade in, any streets affecting the Land or the
                  Buildings;

            (ix)  all of Trustor's right, title and interest in and to any and
                  all other security and collateral of any nature whatsoever,
                  whether now or hereafter given, for the repayment, performance
                  and discharge of the Obligations (as hereinafter defined);

                                       4
<PAGE>

            (x)   all of Trustor's right, title and interest in and to all
                  awards, payments and proceeds of conversion, whether voluntary
                  or involuntary, of any of the Land, the Buildings, the
                  Fixtures, the Personalty or any of the property and rights
                  described in the foregoing clauses (i) through (ix), including
                  without limitation, all insurance, condemnation and tort
                  claims, refunds of real estate taxes and assessments, rent
                  claims and other obligations dischargeable in cash or cash
                  equivalents; and

            (xi)  all other property and rights of Trustor of every kind and
                  character relating to and/or used or to be used in connection
                  with the foregoing, and all proceeds and products of any of
                  the foregoing.

As used in this Deed of Trust, the term "Trust Property" shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

            "Obligations" has the meaning assigned to such term in the Credit
Agreement.

            "Permitted Liens" has the meaning assigned to such term in the
Credit Agreement.

            "Person" has the meaning assigned to such term in the Credit
Agreement.

            "Personalty" means all of Trustor's right, title and interest in and
to all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private, including all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs, and all other
personal property (other than Fixtures) of any kind or character), and including
such property that is now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are or may be used in or related to
the planning, development, financing or operation of the Trust Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

            "Principal Balance" has the meaning assigned to such term in Section
7.02 hereof.

            "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Trustor acquires title
thereto), and other benefits paid or payable by parties (other than Trustor) for
using, leasing, licensing, possessing, operating from, residing in, benefiting
from or otherwise enjoying all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty.

            SECTION 1.03 Terminology. Except as otherwise provided herein:

            (a) references to Articles and Sections shall mean the corresponding
Article or Section of this Deed of Trust;

                                       5
<PAGE>

            (b) words used herein in the singular, where the context so permits,
shall be deemed to include the plural and vice versa, and the definitions of
words used in the singular herein shall apply to such words when used in the
plural where the context so permits and vice versa;

            (c) the words "herein," "hereof," "hereunder," and other words of
similar import when used in this Deed of Trust refer to this Deed of Trust as a
whole, and not to any particular Article or Section; and

            (d) the words "includes" or "including" mean includes or including,
without limitation.

            SECTION 1.04 Other Defined Terms. Any capitalized term used in this
Deed of Trust and not otherwise defined herein shall have the meaning assigned
to such term in the Credit Agreement.

                                   ARTICLE II

                       GRANT OF LIEN AND SECURITY INTEREST

            SECTION 2.01 Grant of Lien. To secure the full and timely payment,
performance and discharge of all of the Obligations, Trustor hereby irrevocably
GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS and CONVEYS unto Trustee and
Trustee's successors, assigns and substitutes in trust hereunder, WITH POWER OF
SALE and right of entry and possession, for the use and benefit of Beneficiary,
in its capacity as Administrative Agent for the Lenders, the real and personal
property, right, title, interest and estate in, to and under the Trust Property,
subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the Trust Property
unto Trustee and Trustee's successors, assigns and substitutes in trust
hereunder, subject to the terms and conditions of this Deed of Trust, with POWER
OF SALE, forever, and Trustor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto
Beneficiary against every Person whomsoever lawfully claiming or to claim the
same or any part, subject, however, to the Permitted Liens; provided, however,
that if Trustor shall pay (or cause to be paid) and perform and discharge (or
cause to be performed and discharged) all of the Obligations on or before the
date on which the same are to be paid, performed and discharged, then the Liens
estates and rights granted by this Deed of Trust shall cease and terminate.

            SECTION 2.02 Grant of Security Interest. This Deed of Trust shall
also constitute and serve as a "security agreement" within the meaning of, and
shall constitute a first and prior security interest under, the Applicable UCC
with respect to the Personalty and the Fixtures. To this end, Trustor by these
presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto
Beneficiary, as Administrative Agent for the Lenders pursuant to the Credit
Agreement, a security interest in all of Trustor's right, title and interest in,
to and under the Personalty and the Fixtures, to secure the full and timely
payment, performance and discharge of the Obligations. Trustor hereby consents
to Beneficiary filing and recording financing statements (and continuations
thereof) with the appropriate filing and recording offices in order to perfect
(and maintain the perfection of) the security interests granted herein.

                                       6
<PAGE>

            SECTION 2.03 No Obligation of Beneficiary. The assignment and
security interest herein granted to Beneficiary shall not be deemed or construed
to constitute Beneficiary as a mortgagee-in-possession of the Trust Property,
obligate Beneficiary to lease the Trust Property or attempt to do the same, or
to take any action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever.

            SECTION 2.04 Fixture Filing. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (a) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the Land described or to which reference is made herein or
on Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is to be
filed of record in the real estate records as a financing statement and shall
constitute a "fixture filing" for purposes of the Applicable UCC; and (c)
Trustor is the record owner of the real estate or interests in the real estate
constituting the Trust Property hereunder. Information concerning the security
interest herein granted may be obtained at the addresses set forth on the first
page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor
(Trustor) are set forth on the first page hereof. In that regard, the following
information is provided:

            Name of Debtor:        LAKES GAMING-MISSISSIPPI, LLC

            Type of Organization:  limited liability company

            State:                 Minnesota

            FEIN:                  20-2053431

            Organizational ID Number: 1011317-2

            SECTION 2.05 Future Advances. It is the intention of Trustor and
Beneficiary that this Deed of Trust shall secure future advances and
readavances, and the lien and security interest created by this Deed of Trust
shall attach upon execution and have priority from the time of recording as to
all advances, whether obligatory or discretionary, until this Deed of Trust is
released of record.

                                  ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

            SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Credit
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Trustor has presently, absolutely and irrevocably GRANTED, ASSIGNED,
TRANSFERRED and CONVEYED, and by these presents does presently, absolutely and
irrevocably GRANT, ASSIGN, TRANSFER and CONVEY, unto Beneficiary, as
Administrative Agent for the Lenders pursuant to the Credit Agreement, as
security for the payment, performance and discharge of the Obligations, all of
the Leases and Rents (if any), subject only to the Permitted Liens applicable
thereto and the License (as hereinafter defined); provided, however, that if
Trustor shall pay (or cause to be paid) and perform and discharge (or cause to
be performed and discharged) all of the Obligations on or before the date on
which the same are to be paid, performed and discharged, then this assignment

                                       7
<PAGE>

shall terminate, and all rights, titles and interests conveyed pursuant to this
assignment shall become vested in Trustor.

            SECTION 3.02 Revocable License.

            (a) Beneficiary hereby grants to Trustor a revocable license (the
"License"), nonexclusive with the rights of Beneficiary reserved in Sections
3.02(b), 3.04, and 3.05 hereof, to exercise and enjoy all incidences of the
status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor. Trustor hereby agrees to receive all Rents and hold the same as a
trust fund to be applied, and to apply the Rents so collected, except to the
extent otherwise provided in the Credit Agreement, first to the payment,
performance and discharge of the Obligations and then to the payment of the
Impositions. Thereafter, Trustor may use the balance of the Rents collected in
any manner not inconsistent with the Loan Documents.

            (b) If an Event of Default shall occur and be continuing, the
License shall immediately and automatically terminate without the necessity of
any action by Beneficiary or any other Person, and Beneficiary shall have the
right in such event to exercise the rights and remedies provided under this Deed
of Trust or otherwise available to Beneficiary under applicable law. Upon demand
by Beneficiary at any time that an Event of Default shall have occurred, Trustor
shall promptly pay to Beneficiary all security deposits under the Leases and all
Rents allocable to any period commencing from and after the occurrence of such
Event of Default. Any Rents received hereunder by Beneficiary shall be applied
and disbursed to the payment, performance and discharge of the Obligations,
subject to the terms of the Credit Agreement; provided, however, that, subject
to any applicable requirement of law, any security deposits actually received by
Beneficiary shall be held, applied and disbursed as provided in the applicable
Leases.

            SECTION 3.03 Enforcement of Leases. Trustor shall (a) submit any and
all proposed Leases (including subleases provided to Trustor for approval) to
Beneficiary for approval prior to the execution thereof or consent thereto, as
applicable; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) maintain each Lease in full force and effect
during the term thereof; (d) provide Beneficiary with prompt notice of each
notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of default received from (or relating to) a tenant
under a Lease, and otherwise promptly reasonably indicate that a material
default or termination of a Lease may occur (other than by reason of the
expiration of the term of such Lease); (e) appear in and defend any action or
proceeding in any manner connected with any of the Leases; (f) deliver to
Beneficiary true and complete copies of all Leases; and (g) deliver to
Beneficiary all such further information, and execute and deliver to Beneficiary
such further assurances and assignments, with respect to the Leases as
Beneficiary may from time to time reasonably request. Without Beneficiary's
prior written consent, Trustor shall not (i) do or knowingly permit to be done
anything to materially impair the value of any of the Leases; (ii) except for
security or similar deposits, collect any of the Rent more than one (1) month in
advance of the time when the same becomes due under the terms of any Lease;

                                       8
<PAGE>

(iii) discount any future accruing Rents; (iv) amend, modify, accept the
surrender of or terminate any of the Leases; or (v) assign or grant a security
interest in or to any of the Leases or Rents.

            SECTION 3.04 Direction to Tenants. Upon the occurrence and during
the continuance of an Event of Default, Trustor hereby authorizes and directs,
and shall, at the direction of Beneficiary, further authorize and direct, in
writing, the tenant under each Lease to pay directly to, or as directed by,
Beneficiary all Rents accruing or due under its Lease without proof to the
tenant of the occurrence and continuance of such Event of Default. Trustor
hereby authorizes the tenant under each Lease to rely upon and comply with any
notice or demand from Beneficiary for payment of Rents to Beneficiary, and
Trustor shall have no claim against any tenant for Rents paid by such tenant to
Beneficiary pursuant to such notice or demand. All Rents actually collected by
Beneficiary pursuant to this Section 3.04 shall be applied in accordance with
the Credit Agreement.

            SECTION 3.05 Appointment of Attorney-in-Fact.

            (a) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to,
upon the occurrence and during the continuance of an Event of Default, demand,
sue for, attach, levy, recover and receive any of the Rents and any premium or
penalty payable upon the exercise by any third Person under any Lease of a
privilege of cancellation originally provided in such Lease and to give proper
receipts, releases and acquittances therefor and, after deducting expenses of
collection, to apply the net proceeds as provided in the Credit Agreement.
Trustor hereby authorizes and directs any such third Person to deliver such
payment to Beneficiary in accordance with this Article III, and Trustor hereby
ratifies and confirms all that its said attorney-in-fact, the Beneficiary, shall
do or cause to be done in accordance with this Deed of Trust and by virtue of
the powers granted hereby. The foregoing appointment is irrevocable and
continuing, and such rights, powers and privileges shall be exclusive in
Beneficiary, and its successors and assigns, so long as any part of the
Obligations remains unpaid or unperformed and undischarged.

            (b) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid or unperformed and undischarged. Trustor hereby represents and warrants
that it has not at any time prior to the date hereof exercised (or appointed any
Person as attorney-in-fact to exercise) any of the rights described in this
Section 3.05(b), and Trustor hereby covenants not to exercise (or appoint any
other Person as attorney-in-fact to exercise) any such right, nor (except at
Beneficiary's written request) to subordinate any such Lease to the lien of this
Deed of Trust or

                                       9
<PAGE>

to any other mortgage, deed of trust, assignment or security agreement or to any
ground lease or surface lease.

            SECTION 3.06 No Liability of Beneficiary. Neither the acceptance
hereof nor the exercise of the rights and remedies hereunder nor any other
action on the part of Beneficiary or any Person exercising the rights of
Beneficiary or any Lender hereunder shall be construed to: (a) be an assumption
by Beneficiary or any such Person or to otherwise make Beneficiary or such
Person liable or responsible for the performance of any of the obligations of
Trustor under or with respect to the Leases or for any Rent, security deposit or
other amount delivered to Trustor, provided that Beneficiary or any such Person
exercising the rights of Beneficiary shall be accountable for any Rents,
security deposits or other amounts actually received by Beneficiary or such
Person, as the case may be; or (b) obligate Beneficiary or any such Person to
take any action under or with respect to the Leases or with respect to the Trust
Property, to incur any expense or perform or discharge any duty or obligation
under or with respect to the Leases or with respect to the Trust Property, to
appear in or defend any action or proceeding relating to the Leases or the Trust
Property, to constitute Beneficiary as a mortgagee-in-possession (unless
Beneficiary actually enters and takes possession of the Trust Property), or to
be liable in any way for any injury or damage to Persons or property sustained
by any Person in or about the Trust Property, other than to the extent caused by
the willful misconduct or gross negligence of Beneficiary or any Person
exercising the rights of Beneficiary hereunder.

            SECTION 3.07 Trustor's Indemnities. Trustor hereby agrees to
protect, indemnify and hold harmless Beneficiary and each of the other
Indemnitees and each Indemnified Party related to Beneficiary or such other
Indemnitees from and against any and all Losses which Beneficiary or any such
other Indemnitees or Indemnified Party may incur under or by reason of this
Article III, or for any action taken by Beneficiary or any such other Lender or
Indemnified Party hereunder, or by reason or in defense of any and all claims
and demands whatsoever which may be asserted against Beneficiary or any such
other Indemnitees or Indemnified Party arising out of the Leases, including,
without limitation, any claim by any third Person for credit on account of Rents
paid to and received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Beneficiary
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Beneficiary or any such
other Indemnitees or Indemnified Party. In the event that Beneficiary or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys' fees, with interest thereon at the Default Rate, shall be
payable by Trustor to Beneficiary within ten (10) days after demand therefor,
and shall be secured hereby and by all other security for the payment and
performance of the Obligations, including, without limitation, the lien and
security interest of this Deed of Trust. The liabilities of Trustor as set forth
in this Section 3.07 shall survive the termination of this Deed of Trust and the
repayment of the Obligations.

            SECTION 3.08 No Modification of Trustor's Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Trustor to
make prompt payment of all Obligations as and when the same become due,
regardless of whether the Rents described in this Article III are sufficient to
pay the Obligations, and the security provided to Beneficiary

                                       10
<PAGE>

pursuant to this Article III shall be cumulative of all other security of any
and every character now or hereafter existing to secure payment of the
Obligations.

            SECTION 3.09 Rights in Bankruptcy. Upon execution of this Deed of
Trust, Beneficiary, and not Trustor, shall be the creditor of any Tenant in
respect of assignments for the benefit of creditors and bankruptcy,
reorganization, insolvency, dissolution or receivership proceedings affecting
any such Tenant; provided, however, that Trustor shall be the party obligated to
make timely filings of claims in such proceedings or to otherwise pursue
creditor's rights therein. Notwithstanding the foregoing, Beneficiary shall have
the right, but not the obligation, to file such claims instead of Trustor and if
Beneficiary does file a claim, Trustor agrees that Beneficiary (a) is entitled
to all distributions on such claim to the exclusion of Trustor and (b) has the
exclusive right to vote such claim and otherwise to participate in the
administration of the estate in connection with such claim. Beneficiary shall
have the option to apply any monies received by it as such creditor to any of
the obligations of Trustor under the Loan Documents the order set forth in the
Loan Documents. If a petition is filed under the Bankruptcy Code by or against
Trustor, and Trustor, as landlord under any Lease, decides to reject such Lease
pursuant to Section 365(a) of the Bankruptcy Code, then Trustor shall give
Beneficiary at least ten (10) days' prior written notice of the date when
Trustor shall apply to the bankruptcy court for authority to reject the Lease.
Beneficiary may, but shall not be obligated to, send Trustor within such ten-day
period a written notice stating that (a) Beneficiary demands that Trustor assume
and assign the Lease to Beneficiary pursuant to Section 365 of the Bankruptcy
Code, and (b) Beneficiary covenants to cure or provide adequate assurance of
future performance under the Lease. If Beneficiary sends such notice, Trustor
shall not reject the Lease provided Beneficiary complies with clause (b) of the
preceding sentence.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary (but to
the extent any representation or warranty in this Article IV is substantively
the same as a representation or warranty contained in Article V of the Credit
Agreement and such representation or warranty is qualified by a materiality or
other qualifier in the Credit Agreement, such representation or warranty herein
shall be subject to the same materiality or other qualifier as in Article V of
the Credit Agreement) as follows:

            :

            SECTION 4.01 Title to Trust Property and Lien of this Deed of Trust.
Trustor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good, marketable and indefeasible title to the Fixtures,
the Personalty and the other Trust Property. The Trust Property is free and
clear of any and all Liens, charges, encumbrances, security interests and
adverse claims whatsoever, except for (i) all Liens, charges, encumbrances,
security interests and adverse claims specifically identified as exceptions on
Schedule B of the policy of title insurance accepted by Beneficiary in
connection herewith or (ii) those Liens set forth in Section 5.08 of the Credit
Agreement.

                                       11
<PAGE>

            SECTION 4.02 Taxes and Other Payments. Trustor has filed all
federal, state, commonwealth, county, municipal and city income and other
material tax returns required to have been filed by it and has paid all taxes
and other Impositions which have become due pursuant to such returns or pursuant
to any assessments or charges received by it, and Trustor does not know of any
basis for any additional assessment or charge in respect of any such taxes or
other Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Trust Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

            SECTION 4.03 Power to Create Lien and Security. Trustor has full
power and lawful authority to grant, bargain, sell, assign, transfer, mortgage
and convey a Lien and security interest in all of the Trust Property in the
manner and form herein provided and without obtaining the authorization,
approval, consent or waiver of any grantor, lessor, sublessor, Governmental
Authority or other Person whomsoever.

            SECTION 4.04 Loan and Credit Agreements. Trustor has received a copy
of and is fully familiar with the terms and provisions of the Credit Agreement
and the other Loan Documents. All representations and warranties made by Trustor
in the Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby made by Trustor as to itself and the Trust Property as
though such representations and warranties were set forth at length herein as
the representations and warranties of Trustor.

            SECTION 4.05 Compliance with Laws. All of the improvements on the
Land (i) comply with all material requirements of all applicable laws and
ordinances with respect to zoning, subdivision, construction, building and land
use, including, without limitation, requirements with respect to parking, access
and certificates of occupancy (and similar certificates), and (ii) comply with,
and shall remain in compliance with, applicable health, fire and building codes.
All of the Buildings lie wholly within the boundaries and building restriction
lines of the Land. No improvements on adjoining properties encroach upon the
Land, and no easements or other encumbrances upon the Land encroach upon or
under any of the Buildings or any portion of the Trust Property. All of the
Buildings and the use of the Trust Property materially comply with, and shall
remain in material compliance with, all applicable statutes, rules, regulations
and private covenants now or hereafter relating to the ownership, construction,
use or operation of the Trust Property, including all applicable statutes, rules
and regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use. All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Trust Property have been obtained and
are in full force and effect. Trustor has not received any notice of, or other
communication with respect to, an alleged violation with respect to any of the
foregoing.

            SECTION 4.06 No Condemnation. No part of any property subject to
this Deed of Trust has been taken in condemnation or other like proceeding nor
is any proceeding pending, threatened or known to be contemplated for the
partial or total condemnation or taking of the Trust Property.

                                       12
<PAGE>

            SECTION 4.07 Flood Zone. The Trust Property is not located in an
area identified by the Federal Emergency Management Agency ("FEMA") as having
special flood hazards or if the Land or any part thereof is identified by the
Federal Emergency Management Agency as an area having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone V),
then Trustor has obtained the insurance required under Section 5.04(a)(v) of
this Deed of Trust.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

            Trustor hereby unconditionally covenants and agrees with Beneficiary
as follows:

            SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Credit Agreement, Trustor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Trust Property, or any portion
thereof or interest therein, with any other Lien or security interest of any
nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Deed of Trust, and,
if any such Lien or security interest is asserted against the Trust Property,
Trustor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Trustor in
good faith and in accordance with the terms of the Credit Agreement) or take
such other action as may be necessary to cause the same to be released of record
and otherwise, and (b) within ten (10) days after the date on which Mortgagor
receives notice of such Lien or security interest. Such notice shall specify who
is asserting such Lien or security interest and shall detail the origin and
nature of the underlying claim giving rise to such asserted Lien or security
interest.

            SECTION 5.02 Payment of Impositions. Trustor shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however, that Trustor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Trust Property, pay the Impositions in
installments. Notwithstanding the foregoing, Trustor may in good faith, by
appropriate proceedings and upon notice to Beneficiary, contest the validity,
applicability or amount of any asserted tax or assessment, subject to any more
restrictive provisions applicable to any such contest contained in the Credit
Agreement and (without limiting the foregoing) so long as (a) such contest is
diligently pursued, (b) Beneficiary determines, in its opinion reasonably
exercised, that such contest suspends the obligation to pay the tax and that
nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Trust Property or any part thereof or any
interest of Beneficiary therein, and (c) unless expressly provided to the
contrary in the Credit Agreement, prior to the earlier of the commencement of
such contest or the delinquency date of the asserted tax or assessment, Trustor
deposits with Beneficiary an amount determined by Beneficiary to be adequate to
cover the payment of such tax or assessment and a reasonable additional sum to
cover possible interest, costs and penalties; provided, however, that Trustor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties

                                       13
<PAGE>

thereon, promptly after such judgment becomes final (and, subject to
Beneficiary's rights and remedies during an Event of Default, Beneficiary shall
make any sum deposited pursuant to clause (c) above available for such payment);
and provided, further, that in any event each such contest shall be concluded,
the taxes, assessments, interest, costs and penalties shall be paid prior to the
date any writ or order is issued under which the Trust Property may be sold,
lost or forfeited.

            SECTION 5.03 Repair. Trustor shall keep the Trust Property in good
order and condition (reasonable wear and tear excepted) and shall make all
repairs, replacements and improvements thereof and thereto, interior and
exterior, structural and non-structural, ordinary and extraordinary, which are
necessary to keep the same in such order and condition. Trustor shall also use
reasonable efforts to prevent any act or occurrence which might impair the value
or usefulness of the Trust Property for its intended usage.

            SECTION 5.04 Insurance and Application of Insurance Proceeds.

            (a) During the term of this Deed of Trust, Trustor, at its sole cost
and expense, shall maintain, or cause to be maintained the following policies of
insurance, with respect to the Trust Property:

                  (i) If applicable or appropriate, Casualty (property)
      insurance against loss or damage by fire, lightning and such other perils
      as are included in a standard "special form" policy (formerly known as an
      "all-risk" endorsement policy), and against loss or damage by all other
      risks and hazards covered by a standard extended coverage insurance policy
      including, without limitation, riot and civil commotion, terrorist
      actions, vandalism, malicious mischief, burglary and theft, in an amount
      equal to the greater of (A) the then full replacement cost of the
      improvements, without deduction for physical depreciation and (B) such
      amount that the insurer would not deem Trustor a co-insurer under said
      policies. The policies of insurance required under this Section 5.04 shall
      contain a "Replacement Cost" endorsement with a waiver of depreciation and
      an "Agreed Amount" or "No Coinsurance" endorsement and shall otherwise
      comply with the Credit Agreement.

                  (ii) Commercial General Liability insurance to the extent
      required under the Credit Agreement, including a broad form comprehensive
      general liability endorsement and coverages for broad form property
      damage, contractual damages and personal injuries (including death
      resulting therefrom) and containing minimum limits per occurrence of
      $1,000,000.00 and $2,000,000.00 in the aggregate for any policy year with
      no deductible.

                  (iii) Rental loss and/or business interruption insurance in an
      amount equal to the estimated gross revenues from the operations of the
      Trust Property for a period of twelve (12) months, if applicable or
      appropriate.

                  (iv) Insurance against loss or damage from (A) leakage of
      sprinkler systems and (B) explosion of steam boilers, air conditioning
      equipment, high pressure piping, machinery and equipment, pressure vessels
      or similar apparatus now or hereafter

                                       14
<PAGE>

      installed on the improvements (without exclusion for explosions), if
      applicable or appropriate.

                  (v) Flood insurance if all or any portion of the Trust
      Property is located in an area now or hereafter designated by the Federal
      Emergency Management Agency as an area having special flood hazards
      (including, without limitation, those areas designated as Zone A or Zone
      V), and in which flood insurance has been made available under the U.S.
      National Flood Insurance Program, in an amount equal to the full
      replacement cost of the Buildings, Fixtures and Personalty now or
      hereafter located on the Trust Property or such other amount as may be
      agreed to by Beneficiary in writing, if applicable or appropriate.

                  (vi) If the Trust Property is or ever becomes non-conforming
      with respect to zoning, ordinance or law coverage to compensate for loss
      of value or property resulting from operation of law and the cost of
      demolition and the increased cost of construction in such amounts as may
      be requested by Beneficiary.

                  (vii) Any other insurance with respect to the Trust Property
      that may be required under the Credit Agreement.

                  (viii) Such other insurance as may from time to time be
      reasonably required by Beneficiary in order to protect its interests.

            All such insurance policies with respect to the Trust Property shall
contain a standard, non-contributory mortgagee clause naming Beneficiary, and
its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Trustor shall not take out separate insurance
with respect to the Trust Property concurrent in form or contributing in the
event of loss with that required to be maintained hereunder or under the Credit
Agreement unless Beneficiary is named as an additional insured thereon under a
standard mortgagee clause acceptable to Beneficiary and each such policy is
otherwise in form and substance acceptable to Beneficiary.

            (b) In the event of the foreclosure of this Deed of Trust, or in the
event of any transfer of title to the Trust Property, or any part thereof, by
foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Trust Property, or such part thereof, shall succeed to all of
Trustor's rights with respect to the Trust Property, including any rights to
unexpired, unearned or returnable insurance premiums, subject to limitations on
the assignment of blanket policies, but limited to such rights as relate to the
Trust Property or such part thereof. If Beneficiary acquires title to the Trust
Property, or any part thereof, in any manner, Beneficiary shall thereupon (as
between Trustor and Beneficiary) become the sole and absolute owner of the
insurance policies with respect to the Trust Property, and all insurance
proceeds payable thereunder with respect to the Trust Property, with the sole
right to collect and retain all unearned or returnable premiums thereon with
respect to the Trust Property, or such part thereof, if any.

                                       15
<PAGE>

            (c) If any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property shall occur, Trustor shall file and
prosecute its claim or claims for any insurance proceeds in good faith and with
due diligence and cause the same to be collected and paid over to Beneficiary,
and Trustor hereby irrevocably authorizes and empowers Beneficiary, in the name
of Trustor or otherwise, to collect and receipt for any such insurance proceeds
and to adjust any insurance claims and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Trustor shall, upon demand of Beneficiary, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such insurance proceeds to Beneficiary, free and clear
of any Liens whatsoever. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact for each such purpose (which appointment is coupled
with an interest) and authorizes any Person to act upon the foregoing
appointment.

            (d) Following any damage to, destruction or loss of or other
casualty with respect to any of the Trust Property, Beneficiary shall apply the
entire amount of any insurance proceeds in accordance with the provisions of the
Credit Agreement or, if there is no provision contained in the Credit Agreement
governing how the same are to be applied, then Beneficiary shall apply the
entire amount thereof to the payment of the Obligations, whether or not then due
and payable, in such manner and order as Beneficiary may elect. In all events,
unless expressly provided to the contrary in the Credit Agreement, Trustor
hereby covenants and agrees to promptly commence and to diligently prosecute the
restoration of the Trust Property upon the occurrence of any casualty loss
affecting the Trust Property, without regard to the availability or adequacy of
insurance proceeds, but in all events in a manner approved by Beneficiary.
Notwithstanding any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Credit Agreement
and the other Loan Documents until the Obligations have been paid in full. If
the Trust Property is sold, through foreclosure or otherwise, prior to the
receipt by Beneficiary of such insurance proceeds, Beneficiary shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such insurance proceeds, or a portion
thereof sufficient to pay the then unpaid Obligations, whichever is less.

            SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

            (a) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Trust Property, or any portion thereof or interest therein, Trustor shall
notify Beneficiary of such proceeding. Trustor shall then, if requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the Credit
Agreement, cause any awards or settlements to be paid over to Beneficiary for
disposition pursuant to the terms of this Deed of Trust. Beneficiary shall be
entitled to participate in any such proceeding, at Trustor's sole cost and
expense, and Trustor shall deliver or cause to be delivered to Beneficiary such
instruments as may be requested by Beneficiary from time to time to permit such
participation.

            (b) If the Trust Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement

                                       16
<PAGE>

payable to Trustor by virtue of its interest in the Trust Property shall be, and
by these presents is, assigned, transferred and set over unto Beneficiary to be
held by Beneficiary, subject to the Lien and security interest of this Deed of
Trust, and disbursed in accordance with the provisions of the Credit Agreement
or, if there is no provision contained in the Credit Agreement governing how the
same is to be disbursed, then Beneficiary shall apply the entire amount thereof
to the payment of the Obligations, whether or not then due and payable, in such
manner and order as Beneficiary may elect. In all events, unless otherwise
expressly provided to the contrary in the Credit Agreement, Trustor hereby
covenants and agrees to commence and diligently to prosecute the restoration of
the Trust Property upon the occurrence of any condemnation or other taking
affecting the Trust Property, without regard to the availability or adequacy of
any award or settlement. Notwithstanding any condemnation or other taking of any
of the Trust Property, Trustor shall continue to pay the Obligations at the time
and in the manner provided for in the Credit Agreement and the other Loan
Documents, and the Obligations shall not be reduced until, and then only to the
extent that, any condemnation award or settlement shall have been actually
received and applied by Beneficiary to the discharge of the Obligations. If the
Trust Property is sold, through foreclosure or otherwise, prior to the receipt
by Beneficiary of such condemnation award or settlement, Beneficiary shall have
the right, whether or not a deficiency judgment on any Loan Document shall have
been sought, recovered or denied, to receive such condemnation award or
settlement, or a portion thereof sufficient to pay the Obligations, whichever is
less.

            SECTION 5.06 Maintenance of Rights of Way, Easements, Licenses and
Other Rights. Trustor shall maintain, preserve and renew all rights of way,
easements, tenements, hereditaments, development rights and credits, zoning
rights, grants, privileges, appurtenances, licenses, franchises and other rights
reasonably necessary for the use or operation of the Trust Property from time to
time, or otherwise relevant to the value thereof, and Trustor shall not, without
the prior written consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the
present or future use or operation of the Trust Property. Trustor shall,
however, comply with all restrictive covenants which may at any time affect the
Trust Property, all applicable zoning ordinances and all other public or private
restrictions relating to the use of the Trust Property.

            SECTION 5.07 Payment and Performance of Obligations. Trustor shall
duly and punctually pay and perform all of the Obligations.

            SECTION 5.08 Compliance with Permitted Liens and Other Obligations.
Trustor shall comply in all material respects with any and all obligations,
restrictions and requirements that may be set forth in each and every document
constituting a Permitted Lien. In addition, Trustor shall comply in all material
respects each and every obligation legally imposed upon it and/or relating to
the Trust Property pursuant to applicable law (including, without limitation,
all matters described in Section 4.05 hereof), contract or other agreement. It
is hereby acknowledged that Beneficiary's consent to a Permitted Lien as of the
date hereof shall in no way be deemed to constitute approval of any future Lien
which may be imposed upon any portion of the Trust Property, or any other
enforcement action affecting Trustor or the Trust Property, as a result of
Trustor's failure to perform or comply with its obligations under any document
constituting a Permitted Lien as of the date hereof.

                                       17
<PAGE>

            SECTION 5.09 Additional Affirmative Covenants. All affirmative
covenants made by the Borrowers or Guarantors or any of them in the Credit
Agreement are incorporated herein by reference and are hereby also made by
Trustor as to itself and the Trust Property as though such covenants were set
forth at length herein as the covenants of Trustor.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

            Trustor hereby covenants and agrees with Beneficiary that, until all
of the Obligations shall have been paid or performed in full and discharged:

            SECTION 6.01 Use Violations. Trustor shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Trust Property in any manner which (a) violates in any material respect any
Governmental Requirement, (b) may be dangerous unless safeguarded as required by
applicable law, (c) constitutes a public or private nuisance, or (d) makes void,
voidable or cancelable, or increases, substantially in excess of commercially
reasonably rates, the premium of, any insurance then in force with respect
thereto.

            SECTION 6.02 Waste. Trustor shall not commit or permit any material
waste with respect to the Trust Property.

            SECTION 6.03 Alterations. Trustor shall notify Beneficiary, in
writing and in advance, with respect to all proposed alterations, improvements
or additions to the Trust Property which are of a material nature, and, unless
and to the extent otherwise expressly provided in the Credit Agreement, Trustor
shall not effect any material alteration, improvement or addition to the Trust
Property without the prior written consent of Beneficiary.

            SECTION 6.04 No Further Encumbrances. Trustor shall not, without the
prior written consent of Beneficiary, create, place or permit to be created or
placed, or through any act or failure to act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, Lien (statutory, constitutional or
contractual), security interest, encumbrance or charge on, or conditional sale
or other title retention agreement with respect to, the Trust Property, or any
portion thereof or interest therein, other than the Permitted Liens, regardless
of whether the same are subordinate to the Lien(s) and security interest(s)
created by this Deed of Trust.

            SECTION 6.05 Transfer Restrictions. Trustor shall not sell, lease,
assign, transfer or otherwise dispose of or abandon all or any part of the Trust
Property (or any interest therein), except as expressly permitted by, and in
accordance with the terms of, the Credit Agreement.

            SECTION 6.06 Loan and Credit Agreements; Additional Negative
Covenants. Trustor has received a copy of and is fully familiar with the terms
and provisions of the Credit Agreement and the other Loan Documents. All
negative covenants made by the Borrowers or Guarantors or any of them in the
Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby also made by Trustor as to itself and the Trust
Property as though such negative covenants were set forth at length herein as
the negative covenants of Trustor.

                                       18
<PAGE>

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Credit Agreement are hereby incorporated herein as if fully
set forth herein, and, without limiting the generality of the foregoing, the
occurrence of an "Event of Default" under the Credit Agreement or any other Loan
Document shall constitute an "Event of Default" hereunder. All notices and cure
periods described herein or in the Credit Agreement or any other Loan Document
shall not be applicable to any "Potential Event of Default" (as hereinafter
defined) if such Potential Event of Default has occurred as of the date on which
Beneficiary commences a nonjudicial foreclosure proceeding with respect to
another Potential Event of Default or Event of Default. Such event shall
constitute an independent Event of Default hereunder. For purposes hereof,
"Potential Event of Default" shall mean any event, but for the passage of time
or giving of notice, would be an Event of Default.

            SECTION 7.02 Acceleration. Upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights, powers or
remedies conferred herein or by operation of law, Beneficiary, in its sole
judgment and discretion, may declare the then unpaid principal balance of the
Loan (the "Principal Balance"), the accrued interest thereon and any other
accrued but unpaid portion of the Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
Trustor.

            SECTION 7.03 Foreclosure and Sale. If Beneficiary invokes the power
of sale contained herein and directs Trustee to foreclose on all or part of the
Trust Property, Trustee shall sell all or any part of the Trust Property
(including any part of the Trust Property that may be subject to the provisions
of the Uniform Commercial Code of the State of Mississippi which may then be
security for the debt hereby secured, which sale may be conducted in connection
with any sale of real property and fixtures and in accordance with the Uniform
Commercial Code of the State of Mississippi) at one or more public sales at the
courthouse of the county in which the Trust Property or any part of the Trust
Property is situated, at public outcry, to the highest bidder for cash, and in
bar of the right and equity of redemption, statutory right of redemption,
homestead, dower, appraisement, stay, elective share and all other rights and
exemptions of every kind, all of which are hereby expressly waived by Trustor,
in order to pay the Obligations and all expenses of sale and of all proceedings
in connection therewith, including reasonable attorney's fees, after advertising
the time, place and terms of sale at least once a week for three (3) consecutive
weeks preceding the date of such sale in some newspaper published in the county
in which the land is located, or if no newspaper is printed in such county, then
in a newspaper of general circulation therein, and by posting one notice of such
sale at the courthouse where such sale is to be held. If the Trust Property is
located in two or more counties or in two judicial districts of the same county,
whether the Trust Property consists of one parcel or more than one parcel, then
Trustee shall have full power to select in which county, or judicial district,
the sale of all or any part of the Trust Property shall be made and his
selection shall be binding upon Trustor and Beneficiary and all persons claiming
through or under them, whether by contract or by law, Trustee shall have full
power to fix the day, time, terms and place of sale and may sell the Trust
Property in parcels or as a whole as Trustee may deem best. Trustor waives the

                                       19
<PAGE>

provisions of Section 89-1-55 of the Mississippi Code of 1972, as amended, and
any successor provisions, as far as said section restricts the right of Trustee
to offer at sale more than one hundred and sixty acres at a time, and Trustee
may offer the Trust Property as a whole or in part and in such order as Trustee
may deem best, regardless of the manner in which it may be described. Trustee
may appoint an agent to conduct foreclosure proceedings and any sale thereunder,
which appointment need not be recorded. Any foreclosure sale may be adjourned or
continued from time to time in the discretion of Trustee until such time as such
sale can be validly and legally completed. At any sale made to enforce the trust
herein given, Trustee shall execute a deed of conveyance or other appropriate
instrument conveying the Trust Property so sold, which conveyance shall be
without any covenant or warranty, express or implied, and shall vest full and
perfect title in such purchaser upon payment of the purchase price. The recitals
in such instrument shall be prima facie evidence of the truth of the statements
made therein, and failure to give any notice to Trustor as provided herein shall
not adversely affect any foreclosure sale or create any liability on the part of
Trustee or Beneficiary to Trustor. Trustee shall apply the proceeds of the sale
in the following order: (a) to all costs and expenses of the sale, including,
but not limited to, reasonable Trustee `s and attorney's fees and costs of title
evidence and any other costs incurred in connection with the sale; (b) to all
sums secured hereby; and (c) the excess, if any, to the person or persons
legally entitled thereto. Upon any sale pursuant to this paragraph, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may
bid for and acquire the Trust Property or any part thereof and in lieu of paying
cash therefor may make settlement for the purchase price by crediting upon the
indebtedness of Trustor secured by this Deed of Trust the net sales price after
deducting therefrom the expenses of the sale and the costs of the action and any
other sums which Trustee or Beneficiary is authorized to deduct under this Deed
of Trust. If the Trust Property is sold pursuant to this paragraph, Trustor or
any person holding possession of the Trust Property through Trustor shall
immediately surrender possession of the Trust Property to the purchaser at such
sale. If possession is not surrendered, Trustor or such person shall be deemed
to be a tenant at sufferance and may be removed by writ of possession, or any
other lawful means.

            Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

            SECTION 7.04 Trustee's Successors, Substitutes and Agents. Trustee
or any successor to or substitute for Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Beneficiary. If Trustee or any successor to or
substitute for Trustee shall have given notice of sale hereunder, any successor
or substitute trustee thereafter appointed may complete the sale and the
conveyance of the Trust Property pursuant thereto as if such notice had been
given by the successor to or substitute for Trustee conducting the sale.

            SECTION 7.05 Receivership. If any of the Obligations shall become
due and payable and shall not be promptly paid, Beneficiary shall have the right
and power to proceed by a suit or suits in equity or at law, whether for the
specific performance of Beneficiary which Trustee may apply for and obtain as a
matter of right and without notice to Trustor, which notice

                                       20
<PAGE>

is hereby expressly waived by Trustor, the appointment of a receiver to collect
the Rents of the Trust Property and to preserve the security hereof, either
before or after any foreclosure sale or the sale of the Trust Property under the
order of a court or courts of competent jurisdiction or under executory or other
legal process, without regard to the value of the Trust Property as security for
the amount then due to Beneficiary, or the solvency of any entity or entities,
person or persons primarily or secondarily liable for the payment of such
amounts; the Rents of the Trust Property, in any such event, having heretofore
been assigned to Beneficiary pursuant to Section 3.01 hereof as additional
security for the payment of the Obligations secured hereby.

            SECTION 7.06 Judicial Foreclosure. If an Event of Default shall
occur and be continuing, Trustee or Beneficiary shall have the right and power
to proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Trust Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Trust Property under the order of a
court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by Trustee and/or Beneficiary in connection with any
such receivership shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of such advance by Trustee and/or Beneficiary
until paid at the Default Rate.

            SECTION 7.07 Separate Sales. To the extent allowed by applicable
law, the Trust Property may be sold in one or more parcels and in such manner
and order as Beneficiary, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

            SECTION 7.08 Possession of Trust Property. Trustor agrees to the
full extent that it lawfully may, that, in case one or more of the Events of
Default shall have occurred and be continuing, then, and in every such case,
Trustee or Beneficiary shall have the right and power to enter into and upon and
take possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of expenditure until paid at the Default Rate,
all of which shall constitute a portion of the Obligations and shall be secured
by this Deed of Trust and all of the other Loan Documents. Trustor hereby
irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact
(coupled with an interest) to perform such acts and execute such documents as
Beneficiary, in its sole discretion, shall deem appropriate, including
endorsement of Trustor's name on any

                                       21
<PAGE>

instruments. Regardless of any provision of this Deed of Trust, the Credit
Agreement or any other Loan Document, Beneficiary shall not be considered to
have accepted any property other than cash or immediately available funds in
satisfaction of any obligation of Trustor to Beneficiary, unless Beneficiary
shall have given express written notice of Beneficiary's election to the
contrary.

            SECTION 7.09 Occupancy After Foreclosure. In the event that there is
a foreclosure sale hereunder and at the time of such sale Trustor or Trustor's
representatives, successors or assigns or any other person claiming any interest
in the Trust Property by, through or under Trustor, are occupying or using the
Trust Property or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of either the landlord or tenant, at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser. To the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event that the
tenant fails to surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for possession of
the Trust Property (such as an action for forcible entry and detainer) in any
court having appropriate jurisdiction.

            SECTION 7.10 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Trustee or Beneficiary shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute
(including specifically those granted by the Applicable UCC). Each such right,
power and remedy, whether specifically herein given or otherwise existing, may
be exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right, power or
remedy. Beneficiary shall be entitled to collect all costs and expenses incurred
in pursuing such remedies. No delay or omission by Trustee or Beneficiary in the
exercise of any such right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

            SECTION 7.11 No Release of Obligations. Neither Trustor, any other
Borrower, nor any other Person now or hereafter obligated for the payment or
performance of all or any part of the Obligations shall be relieved of any such
obligation by reason of (a) the failure of Trustee or Beneficiary to comply with
any request of Trustor, any other Borrower or any other Person so obligated to
foreclose the Lien of this Deed of Trust to enforce any provision hereunder or
under the Credit Agreement; (b) the release, regardless of consideration, of the
Trust Property or any portion thereof or interest therein or the addition of any
other property to the Trust Property; (c) any agreement or stipulation between
any subsequent owner of the Trust Property and Beneficiary extending, renewing,
rearranging or in any other way modifying the terms of this Deed of Trust
without first having obtained the consent of, given notice to or paid any
consideration to Trustor , any other Borrower or any other Person, and in any
such event Trustor, all other Borrowers and all such other Persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless

                                       22
<PAGE>

expressly released and discharged in writing by Beneficiary; or (d) any other
act or occurrence save and except the complete payment and performance of all of
the Obligations.

            SECTION 7.12 Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration, any part of the Trust Property without, as
to the remainder, in any way impairing, affecting, subordinating or releasing
the Lien or security interest created in or evidenced by this Deed of Trust or
its stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect.

            SECTION 7.13 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Trustor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) except for notices expressly
provided for herein or in the Credit Agreement, all notices of any Event of
Default or of Beneficiary's intention to accelerate maturity of the Obligations
or of Trustee's or Beneficiary's election to exercise or actual exercise of any
right, remedy or recourse provided for hereunder or under the Credit Agreement;
and (c) any right to a marshalling of assets, a sale in inverse order of
alienation and (d) any and all conflicts with any provisions of any of the Loan
Documents. If any law referred to in this Deed of Trust and now in force, of
which Trustor or its successor or successors might take advantage despite the
provisions hereof, shall hereafter be repealed or cease to be in force, such law
shall thereafter be deemed not to constitute any part of the contract herein
contained or to preclude the operation or application of the provisions hereof.
Beneficiary shall have the right to determine the order in which any or all of
the Trust Property shall be subjected to the remedies provided herein.

            SECTION 7.14 Discontinuance of Proceedings. In case Beneficiary
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the Credit Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Trustor and Beneficiary shall be restored to their
former positions with respect to the Obligations, this Deed of Trust, the Credit
Agreement, the Trust Property and otherwise, and the rights, remedies, recourses
and powers of Beneficiary shall continue as if same had never been invoked.

            SECTION 7.15 Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of and
any other amounts generated by the holding, leasing, operating or other use of
the Trust Property shall be applied by Beneficiary (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Credit Agreement or if not so provided, then in the
following order of priority, except to the extent otherwise required by
applicable law:

            (a) first, to the payment of the reasonable and necessary costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving the

                                       23
<PAGE>

same, including reasonable (i) receivers' fees, (ii) court costs, (iii)
attorneys' and accountants' fees, (iv) costs of advertisement and title search
fees, and (v) the payment of any and all Impositions, Liens, security interests
or other rights, titles or interests equal or superior to the Lien and security
interest of this Deed of Trust (except those to which the Trust Property has
been sold subject to and without in any way implying Beneficiary's prior consent
to the creation thereof);

            (b) second, to the payment of all amounts other than the Principal
Balance and accrued but unpaid interest which may be due to Beneficiary
hereunder or under the other Loan Documents, together with interest thereon as
provided herein;

            (c) third, to the payment of the Obligations in such order and
manner as Beneficiary determines in its sole discretion; and

            (d) fourth, to Trustor or as otherwise required by any Governmental
Requirement. Trustor shall be liable for any deficiency remaining.

            SECTION 7.16 Uniform Commercial Code Remedies. Beneficiary shall
have all of the rights, remedies and recourses with respect to the Personalty
and the Fixtures afforded to it by the Applicable UCC, including, without
limitation, (i) the right to conduct a unified sale of such Personalty and
Fixtures in connection with a judicial or power of sale foreclosure of any
portion of the Trust Property that constitutes real property, (ii) any the right
to take possession of the Personalty and the Fixtures or any part thereof, and
(iii) to take such other measures as Beneficiary may deem necessary for the
care, protection and preservation of the Personalty and the Fixtures, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded by this Deed of Trust and the other Loan Documents.

            SECTION 7.17 Indemnity. In connection with any action taken by
Trustee, Beneficiary and/or any Indemnitee pursuant to this Deed of Trust,
Trustee, Beneficiary, and/or any such Indemnitee and their respective
Indemnified Parties shall not be liable for any Loss sustained by Trustor
resulting from (a) an assertion that Beneficiary, or any such Indemnitee or an
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Persons, or (b) any act or omission of Trustee, Beneficiary, or
any such Indemnitee or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary and/or
such other Lender or such Indemnified Party, nor shall Trustee, Beneficiary
and/or any other Lender or an Indemnified Party be obligated to perform or
discharge any obligation, duty or liability of Trustor. Trustor shall and does
hereby agree to indemnify Trustee and/or Beneficiary and each of the other
Lenders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Lender and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Lenders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or

                                       24
<PAGE>

remedies hereunder, including such Losses as may result from the ordinary
negligence of Trustee, Beneficiary or any other Lender or an Indemnified Party,
or which may result from strict liability, whether under applicable law or
otherwise, unless such Loss is caused by the gross negligence, willful
misconduct or bad faith of Trustee, Beneficiary or such other Lender or such
Indemnified Party. Should Trustee, Beneficiary and/or any other Lender or an
Indemnified Party make any expenditure on account of any such Losses, the amount
thereof, including costs, expenses and reasonable attorneys' fees, shall be a
demand obligation (which obligation Trustor hereby expressly promises to pay)
owing by Trustor to Trustee and/or Beneficiary and shall bear interest from the
date expended until paid at the Default Rate, shall be a part of the Obligations
and shall be secured by this Deed of Trust and the other Loan Documents. Trustor
hereby assents to, ratifies and confirms any and all actions of Trustee and/or
Beneficiary with respect to the Trust Property taken under this Deed of Trust.
The liabilities of Trustor, as set forth in this Section 7.17, shall survive the
termination of this Deed of Trust and the payment and performance of the
Obligations.

                                  ARTICLE VIII

                                     TRUSTEE

            SECTION 8.01 Duties, Rights, and Powers of Trustee. It shall be no
part of the duty of Trustee to see to any recording, filing or registration of
this Deed of Trust or any other instrument in addition or supplemental thereto,
or to give any notice thereof, or to see to the payment of or be under any duty
in respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Trust Property, or any part thereof, or against
Trustee, or to see to the performance or observance by Trustee of any of the
covenants and agreements contained herein. Trustee shall not be responsible for
the execution, acknowledgment or validity of this Deed of Trust or of any
instrument in addition or supplemental hereto or for the sufficiency of the
security purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Beneficiary. Trustee shall have the right
to confer with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee's own gross
negligence or willful misconduct, and Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by Trustee hereunder, believed by Trustee in good faith
to be genuine.

            SECTION 8.02 Successor Trustee. From time to time, by a writing
signed and acknowledged by Beneficiary and filed for record in the office of the
recorder of the County in which the Land is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date, book and page
of its recordation. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee
hereunder with the same effect as if originally named Trustee herein. A writing
recorded pursuant to the provisions of this Section 8.02 shall be conclusive
proof of the proper substitution of such new trustee.

                                       25
<PAGE>

            SECTION 8.03 Retention of Moneys. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

            SECTION 8.04 Reconveyance. Upon written request of Beneficiary
stating all of the Obligations have been paid, performed and discharged, and the
Credit Agreement is terminated, and payment of its fees, Trustee shall reconvey,
without warranty, the Trust Property. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in such reconveyance may be described as "the person or persons legally
entitled hereto" or such other description as required by law.

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01 Instrument Construed as Deed of Trust, Etc. This Deed
of Trust may be construed as a deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

            SECTION 9.02 Performance at Trustor's Expense. The cost and expense
of performing or complying with any and all of the Obligations shall be borne
solely by Trustor, and no portion of such cost and expense shall be, in any way
or to any extent, credited against any installment on or portion of the
Obligations.

            SECTION 9.03 Survival of Obligations. Each and all of the
Obligations shall survive the execution and delivery of this Deed of Trust and
shall continue in full force and effect until all of the Obligations shall have
been fully satisfied.

            SECTION 9.04 Further Assurances. Trustor, upon the request of
Beneficiary, shall execute, acknowledge, deliver and record and/or file such
further instruments, including financing statements, and do such further acts as
may be reasonably necessary, desirable or proper to carry out more effectively
the purpose of this Deed of Trust and to subject to the Liens and security
interests hereof any property intended by the terms hereof to be covered hereby,
including any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Trust Property.

            SECTION 9.05 Notices. All notices or other communications required
or permitted to be given pursuant to this Deed of Trust shall be in writing and
shall be considered properly given if given in the manner and to the addresses
prescribed by Section 11.02 of the Credit Agreement to the parties and at the
addresses set forth in the first paragraph hereof, and to the parties and at the
addresses set forth in Section 11.02 of the Credit Agreement; provided, however,
that (a) service of notice as required by the laws of any State or Commonwealth
in which portions of the Trust Property may be situated shall for all purposes
be deemed

                                       26
<PAGE>

appropriate and sufficient with the giving of such notice thereunder, and (b)
any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by the giving of ten (10)
days' notice to the other party in the manner set forth above.

            SECTION 9.06 No Waiver. Any failure by Beneficiary to insist, or any
election by Beneficiary not to insist, upon strict performance by Trustor of any
of the terms, provisions or conditions of this Deed of Trust shall not be deemed
to be a waiver of the same or of any other terms, provision or condition hereof,
and Beneficiary shall have the right, at any time or times thereafter, to insist
upon strict performance by Trustor of any and all of such terms, provisions and
conditions. Beneficiary may, in Beneficiary's sole and absolute discretion, (i)
in the case of a Default, determine whether such Default has been cured, and
(ii) in the case of an Event of Default, accept or reject any proposed cure of
an Event of Default. In no event shall any provision of this Deed of Trust or
any other Loan Document which provides that Beneficiary shall have certain
rights and/or remedies only during the continuance of an Event of Default be
construed so as to require Beneficiary to accept a cure of any such Event of
Default. Unless and until Beneficiary accepts any proposed cure of an Event of
Default, such Event of Default shall be deemed to be continuing for purposes of
this Deed of Trust and the other Loan Documents.

            SECTION 9.07 Beneficiary's Right to Perform; Beneficiary's
Expenditures

            (a) Trustor agrees that if Trustor fails to perform any act or take
any action which Trustor is required to perform or take hereunder or under the
Credit Agreement or to pay any money which Trustor is required to pay hereunder
or under the Credit Agreement, Beneficiary may, but shall not be obligated to,
perform or cause to be performed such act or take such action or pay such money,
to the extent and only to the extent permitted under the Credit Agreement.

            (b) All costs and expenses incurred by Beneficiary (or any
Indemnified Party), including, without limitation, attorneys fees, costs and
expenses, all monies paid by (or on behalf of) Beneficiary and the monetary
value of all services performed by (or on behalf of Beneficiary) in connection
with a Default or Event of Default hereunder or under any other Loan Document,
including, without limitation, the (i) the enforcement of any term or provision
of this Deed of Trust or any other Loan Document, (ii) the performance by
Beneficiary of any obligation of Trustor under this Deed of Trust or any other
Loan Document if Beneficiary elects to so perform, in its sole and absolute
discretion, and (iii) any action Beneficiary elects to take, in its sole and
absolute discretion, to protect its interest in or the value of the Trust
Property, shall be a demand obligation owing by Trustor to Beneficiary, as the
case may be, and to the extent any payment is made to a third Person,
Beneficiary, upon making such payment, shall be subrogated to all of the rights
of the Person receiving such payment. All such costs and expenses, monies and
the monetary value of such services performed shall (x) bear interest at the
Default Rate from the date of such incurrence, payment or performance, as
applicable, until paid, and (y) constitute (together with such interest) a
portion of the Obligations and shall be secured by this Deed of Trust and all of
the other Loan Documents. If Beneficiary shall elect to pay any Imposition or
other sums due with reference to the Trust Property, Beneficiary may do so in
reliance on any bill, statement or assessment procured from the appropriate
Governmental Authority or other issuer thereof. Attorneys' fees, costs and
expenses as used herein shall

                                       27
<PAGE>

include, without limitation, such fees, costs and expenses incurred in
litigation or not, whether before or after judgment and and consultants, court
costs, expert witness fees, document reproduction expenses, costs of exhibit
preparation, courier charges, postage and communication expenses. This provision
is separate and several, and shall survive merger into any judgment.

            Trustor shall and does hereby agree that, if all or a portion of the
Obligations has prior to the maturity date fixed in the Credit Agreement, become
due or been declared due by reason of an Event of Default the entire amount then
due under the terms of this Deed of Trust and the Credit Agreement shall include
all attorneys' fees and costs and expenses which are actually incurred as stated
above.

            SECTION 9.08 Successors and Assigns. All of the terms hereof shall
apply to, be binding upon and inure to the benefit of the parties hereto, their
successors, assigns, heirs and legal representatives, and all other Persons
claiming by, through or under them; provided, however, that nothing herein shall
be deemed to imply any right on behalf of Trustor to assign its interest in any
of the Trust Property except as may be expressly set forth in the Credit
Agreement.

            SECTION 9.09 Severability. This Deed of Trust is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws and regulations of applicable Governmental Authorities and the
provisions hereof are intended to be limited to the extent necessary that they
will not render this Deed of Trust invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
provision hereof or the application thereof to any Person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Deed of Trust nor the application of such provision to other
Persons or circumstances shall be affected thereby, but rather shall be enforced
to the greatest extent permitted by applicable law.

            SECTION 9.10 Subrogation of Trustee. This Deed of Trust is made with
full substitution and subrogation of Trustee and successors in this trust to
Trustee and Trustee and such successors assigns in and to all covenants and
warranties by others heretofore given or made in respect of the Trust Property
or any part thereof.

            SECTION 9.11 Entire Agreement and Modification. This Deed of Trust
may not be amended, revised, waived, discharged, released or terminated orally,
but only by a written instrument or instruments executed by the party against
which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

            SECTION 9.12 Applicable Law. THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW YORK.
TRUSTOR AND BENEFICIARY FURTHER AGREE AND STIPULATE THAT THIS DEED OF TRUST, THE
CREDIT AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW
YORK WERE NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW YORK, AND THAT
THE STATE OF NEW YORK HAS A SUBSTANTIAL

                                       28
<PAGE>

RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION. IT IS THEREFORE
THE INTENT OF TRUSTOR AND BENEFICIARY THAT THIS DEED OF TRUST SHALL BE CONSTRUED
AND INTERPRETED WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO NEW YORK CHOICE OF LAW PRINCIPLES); PROVIDED,
HOWEVER, THAT THE LAWS OF THE STATE OF MISSISSIPPI SHALL APPLY TO THE CREATION,
PERFECTION AND PROCEDURES GOVERNING ENFORCEMENT OF ANY LIENS, SECURITY INTERESTS
AND ENCUMBRANCES GRANTED OR CREATED BY THIS DEED OF TRUST IN THE REAL OR
PERSONAL PROPERTY LOCATED IN (OR IN THE CASE OF INTANGIBLE PERSONAL PROPERTY,
HAVING A SITUS IN) THE STATE OF MISSISSIPPI, AND THE MANAGEMENT, OPERATION,
DISPOSITION AND REALIZATION OF THE SECURITY PROVIDED THEREBY. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE LAWS OF THE STATE OF NEW YORK SHALL APPLY
TO (I) ALL MATTERS RELATING TO THE CHARGING AND COLLECTION OF INTEREST UNDER
THIS DEED OF TRUST AND WITH RESPECT TO THE OBLIGATIONS, (II) THE ENFORCEMENT OF
ALL RIGHTS UNDER THE CREDIT AGREEMENT, AND THE LOAN DOCUMENTS OTHER THAN THIS
DEED OF TRUST AND (III) THE RIGHT TO SUE TRUSTOR OR ANY OTHER PERSON OBLIGATED
UNDER THE LOAN AGREEMENT AND THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING
OBLIGATIONS OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE
UNDER ANY ONE ACTION AND ANTIDEFICIENCY RULES. TRUSTOR HEREBY AGREES THAT
BENEFICIARY MAY ENFORCE ITS RIGHTS UNDER THIS DEED OF TRUST AND ANY OF THE OTHER
LOAN DOCUMENTS, INCLUDING THE RIGHT TO SUE TRUSTOR OR ANY PERSON OBLIGATED UNDER
THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A
JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE, IN ACCORDANCE WITH NEW YORK
LAW.

            SECTION 9.13 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Credit Agreement are used to pay indebtedness
secured by any outstanding Lien, security interest, charge or prior encumbrance
against the Trust Property, such proceeds shall be deemed to have been advanced
by Beneficiary at Trustor's request, and Beneficiary shall be subrogated to any
and all rights, security interests and Liens owned by any owner or holder of
such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Beneficiary, Trustor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

            SECTION 9.14 No Partnership. Nothing contained in this Deed of Trust
is intended to, or shall be construed to, create to any extent and in any manner
whatsoever any partnership, joint venture, or association between Trustor and
Beneficiary, or in any way make Beneficiary a co-principal with Trustor with
reference to the Trust Property, and any inferences to the contrary are hereby
expressly negated.

                                       29
<PAGE>

            SECTION 9.15 Headings. The Article, Section and Subsection headings
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

            SECTION 9.16 Release of Deed of Trust. If all of the Obligations
shall be paid, performed and discharged and the Credit Agreement is terminated,
Beneficiary shall forthwith cause satisfaction and discharge of this Deed of
Trust to be entered upon the record, at the sole cost and expense of Trustor,
and shall execute and deliver (or cause to be executed and delivered) such
instruments of satisfaction and discharge as may be appropriate, such
instruments to be duly acknowledged and in form for recording, at the sole cost
and expense of Trustor.

            SECTION 9.17 Limitation of Obligations with Respect to Trust
Property.

            (a) Neither Trustee nor Beneficiary or any Lender shall have any
duty to protect or preserve, or any liability with respect to the protection or
preservation of, any Trust Property or to preserve rights pertaining thereto
other than the duty to use reasonable care in the custody and preservation of
any Trust Property in its actual possession. Beneficiary shall be deemed to have
exercised reasonable care in the custody and preservation of any Trust Property
in its possession if such Trust Property is accorded treatment substantially
equal to that which Beneficiary accords its own like property. Beneficiary shall
be relieved of all responsibility for any Trust Property in its possession upon
surrendering it, or tendering surrender of it, to Trustor or to such other
Person entitled thereto by applicable law.

            (b) Nothing contained in this Deed of Trust shall be construed as
requiring or obligating Trustee, Beneficiary or any Lender, and neither Trustee
nor Beneficiary or any Lender shall be required or obligated, to (i) make any
demand or inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim or notice or take any action with respect to any
Trust Property or the monies due or to become due thereunder in connection
therewith, (ii) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders, offers or other matters relating to any Trust
Property, whether or not Beneficiary or any of the other Lenders has or is
deemed to have knowledge or notice thereof, (iii) take any necessary steps to
preserve rights against any prior parties with respect to any Trust Property, or
(iv) notify Trustor or any other Person of any decline in the value of any Trust
Property.

            SECTION 9.18 Inconsistency with Credit Agreement. To the fullest
extent possible, the terms and provisions of the Credit Agreement shall be read
together with the terms and provisions of this Deed of Trust such that the terms
and provisions of this Deed of Trust shall supplement, rather than conflict
with, the terms and provisions of the Credit Agreement; provided, however, that,
notwithstanding the foregoing, in the event any of the terms or provisions of
this Deed of Trust conflict with any of the terms or provisions of the Credit
Agreement, such that it is impractical for such terms or provisions to coexist,
the terms or provisions of the Credit Agreement shall govern and control for all
purposes; and, provided further, that the inclusion in this Deed of Trust of
terms and provisions, supplemental rights or remedies in favor of a secured
party but which are not addressed in the Credit Agreement shall not be deemed to
be a conflict with the Credit Agreement and all such additional terms,
provisions, supplemental rights or remedies contained herein shall be given full
force and effect.

                                       30
<PAGE>

            SECTION 9.19 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between Trustor and Beneficiary, or any Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Trustor for the use, forbearance or detention of the money
to be loaned under the Credit Agreement or any other Loan Document, or for the
payment or performance of any covenant or obligation contained herein or in the
Credit Agreement or any other Loan Document, exceed the maximum amount
permissible under applicable federal or state usury laws. If, under any
circumstances, fulfillment of any such provision, at the time performance of
such provision shall be due, shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall be
reduced to the limit of such validity. If, under any circumstances, Trustor
shall have paid an amount of money which is deemed to be interest and such
interest would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction
of the principal amount owing in respect of the Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
Trustor. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by Beneficiary (or
Lender) shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by applicable
law, be amortized, prorated, allocated and spread from the date of this Deed of
Trust until payment in full of the Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.

            SECTION 9.20 Covenants To Run With the Land. All of the grants,
representations, warranties, undertakings, covenants, terms, provisions and
conditions in this Deed of Trust shall run with the Land and shall apply to and
bind the successors and assigns of Trustor. If there shall be more than one
trustor, the covenants, representations and warranties made herein shall be
deemed to be joint and several.

            SECTION 9.21 Amount Secured; Last Dollar. So long as the balance of
the Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the Obligations secured by this Deed of
Trust, but shall, instead, be deemed to be applied against only such portions of
the Obligations that are not secured by this Deed of Trust.

            SECTION 9.22 Defense of Claims. Trustor shall promptly notify
Beneficiary in writing of the commencement of any legal proceedings affecting
Trustor's title to the Trust Property or Beneficiary's Lien on or security
interest in the Trust Property, or any part thereof, and shall take all such
action, employing attorneys agreeable to Beneficiary, as may be necessary to
preserve Trustor's and Beneficiary's rights affected thereby. If Trustor fails
or refuses to adequately or vigorously, in the sole judgment of Beneficiary,
defend Trustor's or Beneficiary's rights to the Trust Property, Beneficiary may
take such action on behalf of and in the name of Trustor and at Trustor's
expense. Moreover, Beneficiary may take (or cause its agents to take) such
independent action in connection therewith as they may in their discretion deem
proper, including, without limitation, the right to employ independent counsel
and to intervene in any suit affecting the Trust Property. All costs, expenses
and attorneys' fees incurred by Beneficiary

                                       31
<PAGE>

(or its agents) pursuant to this Section 9.22 or in connection with the defense
by Beneficiary of any claims, demands or litigation relating to Trustor, the
Trust Property or the transactions contemplated in this Deed of Trust shall be
paid by Trustor on demand, plus interest thereon from the date of the advance by
Beneficiary until reimbursement of Beneficiary at the Default Rate.

            SECTION 9.23 Exculpation Provisions. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES
THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST;
THAT IT HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST;
THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND
THAT IT RECOGNIZES THAT CERTAIN TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."

            SECTION 9.24 No Merger of Estates. So long as any part of the
Obligations remain unpaid, unperformed or undischarged, the fee, easement and
leasehold estates to the Trust Property shall not merge but rather shall remain
separate and distinct, notwithstanding the union of such estates either in
Trustor, Beneficiary, any lessee, any third-party purchaser or otherwise.

            SECTION 9.25 Intentionally Deleted.

            SECTION 9.26 Intentionally Deleted.

            SECTION 9.27 Intentionally Deleted.

            SECTION 9.28 Release and Reconveyance. Lender will release and
reconvey its interest under this Deed of Trust to the Trust Property as required
by Section 7.04 of the Credit Agreement.

             [NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

                                       32
<PAGE>

      IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date
first above written.

                                   TRUSTOR:

                                   LAKES GAMING-MISSISSIPPI, LLC, a
                                   Minnesota limited liability company

                                   By: /s/ Timothy J. Cope
                                       ----------------------------------------
                                   Name:  Timothy J. Cope
                                         --------------------------------------
                                     its: President and Chief Financial Officer
                                          -------------------------------------

                                       33
<PAGE>

STATE OF MISSISSIPPI  )
                      ) ss.
COUNTY OF             )

Personally appeared before me, the undersigned authority in and for the said
county and state, on this ____ day of _________ , 2006, within my jurisdiction,
the within named _________, who acknowledged that he/she is _________ of Lakes
Gaming-Mississippi, LLC, a Minnesota limited liability company, and that for and
on behalf of the said limited liability company, and as its act and deed he/she
executed the above and foregoing instrument, after first having been duly
authorized by said limited liability company so to do.

                                       34
<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

                                   Exhbit A-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>c06339exv10w7.txt
<DESCRIPTION>DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SEUCRITY AGREEMENT AND FIXTURE FILING
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.7

THIS DEED OF TRUST WAS PREPARED BY
AND WHEN RECORDED, RETURN TO:

Latham & Watkins LLP
885 Third Avenue
New York, New York  10022
Attention:  Elizabeth Jaffe, Esq.
Reference No.:  024819 0034

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

                                     made by

                LAKES KEAN ARGOVITZ RESORTS - CALIFORNIA, L.L.C.
                                    (TRUSTOR)

                                       to

                    FIDELITY NATIONAL TITLE INSURANCE COMPANY
                                    (TRUSTEE)

                               for the benefit of

                              BANK OF AMERICA, N.A.
                                  (BENEFICIARY)

                               PROPERTY LOCATION:

                                14020 Melody Road
          Portion of Section 10, T. 17, S. R.1E (Highway 94/Campo Road)
                                Jamul, California

                           DATED AS OF JUNE 22, 2006

    THIS ALSO CONSTITUTES FINANCING STATEMENTS FILED AS A FIXTURE FILING AND
 FINANCING STATEMENT PURSUANT TO SECTIONS 9501(a)(1) AND 9502(b) AND (c) OF THE
     CALIFORNIA UNIFORM COMMERCIAL CODE AND IS RECORDED AS A FIXTURE FILING

     PURSUANT TO SECTION 2924B(d) OF THE CALIFORNIA CIVIL CODE, TRUSTOR AND
   BENEFICIARY REQUEST THAT A COPY OF ANY NOTICE OF DEFAULT AND A COPY OF ANY
   NOTICE OF SALE BE MAILED TO TRUSTOR AND BENEFICIARY, RESPECTIVELY, AT THE
                    ADDRESS FOR SUCH PARTY SET FORTH HEREIN.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                      PAGE
                                                                                                                      ----
<S>                                                                                                                   <C>
ARTICLE I DEFINITIONS............................................................................................      2
         SECTION 1.01      Terms Defined Above...................................................................      2
         SECTION 1.02      Definitions...........................................................................      2
         SECTION 1.03      Terminology...........................................................................      6
         SECTION 1.04      Other Defined Terms...................................................................      6

ARTICLE II GRANT OF LIEN AND SECURITY INTEREST...................................................................      6
         SECTION 2.01      Grant of Lien.........................................................................      6
         SECTION 2.02      Grant of Security Interest............................................................      6
         SECTION 2.03      No Obligation of Beneficiary..........................................................      7
         SECTION 2.04      Fixture Filing........................................................................      7
         SECTION 2.05      Future Advances.......................................................................      7
         SECTION 2.06      Intentionally Omitted.................................................................      7

ARTICLE III ASSIGNMENT OF LEASES AND RENTS.......................................................................      7
         SECTION 3.01      Assignment............................................................................      7
         SECTION 3.02      Revocable License.....................................................................      8
         SECTION 3.03      Enforcement of Leases.................................................................      8
         SECTION 3.04      Direction to Tenants..................................................................      9
         SECTION 3.05      Appointment of Attorney-in-Fact.......................................................      9
         SECTION 3.06      No Liability of Beneficiary...........................................................     10
         SECTION 3.07      Trustor's Indemnities.................................................................     10
         SECTION 3.08      No Modification of Trustor's Obligations..............................................     11
         SECTION 3.09      Rights in Bankruptcy..................................................................     11
         SECTION 3.10      Right to Enforce Under California Civil Code Section 2938.............................     11

ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................     13
         SECTION 4.01      Title to Trust Property and Lien of this Deed of Trust................................     13
         SECTION 4.02      Taxes and Other Payments..............................................................     14
         SECTION 4.03      Power to Create Lien and Security.....................................................     14
         SECTION 4.04      Loan and Credit Agreements............................................................     14
         SECTION 4.05      Compliance with Laws..................................................................     14
         SECTION 4.06      No Condemnation.......................................................................     15
         SECTION 4.07      Flood Zone............................................................................     15
         SECTION 4.08      Additional Environmental Representation...............................................     15

ARTICLE V AFFIRMATIVE COVENANTS..................................................................................     15
         SECTION 5.01      Lien Status...........................................................................     15
         SECTION 5.02      Payment of Impositions................................................................     15
         SECTION 5.03      Repair................................................................................     16
         SECTION 5.04      Insurance and Application of Insurance Proceeds.......................................     16
         SECTION 5.05      Condemnation and Application of Condemnation Proceeds.................................     18
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                                                   <C>
         SECTION 5.06      Maintenance of Rights of Way, Easements, Licenses and Other Rights....................     19
         SECTION 5.07      Payment and Performance of Obligations................................................     20
         SECTION 5.08      Compliance with Permitted Liens and Other Obligations.................................     20
         SECTION 5.09      Additional Affirmative Covenants......................................................     20

ARTICLE VI NEGATIVE COVENANTS....................................................................................     20
         SECTION 6.01      Use Violations........................................................................     20
         SECTION 6.02      Waste.................................................................................     20
         SECTION 6.03      Alterations...........................................................................     20
         SECTION 6.04      No Further Encumbrances...............................................................     20
         SECTION 6.05      Transfer Restrictions.................................................................     21
         SECTION 6.06      Loan and Credit Agreements; Additional Negative Covenants.............................     21

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.......................................................................     21
         SECTION 7.01      Event of Default......................................................................     21
         SECTION 7.02      Acceleration..........................................................................     21
         SECTION 7.03      Foreclosure and Sale..................................................................     21
         SECTION 7.04      Trustee's Successors, Substitutes and Agents..........................................     22
         SECTION 7.05      Receivership..........................................................................     23
         SECTION 7.06      Judicial Foreclosure..................................................................     23
         SECTION 7.07      Separate Sales........................................................................     24
         SECTION 7.08      Possession of Trust Property..........................................................     24
         SECTION 7.09      Occupancy After Foreclosure...........................................................     24
         SECTION 7.10      Remedies Cumulative, Concurrent and Nonexclusive......................................     25
         SECTION 7.11      No Release of Obligations.............................................................     25
         SECTION 7.12      Release of and Resort to Collateral...................................................     25
         SECTION 7.13      Waiver of Redemption, Notice and Marshalling of Assets................................     25
         SECTION 7.14      Discontinuance of Proceedings.........................................................     26
         SECTION 7.15      Application of Proceeds...............................................................     26
         SECTION 7.16      Uniform Commercial Code Remedies......................................................     27
         SECTION 7.17      Indemnity.............................................................................     27
         SECTION 7.18      Waiver of Lien........................................................................     28
         SECTION 7.19      Action for Environmental Claims.......................................................     28

ARTICLE VIII TRUSTEE.............................................................................................     29
         SECTION 8.01      Duties, Rights, and Powers of Trustee.................................................     29
         SECTION 8.02      Successor Trustee.....................................................................     29
         SECTION 8.03      Retention of Moneys...................................................................     30
         SECTION 8.04      Reconveyance..........................................................................     30

ARTICLE IX MISCELLANEOUS.........................................................................................     30
         SECTION 9.01      Instrument Construed as Deed of Trust, Etc............................................     30
         SECTION 9.02      Performance at Trustor's Expense......................................................     30
         SECTION 9.03      Survival of Obligations...............................................................     30
         SECTION 9.04      Further Assurances....................................................................     30
         SECTION 9.05      Notices...............................................................................     30
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                               <C>
         SECTION 9.06  No Waiver.............................................................................     31
         SECTION 9.07  Beneficiary's Right to Perform; Beneficiary's Expenditures............................     31
         SECTION 9.08  Successors and Assigns................................................................     32
         SECTION 9.09  Severability..........................................................................     32
         SECTION 9.10  Subrogation of Trustee................................................................     32
         SECTION 9.11  Entire Agreement and Modification.....................................................     32
         SECTION 9.12  Applicable Law........................................................................     32
         SECTION 9.13  Satisfaction of Prior Encumbrance.....................................................     33
         SECTION 9.14  No Partnership........................................................................     34
         SECTION 9.15  Headings..............................................................................     34
         SECTION 9.16  Release of Deed of Trust..............................................................     34
         SECTION 9.17  Limitation of Obligations with Respect to Trust Property..............................     34
         SECTION 9.18  Inconsistency with Credit Agreement...................................................     34
         SECTION 9.19  Limitation on Interest Payable........................................................     35
         SECTION 9.20  Covenants To Run With the Land........................................................     35
         SECTION 9.21  Amount Secured; Last Dollar...........................................................     35
         SECTION 9.22  Defense of Claims.....................................................................     36
         SECTION 9.23  Exculpation Provisions................................................................     36
         SECTION 9.24  No Merger of Estates..................................................................     36
         SECTION 9.25  Suretyship Waivers....................................................................     36
         SECTION 9.26  Beneficiary Statement.................................................................     42
         SECTION 9.27  Request for Notice....................................................................     42
         SECTION 9.28  Release and Reconveyance..............................................................     42

EXHIBIT A  -  LEGAL DESCRIPTION
</TABLE>

                                      iii
<PAGE>

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

      THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (hereinafter, together with any and all amendments, supplements,
modifications or restatements of any kind, referred to as this "Deed of Trust"),
is made as of June 22, 2006, by LAKES KEAN ARGOVITZ RESORTS - CALIFORNIA,
L.L.C., a Delaware limited liability company ("Trustor"), having its principal
place of business at c/o Lakes Entertainment, Inc., 130 Cheshire Lane, Suite
101, Minnetonka, Minnesota 55309, Attention: Damon E. Schramm, Esq., to Fidelity
National Title Insurance Company, a California corporation (including any
successor trustee at the time acting as such hereunder, "Trustee"), for the
benefit of BANK OF AMERICA, N.A., having its principal place of business at 100
N. Tyron Street, Charlotte, North Carolina 28255-0001, Attention: Douglas Jones
(in such capacity, together with its successors and assigns, "Beneficiary"), for
itself and in its capacity of Administrative Agent ("Administrative Agent") for
each of the financial institutions and their respective successors and assigns
which from time to time shall be a "Lender" under the Credit Agreement (as
hereinafter defined).

                                R E C I T A L S:

      WHEREAS, Trustor, a subsidiary of Parent, as hereinafter defined, is the
owner and holder of fee simple title in and to the Land (as hereinafter defined)
described on Exhibit A attached hereto and made a part hereof;

      WHEREAS, on the date hereof, Trustor, Lakes Entertainment, Inc.
("Parent"), Lakes Gaming and Resort, LLC ("Borrower") and the Guarantors (as
defined in the Credit Agreement), entered into that certain Credit Agreement
with Beneficiary, the Lenders party thereto and Banc of America Securities, LLC,
as sole lead arranger and sole book manager (as the same may be amended,
modified or otherwise supplemented and in effect from time to time, the "Credit
Agreement"), pursuant to which the Lenders agreed to extend to the Borrowers
that certain senior secured term loan facility in the aggregate original
principal amount of up to ONE HUNDRED AND FIVE MILLION and 00/100 Dollars
($105,000,000.00) (the "Loan");

      WHEREAS, Trustor will derive direct economic benefit from the Loan;

      WHEREAS, as a condition to Beneficiary executing the Credit Agreement,
Beneficiary is requiring that Trustor grant to Beneficiary, on behalf of the
Lenders, a security interest in and a first deed of trust lien upon the Trust
Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Credit Agreement, this Deed of Trust, and the
other Loan Documents (as hereinafter defined) (except for "Unsecured
Environmental Costs", as defined in Section 7.19 below), and (b) the performance
by Trustor of all terms, covenants, conditions, provisions, agreements and
liabilities contained in the Credit Agreement, this Deed of Trust, and the other
Loan Documents.

      NOW, THEREFORE, in order to comply with the terms and conditions of the
Credit Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Trustor hereby agrees with
Beneficiary as follows:

                                       1
<PAGE>

                                   ARTICLE I

                                   DEFINITIONS

      SECTION 1.01 Terms Defined Above. As used in this Deed of Trust, the terms
defined in the introductory paragraph to this Deed of Trust and in the Recitals
set forth above shall have the meanings respectively assigned to them above.
SECTION 1.02 Definitions. As used herein, the following terms shall have the
following meanings:

      "Applicable UCC" means the Uniform Commercial Code as presently in effect
in the State or Commonwealth where the Trust Property is located.

      "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101, et. seq.), as amended, and any successor statute.

      "Buildings" means any and all buildings, structures, garages, utility
sheds, workrooms, air conditioning towers, open parking areas and other
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

      "Default" has the meaning assigned to such term in the Credit Agreement.

      "Default Rate" has the meaning assigned to such term in the Credit
Agreement.

      "Event of Default" has the meaning assigned to such term in Section 7.01
hereof.

      "Fixtures" means all materials, supplies, equipment, apparatus and other
items now or hereafter acquired by Trustor and incorporated into the Trust
Property so as to constitute fixtures under the laws of the state in which such
items are located.

      "Governmental Authority" has the meaning assigned to such term in the
Credit Agreement.

      "Governmental Requirements" means any and all present and future judicial
decisions, statutes, rulings, rules, regulations, permits, certificates or
ordinances of any Governmental Authority in any way applicable to Trustor or the
Trust Property, including the ownership, use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction thereof.

      "Impositions" means any and all real estate and personal property taxes;
water, gas, sewer, electricity and other utility rates and charges; charges for
any easement, license or agreement maintained for the benefit of the Trust
Property; any and all other taxes, charges and assessments, whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of any kind and
nature whatsoever which at any time prior to or after the execution hereof may
be assessed, levied or imposed upon the Trust Property or the ownership, use,
occupancy, benefit or

                                       2
<PAGE>

enjoyment thereof, together with any interest, costs or penalties that may
become payable in connection therewith.

      "Indemnified Parties" means, with respect to any Person entitled to the
benefit of an indemnity, such Person's officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, attorneys,
accountants and experts. The term "Indemnified Party" means any one of such
Persons.

      "Indemnitees" has the meaning assigned to such term in the Credit
Agreement.

      "Land" means the real property or interest therein described in Exhibit A
attached hereto, and all rights, titles and interests appurtenant thereto.

      "Leases" means any and all leases, master leases, subleases, licenses,
concessions or other agreements (whether written or oral, and whether now or
hereafter in effect) which grant to third Persons a possessory interest in and
to, or the right to use, all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty, together with all security and other deposits
made in connection therewith and any guarantee of the obligations of the
landlord or the tenant thereunder.

      "License" has the meaning assigned to such term in Section 3.02(a) hereof.

      "Lien" has the meaning assigned to such term in the Credit Agreement.

      "Loan Documents" means, collectively, the Credit Agreement, this Deed of
Trust, and all other instruments, agreements and other documents executed and
delivered pursuant hereto or thereto or otherwise included in the definition of
the term "Loan Documents" in the Credit Agreement.

      "Losses" means all obligations, damages, claims, causes of action, costs,
fines, fees, charges, penalties, deficiencies, losses, diminutions in value,
expenses (including court costs, fees and expenses of attorneys, accountants,
consultants and other experts) and other liabilities, and, with respect to any
indemnity, includes all attorneys' fees, costs and expenses in connection with
the enforcement and collection of such indemnity. The term "Loss" means any one
of such Losses.

      "Trust Property" means all of Trustor's right, title, interest and estate,
whether now owned or hereafter acquired, in and to the Land, the Buildings, the
Fixtures and the Personalty, together with:

      (I)   all rights, privileges, tenements, hereditaments, rights-of-way,
            easements, air rights, development rights or credits, zoning rights,
            appendages and appurtenances in anywise appertaining thereto, and
            all right, title and interest of Trustor in and to any streets,
            ways, alleys, strips or gores of land adjoining the Land or any part
            thereof, and all right, title and interest of Trustor, if any, in
            and to all rights, royalties and profits with respect to all
            minerals, coal, oil, gas and other substances of any kind or
            character on or underlying the Land, together with all right, title
            and interest of Trustor

                                       3
<PAGE>

            in and to all water and water rights (whether riparian,
            appropriative or otherwise and whether or not appurtenant);

      (II)  all rights of Trustor (but not its obligations) under any contracts
            and agreements, including, without limitation, construction
            contracts and architectural agreements, relating to the Land, the
            Buildings, the Fixtures or the Personalty;

      (III) all of Trustor's right, title and interest in and to all permits,
            licenses, franchises, certificates, authorizations, consents,
            approvals and other rights and privileges (each, a "Permit")
            obtained in connection with the Land, the Buildings, the Fixtures or
            the Personalty or the use or operation thereof;

      (IV)  all of Trustor's right, title and interest in and to all plans and
            specifications, designs, schematics, drawings and other information,
            materials and matters heretofore or hereafter prepared relating to
            the Land, the Buildings, the Fixtures or the Personalty;

      (V)   all of Trustor's right, title and interest in and to all proceeds
            arising from or by virtue of the sale, lease or other disposition of
            the Land, the Buildings, the Fixtures or the Personalty or any part
            thereof or any interest therein or from the operation thereof;

      (VI)  all of Trustor's right, title and interest in and to all Leases now
            or hereafter in effect and all Rents, royalties, bonuses, issues,
            profits, revenues or other benefits arising from or attributable to
            the Land, the Buildings, the Fixtures or the Personalty;

      (VII) all of Trustor's right, title and interest in and to all
            betterments, additions, alterations, appurtenances, substitutions,
            replacements and revisions to the Land, the Buildings, the Fixtures
            or the Personalty and all reversions and remainders relating
            thereto;

      (VIII) all of Trustor's right, title and interest in and to any awards,
            remuneration, settlements or compensation now or hereafter made by
            any Governmental Authority pertaining to the Land, the Buildings,
            the Fixtures or the Personalty, including those arising from or
            attributable to any vacation of, or change of grade in, any streets
            affecting the Land or the Buildings;

      (IX)  all of Trustor's right, title and interest in and to any and all
            other security and collateral of any nature whatsoever, whether now
            or hereafter given, for the repayment, performance and discharge of
            the Obligations (as hereinafter defined);

      (X)   all of Trustor's right, title and interest in and to all awards,
            payments and proceeds of conversion, whether voluntary or
            involuntary, of any of the Land, the Buildings, the Fixtures, the
            Personalty or any of the property

                                       4
<PAGE>

            and rights described in the foregoing clauses (i) through (ix),
            including without limitation, all insurance, condemnation and tort
            claims, refunds of real estate taxes and assessments, rent claims
            and other obligations dischargeable in cash or cash equivalents; and

      (XI)  all other property and rights of Trustor of every kind and character
            relating to and/or used or to be used in connection with the
            foregoing, and all proceeds and products of any of the foregoing.

      EXCLUDING, HOWEVER, all motor vehicles and forklifts now or hereafter
located on the Land and only to the extent contemplated by the Credit Agreement.

As used in this Deed of Trust, the term "Trust Property" shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

      "Obligations" has the meaning assigned to such term in the Credit
Agreement but shall specifically not include "Unsecured Environmental Costs" as
defined in Section 7.19 below.

      "Permitted Liens" has the meaning assigned to such term in the Credit
Agreement.

      "Person" has the meaning assigned to such term in the Credit Agreement.

      "Personalty" means all of Trustor's right, title and interest in and to
all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private, including all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs, and all other
personal property (other than Fixtures) of any kind or character), and including
such property that is now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are or may be used in or related to
the planning, development, financing or operation of the Trust Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

      "Principal Balance" has the meaning assigned to such term in Section 7.02
hereof.

      "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Trustor acquires title
thereto), and other benefits paid or payable by parties (other than Trustor) for
using, leasing, licensing, possessing, operating from, residing in, benefiting
from or otherwise enjoying all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty.

      SECTION 1.03 Terminology. Except as otherwise provided herein:

                                       5
<PAGE>

      (a) references to Articles and Sections shall mean the corresponding
Article or Section of this Deed of Trust;

      (b) words used herein in the singular, where the context so permits, shall
be deemed to include the plural and vice versa, and the definitions of words
used in the singular herein shall apply to such words when used in the plural
where the context so permits and vice versa;

      (c) the words "herein," "hereof," "hereunder," and other words of similar
import when used in this Deed of Trust refer to this Deed of Trust as a whole,
and not to any particular Article or Section; and

      (d) the words "includes" or "including" mean includes or including,
without limitation.

      SECTION 1.04 Other Defined Terms. Any capitalized term used in this Deed
of Trust and not otherwise defined herein shall have the meaning assigned to
such term in the Credit Agreement.

                                   ARTICLE II

                       GRANT OF LIEN AND SECURITY INTEREST

      SECTION 2.01 Grant of Lien. To secure the full and timely payment,
performance and discharge of all of the Obligations, Trustor hereby irrevocably
GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS and CONVEYS unto Trustee and
Trustee's successors, assigns and substitutes in trust hereunder, WITH POWER OF
SALE and right of entry and possession, for the use and benefit of Beneficiary,
in its capacity as Administrative Agent for the Lenders, the real and personal
property, right, title, interest and estate in, to and under the Trust Property,
subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the Trust Property
unto Trustee and Trustee's successors, assigns and substitutes in trust
hereunder, subject to the terms and conditions of this Deed of Trust, with POWER
OF SALE, forever, and Trustor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto
Beneficiary against every Person whomsoever lawfully claiming or to claim the
same or any part, subject, however, to the Permitted Liens; provided, however,
that if Trustor shall pay (or cause to be paid) and perform and discharge (or
cause to be performed and discharged) all of the Obligations on or before the
date on which the same are to be paid, performed and discharged, then the Liens
estates and rights granted by this Deed of Trust shall cease and terminate.

      SECTION 2.02 Grant of Security Interest. This Deed of Trust shall also
constitute and serve as a "security agreement" within the meaning of, and shall
constitute a first and prior security interest under, the Applicable UCC with
respect to the Personalty and the Fixtures. To this end, Trustor by these
presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto
Beneficiary, as Administrative Agent for the Lenders pursuant to the Credit
Agreement, a security interest in all of Trustor's right, title and interest in,
to and under the Personalty and the Fixtures, to secure the full and timely
payment, performance

                                       6
<PAGE>

and discharge of the Obligations. Trustor hereby consents to Beneficiary filing
and recording financing statements (and continuations thereof) with the
appropriate filing and recording offices in order to perfect (and maintain the
perfection of) the security interests granted herein.

      SECTION 2.03 No Obligation of Beneficiary. The assignment and security
interest herein granted to Beneficiary shall not be deemed or construed to
constitute Beneficiary as a mortgagee-in-possession of the Trust Property,
obligate Beneficiary to lease the Trust Property or attempt to do the same, or
to take any action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever.

      SECTION 2.04 Fixture Filing. Without in any manner limiting the generality
of any of the other provisions of this Deed of Trust: (a) some portions of the
goods described or to which reference is made herein are or are to become
fixtures on the Land described or to which reference is made herein or on
Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is to be filed
of record in the real estate records as a financing statement and shall
constitute a "fixture filing" for purposes of the Applicable UCC; and (c)
Trustor is the record owner of the real estate or interests in the real estate
constituting the Trust Property hereunder. Information concerning the security
interest herein granted may be obtained at the addresses set forth on the first
page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor
(Trustor) are set forth on the first page hereof. In that regard, the following
information is provided:

      Name of Debtor:   Lakes Kean Argovitz Resorts - California, LLC

      Type of Organization:   limited liability company

      State: Delaware

      FEIN:  41-1941310

      Organizational ID Number: 199930610016

      SECTION 2.05 Future Advances. It is the intention of Trustor and
Beneficiary that this Deed of Trust shall secure future advances and
readavances, and the lien and security interest created by this Deed of Trust
shall attach upon execution and have priority from the time of recording as to
all advances, whether obligatory or discretionary, until this Deed of Trust is
released of record.

      SECTION 2.06 Intentionally Omitted

                                   ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

      SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Credit
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Trustor has presently, absolutely and irrevocably GRANTED, ASSIGNED,
TRANSFERRED and CONVEYED, and by these presents does presently, absolutely and
irrevocably GRANT, ASSIGN, TRANSFER

                                       7
<PAGE>

and CONVEY, unto Beneficiary, as Administrative Agent for the Lenders pursuant
to the Credit Agreement, as security for the payment, performance and discharge
of the Obligations, all of the Leases and Rents (if any), subject only to the
Permitted Liens applicable thereto and the License (as hereinafter defined);
provided, however, that if Trustor shall pay (or cause to be paid) and perform
and discharge (or cause to be performed and discharged) all of the Obligations
on or before the date on which the same are to be paid, performed and
discharged, then this assignment shall terminate, and all rights, titles and
interests conveyed pursuant to this assignment shall become vested in Trustor.

      SECTION 3.02 Revocable License.

      (a) Beneficiary hereby grants to Trustor a revocable license (the
"License"), nonexclusive with the rights of Beneficiary reserved in Sections
3.02(b), 3.04, and 3.05 hereof, to exercise and enjoy all incidences of the
status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor. Trustor hereby agrees to receive all Rents and hold the same as a
trust fund to be applied, and to apply the Rents so collected, except to the
extent otherwise provided in the Credit Agreement, first to the payment,
performance and discharge of the Obligations and then to the payment of the
Impositions. Thereafter, Trustor may use the balance of the Rents collected in
any manner not inconsistent with the Loan Documents.

      (b) If an Event of Default shall occur and be continuing, the License
shall immediately and automatically terminate without the necessity of any
action by Beneficiary or any other Person, and Beneficiary shall have the right
in such event to exercise the rights and remedies provided under this Deed of
Trust or otherwise available to Beneficiary under applicable law. Upon demand by
Beneficiary at any time that an Event of Default shall have occurred, Trustor
shall promptly pay to Beneficiary all security deposits under the Leases and all
Rents allocable to any period commencing from and after the occurrence of such
Event of Default. Any Rents received hereunder by Beneficiary shall be applied
and disbursed to the payment, performance and discharge of the Obligations,
subject to the terms of the Credit Agreement; provided, however, that, subject
to any applicable requirement of law, any security deposits actually received by
Beneficiary shall be held, applied and disbursed as provided in the applicable
Leases.

      SECTION 3.03 Enforcement of Leases. Trustor shall (a) submit any and all
proposed Leases (including subleases provided to Trustor for approval) to
Beneficiary for approval prior to the execution thereof or consent thereto, as
applicable; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) maintain each Lease in full force and effect
during the term thereof; (d) provide Beneficiary with prompt notice of each
notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of default received from (or relating to) a tenant
under a Lease, and otherwise promptly reasonably indicate that a material
default or termination of a Lease may occur (other than by reason of the
expiration of the term of such Lease); (e) appear in and defend any action or
proceeding in any manner connected with any of the Leases; (f) deliver to
Beneficiary true and complete copies of all Leases; and (g) deliver to
Beneficiary all such further information, and execute and deliver to

                                       8
<PAGE>

Beneficiary such further assurances and assignments, with respect to the Leases
as Beneficiary may from time to time reasonably request. Without Beneficiary's
prior written consent, Trustor shall not (i) do or knowingly permit to be done
anything to materially impair the value of any of the Leases; (ii) except for
security or similar deposits, collect any of the Rent more than one (1) month in
advance of the time when the same becomes due under the terms of any Lease;
(iii) discount any future accruing Rents; (iv) amend, modify, accept the
surrender of or terminate any of the Leases; or (v) assign or grant a security
interest in or to any of the Leases or Rents.

      SECTION 3.04 Direction to Tenants. Upon the occurrence and during the
continuance of an Event of Default, Trustor hereby authorizes and directs, and
shall, at the direction of Beneficiary, further authorize and direct, in
writing, the tenant under each Lease to pay directly to, or as directed by,
Beneficiary all Rents accruing or due under its Lease without proof to the
tenant of the occurrence and continuance of such Event of Default. Trustor
hereby authorizes the tenant under each Lease to rely upon and comply with any
notice or demand from Beneficiary for payment of Rents to Beneficiary, and
Trustor shall have no claim against any tenant for Rents paid by such tenant to
Beneficiary pursuant to such notice or demand. All Rents actually collected by
Beneficiary pursuant to this Section 3.04 shall be applied in accordance with
the Credit Agreement.

      SECTION 3.05 Appointment of Attorney-in-Fact.

      (a) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to,
upon the occurrence and during the continuance of an Event of Default, demand,
sue for, attach, levy, recover and receive any of the Rents and any premium or
penalty payable upon the exercise by any third Person under any Lease of a
privilege of cancellation originally provided in such Lease and to give proper
receipts, releases and acquittances therefor and, after deducting expenses of
collection, to apply the net proceeds as provided in the Credit Agreement.
Trustor hereby authorizes and directs any such third Person to deliver such
payment to Beneficiary in accordance with this Article III, and Trustor hereby
ratifies and confirms all that its said attorney-in-fact, the Beneficiary, shall
do or cause to be done in accordance with this Deed of Trust and by virtue of
the powers granted hereby. The foregoing appointment is irrevocable and
continuing, and such rights, powers and privileges shall be exclusive in
Beneficiary, and its successors and assigns, so long as any part of the
Obligations remains unpaid or unperformed and undischarged.

      (b) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid

                                       9
<PAGE>

or unperformed and undischarged. Trustor hereby represents and warrants that it
has not at any time prior to the date hereof exercised (or appointed any Person
as attorney-in-fact to exercise) any of the rights described in this Section
3.05(b), and Trustor hereby covenants not to exercise (or appoint any other
Person as attorney-in-fact to exercise) any such right, nor (except at
Beneficiary's written request) to subordinate any such Lease to the lien of this
Deed of Trust or to any other mortgage, deed of trust, assignment or security
agreement or to any ground lease or surface lease.

      SECTION 3.06 No Liability of Beneficiary. Neither the acceptance hereof
nor the exercise of the rights and remedies hereunder nor any other action on
the part of Beneficiary or any Person exercising the rights of Beneficiary or
any Lender hereunder shall be construed to: (a) be an assumption by Beneficiary
or any such Person or to otherwise make Beneficiary or such Person liable or
responsible for the performance of any of the obligations of Trustor under or
with respect to the Leases or for any Rent, security deposit or other amount
delivered to Trustor, provided that Beneficiary or any such Person exercising
the rights of Beneficiary shall be accountable for any Rents, security deposits
or other amounts actually received by Beneficiary or such Person, as the case
may be; or (b) obligate Beneficiary or any such Person to take any action under
or with respect to the Leases or with respect to the Trust Property, to incur
any expense or perform or discharge any duty or obligation under or with respect
to the Leases or with respect to the Trust Property, to appear in or defend any
action or proceeding relating to the Leases or the Trust Property, to constitute
Beneficiary as a mortgagee-in-possession (unless Beneficiary actually enters and
takes possession of the Trust Property), or to be liable in any way for any
injury or damage to Persons or property sustained by any Person in or about the
Trust Property, other than to the extent caused by the willful misconduct or
gross negligence of Beneficiary or any Person exercising the rights of
Beneficiary hereunder.

      SECTION 3.07 Trustor's Indemnities. Trustor hereby agrees to protect,
indemnify and hold harmless Beneficiary and each of the other Indemnitees and
each Indemnified Party related to Beneficiary or such other Indemnitees from and
against any and all Losses which Beneficiary or any such other Indemnitees or
Indemnified Party may incur under or by reason of this Article III, or for any
action taken by Beneficiary or any such other Lender or Indemnified Party
hereunder, or by reason or in defense of any and all claims and demands
whatsoever which may be asserted against Beneficiary or any such other
Indemnitees or Indemnified Party arising out of the Leases, including, without
limitation, any claim by any third Person for credit on account of Rents paid to
and received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Beneficiary
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Beneficiary or any such
other Indemnitees or Indemnified Party. In the event that Beneficiary or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys' fees, with interest thereon at the Default Rate, shall be
payable by Trustor to Beneficiary within ten (10) days after demand therefor,
and shall be secured hereby and by all other security for the payment and
performance of the Obligations, including, without limitation, the lien and
security interest of this Deed of Trust. The liabilities of Trustor as set forth
in this Section 3.07 shall survive the termination of this Deed of Trust and the
repayment of the Obligations.

                                       10
<PAGE>

            SECTION 3.08 No Modification of Trustor's Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Trustor to
make prompt payment of all Obligations as and when the same become due,
regardless of whether the Rents described in this Article III are sufficient to
pay the Obligations, and the security provided to Beneficiary pursuant to this
Article III shall be cumulative of all other security of any and every character
now or hereafter existing to secure payment of the Obligations.

            SECTION 3.09 Rights in Bankruptcy. Upon execution of this Deed of
Trust, Beneficiary, and not Trustor, shall be the creditor of any Tenant in
respect of assignments for the benefit of creditors and bankruptcy,
reorganization, insolvency, dissolution or receivership proceedings affecting
any such Tenant; provided, however, that Trustor shall be the party obligated to
make timely filings of claims in such proceedings or to otherwise pursue
creditor's rights therein. Notwithstanding the foregoing, Beneficiary shall have
the right, but not the obligation, to file such claims instead of Trustor and if
Beneficiary does file a claim, Trustor agrees that Beneficiary (a) is entitled
to all distributions on such claim to the exclusion of Trustor and (b) has the
exclusive right to vote such claim and otherwise to participate in the
administration of the estate in connection with such claim. Beneficiary shall
have the option to apply any monies received by it as such creditor to any of
the obligations of Trustor under the Loan Documents the order set forth in the
Loan Documents. If a petition is filed under the Bankruptcy Code by or against
Trustor, and Trustor, as landlord under any Lease, decides to reject such Lease
pursuant to Section 365(a) of the Bankruptcy Code, then Trustor shall give
Beneficiary at least ten (10) days' prior written notice of the date when
Trustor shall apply to the bankruptcy court for authority to reject the Lease.
Beneficiary may, but shall not be obligated to, send Trustor within such ten-day
period a written notice stating that (a) Beneficiary demands that Trustor assume
and assign the Lease to Beneficiary pursuant to Section 365 of the Bankruptcy
Code, and (b) Beneficiary covenants to cure or provide adequate assurance of
future performance under the Lease. If Beneficiary sends such notice, Trustor
shall not reject the Lease provided Beneficiary complies with clause (b) of the
preceding sentence.

            SECTION 3.10 Right to Enforce Under California Civil Code Section
2938. Without limiting any other rights or remedies of Beneficiary set forth in
this Deed of Trust or under any of the other Loan Documents to which Trustor is
a party, or available at law or in equity, at any time upon or following the
occurrence of any Event of Default, Beneficiary shall have the right to enforce
all of the rights and remedies of an Beneficiary under Section 2938 of the
California Civil Code ("Section 2938"). In the event that Beneficiary shall
elect to enforce this Deed of Trust in accordance with Section 2938, the
following procedures shall apply, as applicable:

                  (i) Beneficiary may send a demand notice in the form
      prescribed by Section 2938 to, in the case of enforcement under Section
      2938(c)(3), one or more of the tenants of the Trust Property, with a copy
      to Trustor and any other Beneficiary under a recorded assignment of
      leases, rents, issues and profits with respect to the Trust Property, or,
      in the case of enforcement under Section 2938(c)(4), to Trustor with a
      copy to any such other Beneficiarys in accordance with the procedures set
      forth therein. Without limiting Beneficiary's rights to any amounts
      received by Trustor after an Event of Default, Trustor shall immediately
      turn over to Beneficiary any Rents received by Trustor from any tenant of
      the Trust Property from and after Beneficiary's enforcement of this

                                       11
<PAGE>

      assignment under either of such Sections 2938(c)(3) or (4), it being
      understood that Trustor shall be deemed to hold such amounts as trustee
      for Beneficiary until such amounts have been paid to Beneficiary. In
      addition, Trustor shall also cause any collection agent for Trustor or any
      other person who has collected for Trustor's benefit relating to the
      period from and after Beneficiary's enforcement of this assignment under
      either of such Sections 2938(c)(3) or (4), to turn such Rents over to
      Beneficiary.

                  (ii) Notwithstanding anything to the contrary contained in
      this Deed of Trust or any other Loan Document, if Beneficiary shall
      proceed to enforce this assignment by means other than the appointment of
      a receiver and consequently receives Rents as a result thereof, and
      Beneficiary receives written demand from Trustor (or any other party
      entitled under law to make demand on Beneficiary) to pay the reasonable
      costs of protecting and preserving the Trust Property, Beneficiary may
      elect either to pay (either directly to the party to whom owed, or by
      joint check payable to Trustor and such party) or authorize Trustor to
      pay, such costs (such payments being referred to herein as "Protective
      Payments"), conditioned upon Trustor furnishing to Beneficiary all
      information (such as invoices, bills, contracts, or purchase orders)
      necessary in order for Beneficiary to identify the party to whom payment
      is owed or the work, service or item for which payment is requested and to
      establish that such Protective Payments are required to be paid or
      authorized under this Section. If Trustor is authorized to pay any
      Protective Payments under this Section, Beneficiary reserves the right to
      deposit the amounts necessary to pay such Protective Payments into a
      non-interest bearing checking account, in which Trustor shall have granted
      to Beneficiary a perfected, first priority security interest, from which
      Trustor shall be obligated to draw the funds necessary to pay such
      Protective Payments. In the event that Beneficiary agrees or is required
      under any circumstances to pay or authorize the payment of any Protective
      Payments consisting of costs of improvement of the Trust Property or any
      portion thereof (or any other costs the non-payment of which would entitle
      the payee to enforce mechanic's or materialman's liens or similar rights),
      Beneficiary shall be authorized, before paying or authorizing the payment
      of any such payments, to require compliance with standard construction
      loan disbursement conditions with respect to such costs, including,
      without limitation, the receipt of unconditional mechanics' lien waivers
      with respect to the work for which such costs are to be paid.

                  (iii) In no event shall Beneficiary be obligated to pay or
      authorize the payment of Protective Payments in excess of any Rents
      actually received by Beneficiary as a result of the enforcement of Section
      (i) of this Section.

                  (iv) Nothing contained in this Section shall limit the rights
      of Beneficiary under any other provision of Deed of Trust.

                  (v) Nothing contained in this Section shall limit either (x)
      Beneficiary's right to cease at any time any further enforcement of this
      Assignment under Section 2938 by sending written notice of the
      cancellation thereof to each party to whom a demand notice was sent, or
      (y) Beneficiary's right to seek the appointment of a receiver, either of
      which if enforced by Beneficiary, shall terminate Beneficiary's
      obligations under Section (i) of this Section.

                                       12
<PAGE>

                  (vi) In no event shall any enforcement of Beneficiary's rights
      under this Section, including, without limitation, the payment or
      authorization of payment of any Protective Payments, make Beneficiary a
      "mortgagee-in-possession" or limit, waive, or otherwise derogate any of
      Beneficiary's other rights and remedies available to it under the Loan
      Documents to which Trustor is a party or at law. In no event shall any
      exercise of lights by the Beneficiary under this Section, including,
      without limitation, the payment or authorization of payment of any
      Protective Payments, be construed to require the Beneficiary to operate or
      manage the Trust Property or be construed as an assumption by Beneficiary
      of any obligation to operate or manage the Trust Property, and all
      liabilities and obligations in relation to the operation and management of
      the Trust Property shall remain exclusively that of the Trustor.

            (B) Any Rents received by Beneficiary as a result of any such
enforcement measures shall be applied as provided in this Deed of Trust.

            (C) Without in any way limiting Trustor's other indemnification
obligations set forth in this Assignment and in any of the Loan Documents to
which Trustor is a party, Trustor shall indemnify, defend, protect, and hold
harmless Beneficiary, and its successors and assigns, from and against any and
all losses, costs, expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses), damages, liabilities, or claims asserted
against or suffered by Beneficiary (i) arising from any Protective Payments
made, or authorized to be made, by Beneficiary in good faith, and (ii) arising
from any work performed or goods or services furnished in connection with the
ownership or operation of the Trust Property at any time during which
Beneficiary shall be enforcing its rights under this Section.

            (D) Without limiting the restrictions on assignment set forth in
this Assignment and any of the other Loan Documents to which Trustor is a party,
each Beneficiary of any interest in the Rents shall acquire its interest in the
Rents subject to the rights of the Beneficiary set forth in this Assignment, and
shall acquire no greater rights with respect to the payment of Protective
Payments than the rights of Trustor as set forth in this Section.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary (but to
the extent any representation or warranty in this Article IV is substantively
the same as a representation or warranty contained in Article V of the Credit
Agreement and such representation or warranty is qualified by a materiality or
other qualifier in the Credit Agreement, such representation or warranty herein
shall be subject to the same materiality or other qualifier as in Article V of
the Credit Agreement) as follows:

            SECTION 4.01 Title to Trust Property and Lien of this Deed of Trust.
Trustor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good,

                                       13
<PAGE>

marketable and indefeasible title to the Fixtures, the Personalty and the other
Trust Property. The Trust Property is free and clear of any and all Liens,
charges, encumbrances, security interests and adverse claims whatsoever, except
for (i) all Liens, charges, encumbrances, security interests and adverse claims
specifically identified as exceptions on Schedule B of the policy of title
insurance accepted by Beneficiary in connection herewith or (ii) those Liens set
forth in Section 5.08 of the Credit Agreement.

            SECTION 4.02 Taxes and Other Payments. Trustor has filed all
federal, state, commonwealth, county, municipal and city income and other
material tax returns required to have been filed by it and has paid all taxes
and other Impositions which have become due pursuant to such returns or pursuant
to any assessments or charges received by it, and Trustor does not know of any
basis for any additional assessment or charge in respect of any such taxes or
other Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Trust Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

            SECTION 4.03 Power to Create Lien and Security. Trustor has full
power and lawful authority to grant, bargain, sell, assign, transfer, mortgage
and convey a Lien and security interest in all of the Trust Property in the
manner and form herein provided and without obtaining the authorization,
approval, consent or waiver of any grantor, lessor, sublessor, Governmental
Authority or other Person whomsoever.

            SECTION 4.04 Loan and Credit Agreements. Trustor has received a copy
of and is fully familiar with the terms and provisions of the Credit Agreement
and the other Loan Documents. All representations and warranties made by Trustor
in the Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby made by Trustor as to itself and the Trust Property as
though such representations and warranties were set forth at length herein as
the representations and warranties of Trustor.

            SECTION 4.05 Compliance with Laws. All of the improvements on the
Land (i) comply with all material requirements of all applicable laws and
ordinances with respect to zoning, subdivision, construction, building and land
use, including, without limitation, requirements with respect to parking, access
and certificates of occupancy (and similar certificates), and (ii) comply with,
and shall remain in compliance with, applicable health, fire and building codes.
All of the Buildings lie wholly within the boundaries and building restriction
lines of the Land. No improvements on adjoining properties encroach upon the
Land, and no easements or other encumbrances upon the Land encroach upon or
under any of the Buildings or any portion of the Trust Property. All of the
Buildings and the use of the Trust Property materially comply with, and shall
remain in material compliance with, all applicable statutes, rules, regulations
and private covenants now or hereafter relating to the ownership, construction,
use or operation of the Trust Property, including all applicable statutes, rules
and regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use. All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Trust Property have been obtained and

                                       14
<PAGE>

are in full force and effect. Trustor has not received any notice of, or other
communication with respect to, an alleged violation with respect to any of the
foregoing.

            SECTION 4.06 No Condemnation. No part of any property subject to
this Deed of Trust has been taken in condemnation or other like proceeding nor
is any proceeding pending, threatened or known to be contemplated for the
partial or total condemnation or taking of the Trust Property.

            SECTION 4.07 Flood Zone. The Trust Property is not located in an
area identified by the Federal Emergency Management Agency ("FEMA") as having
special flood hazards or if the Land or any part thereof is identified by the
Federal Emergency Management Agency as an area having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone V),
then Trustor has obtained the insurance required under Section 5.04(a)(v) of
this Deed of Trust.

            SECTION 4.08 Additional Environmental Representation. The Trust
Property has not been designated as a "hazardous waste property" and to Tenant's
knowledge, the Trust Property has not been designated as a "border zone
property" pursuant to Section 25220, et. seq. of the California Health and
Safety Code.

                                   ARTICLE V

                              AFFIRMATIVE COVENANTS

            Trustor hereby unconditionally covenants and agrees with Beneficiary
as follows:

            SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Credit Agreement, Trustor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Trust Property, or any portion
thereof or interest therein, with any other Lien or security interest of any
nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Deed of Trust, and,
if any such Lien or security interest is asserted against the Trust Property,
Trustor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Trustor in
good faith and in accordance with the terms of the Credit Agreement) or take
such other action as may be necessary to cause the same to be released of record
and otherwise, and (b) within ten (10) days after the date on which Mortgag
receives notice of such Lien or security interest. Such notice shall specify who
is asserting such Lien or security interest and shall detail the origin and
nature of the underlying claim giving rise to such asserted Lien or security
interest.

            SECTION 5.02 Payment of Impositions. Trustor shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however, that Trustor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Trust Property, pay the Impositions in
installments. Notwithstanding the foregoing, Trustor may in

                                       15
<PAGE>

good faith, by appropriate proceedings and upon notice to Beneficiary,
contest the validity, applicability or amount of any asserted tax or assessment,
subject to any more restrictive provisions applicable to any such contest
contained in the Credit Agreement and (without limiting the foregoing) so long
as (a) such contest is diligently pursued, (b) Beneficiary determines, in its
opinion reasonably exercised, that such contest suspends the obligation to pay
the tax and that nonpayment of such tax or assessment will not result in the
sale, loss, forfeiture or diminution of the Trust Property or any part thereof
or any interest of Beneficiary therein, and (c) unless expressly provided to the
contrary in the Credit Agreement, prior to the earlier of the commencement of
such contest or the delinquency date of the asserted tax or assessment, Trustor
deposits with Beneficiary an amount determined by Beneficiary to be adequate to
cover the payment of such tax or assessment and a reasonable additional sum to
cover possible interest, costs and penalties; provided, however, that Trustor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment becomes final (and, subject to Beneficiary's rights and
remedies during an Event of Default, Beneficiary shall make any sum deposited
pursuant to clause (c) above available for such payment); and provided, further,
that in any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order
is issued under which the Trust Property may be sold, lost or forfeited.

            SECTION 5.03 Repair. Trustor shall keep the Trust Property in good
order and condition (reasonable wear and tear excepted) and shall make all
repairs, replacements and improvements thereof and thereto, interior and
exterior, structural and non-structural, ordinary and extraordinary, which are
necessary to keep the same in such order and condition. Trustor shall also use
reasonable efforts to prevent any act or occurrence which might impair the value
or usefulness of the Trust Property for its intended usage.

            SECTION 5.04 Insurance and Application of Insurance Proceeds.

            (A) During the term of this Deed of Trust, Trustor, at its sole cost
and expense, shall maintain, or cause to be maintained the following policies of
insurance, with respect to the Trust Property:

                  (i) If applicable or appropriate Casualty (property) insurance
      against loss or damage by fire, lightning and such other perils as are
      included in a standard "special form" policy (formerly known as an
      "all-risk" endorsement policy), and against loss or damage by all other
      risks and hazards covered by a standard extended coverage insurance policy
      including, without limitation, riot and civil commotion, terrorist
      actions, vandalism, malicious mischief, burglary and theft, in an amount
      equal to the greater of (A) the then full replacement cost of the
      improvements, without deduction for physical depreciation and (B) such
      amount that the insurer would not deem Trustor a co-insurer under said
      policies. The policies of insurance required under this Section 5.04 shall
      contain a "Replacement Cost" endorsement with a waiver of depreciation and
      an "Agreed Amount" or "No Coinsurance" endorsement and shall otherwise
      comply with the Credit Agreement.

                                       16
<PAGE>

                  (ii) Commercial General Liability insurance to the extent
      required under the Credit Agreement, including a broad form comprehensive
      general liability endorsement and coverages for broad form property
      damage, contractual damages and personal injuries (including death
      resulting therefrom) and containing minimum limits per occurrence of
      $1,000,000.00 and $2,000,000.00 in the aggregate for any policy year with
      no deductible.

                  (iii) Rental loss and/or business interruption insurance in an
      amount equal to the estimated gross revenues from the operations of the
      Trust Property for a period of twelve (12) months, if applicable or
      appropriate.

                  (iv) Insurance against loss or damage from (A) leakage of
      sprinkler systems and (B) explosion of steam boilers, air conditioning
      equipment, high pressure piping, machinery and equipment, pressure vessels
      or similar apparatus now or hereafter installed on the improvements
      (without exclusion for explosions), if applicable or appropriate.

                  (v) Flood insurance if all or any portion of the Trust
      Property is located in an area now or hereafter designated by the Federal
      Emergency Management Agency as an area having special flood hazards
      (including, without limitation, those areas designated as Zone A or Zone
      V), and in which flood insurance has been made available under the U.S.
      National Flood Insurance Program, in an amount equal to the full
      replacement cost of the Buildings, Fixtures and Personalty now or
      hereafter located on the Trust Property or such other amount as may be
      agreed to by Beneficiary in writing, if applicable or appropriate.

                  (vi) If the Trust Property is or ever becomes non-conforming
      with respect to zoning, ordinance or law coverage to compensate for loss
      of value or property resulting from operation of law and the cost of
      demolition and the increased cost of construction in such amounts as may
      be requested by Beneficiary.

                  (vii) Any other insurance with respect to the Trust Property
      that may be required under the Credit Agreement.

                  (viii) Such other insurance as may from time to time be
      reasonably required by Beneficiary in order to protect its interests.

            All such insurance policies with respect to the Trust Property shall
contain a standard, non-contributory mortgagee clause naming Beneficiary, and
its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Trustor shall not take out separate insurance
with respect to the Trust Property concurrent in form or contributing in the
event of loss with that required to be maintained hereunder or under the Credit
Agreement unless Beneficiary is named as an additional insured thereon under a
standard mortgagee clause acceptable to Beneficiary and each such policy is
otherwise in form and substance acceptable to Beneficiary.

                                       17
<PAGE>

            (b) In the event of the foreclosure of this Deed of Trust, or in the
event of any transfer of title to the Trust Property, or any part thereof, by
foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Trust Property, or such part thereof, shall succeed to all of
Trustor's rights with respect to the Trust Property, including any rights to
unexpired, unearned or returnable insurance premiums, subject to limitations on
the assignment of blanket policies, but limited to such rights as relate to the
Trust Property or such part thereof. If Beneficiary acquires title to the Trust
Property, or any part thereof, in any manner, Beneficiary shall thereupon (as
between Trustor and Beneficiary) become the sole and absolute owner of the
insurance policies with respect to the Trust Property, and all insurance
proceeds payable thereunder with respect to the Trust Property, with the sole
right to collect and retain all unearned or returnable premiums thereon with
respect to the Trust Property, or such part thereof, if any.

            (c) If any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property shall occur, Trustor shall file and
prosecute its claim or claims for any insurance proceeds in good faith and with
due diligence and cause the same to be collected and paid over to Beneficiary,
and Trustor hereby irrevocably authorizes and empowers Beneficiary, in the name
of Trustor or otherwise, to collect and receipt for any such insurance proceeds
and to adjust any insurance claims and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Trustor shall, upon demand of Beneficiary, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such insurance proceeds to Beneficiary, free and clear
of any Liens whatsoever. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact for each such purpose (which appointment is coupled
with an interest) and authorizes any Person to act upon the foregoing
appointment.

            (d) Following any damage to, destruction or loss of or other
casualty with respect to any of the Trust Property, Beneficiary shall apply the
entire amount of any insurance proceeds in accordance with the provisions of the
Credit Agreement or, if there is no provision contained in the Credit Agreement
governing how the same are to be applied, then Beneficiary shall apply the
entire amount thereof to the payment of the Obligations, whether or not then due
and payable, in such manner and order as Beneficiary may elect. In all events,
unless expressly provided to the contrary in the Credit Agreement, Trustor
hereby covenants and agrees to promptly commence and to diligently prosecute the
restoration of the Trust Property upon the occurrence of any casualty loss
affecting the Trust Property, without regard to the availability or adequacy of
insurance proceeds, but in all events in a manner approved by Beneficiary.
Notwithstanding any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Credit Agreement
and the other Loan Documents until the Obligations have been paid in full. If
the Trust Property is sold, through foreclosure or otherwise, prior to the
receipt by Beneficiary of such insurance proceeds, Beneficiary shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such insurance proceeds, or a portion
thereof sufficient to pay the then unpaid Obligations, whichever is less.

            SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

                                       18
<PAGE>

            (a) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Trust Property, or any portion thereof or interest therein, Trustor shall
notify Beneficiary of such proceeding. Trustor shall then, if requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the Credit
Agreement, cause any awards or settlements to be paid over to Beneficiary for
disposition pursuant to the terms of this Deed of Trust. Beneficiary shall be
entitled to participate in any such proceeding, at Trustor's sole cost and
expense, and Trustor shall deliver or cause to be delivered to Beneficiary such
instruments as may be requested by Beneficiary from time to time to permit such
participation.

            (b) If the Trust Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement payable to Trustor by virtue of its interest
in the Trust Property shall be, and by these presents is, assigned, transferred
and set over unto Beneficiary to be held by Beneficiary, subject to the Lien and
security interest of this Deed of Trust, and disbursed in accordance with the
provisions of the Credit Agreement or, if there is no provision contained in the
Credit Agreement governing how the same is to be disbursed, then Beneficiary
shall apply the entire amount thereof to the payment of the Obligations, whether
or not then due and payable, in such manner and order as Beneficiary may elect.
In all events, unless otherwise expressly provided to the contrary in the Credit
Agreement, Trustor hereby covenants and agrees to commence and diligently to
prosecute the restoration of the Trust Property upon the occurrence of any
condemnation or other taking affecting the Trust Property, without regard to the
availability or adequacy of any award or settlement. Notwithstanding any
condemnation or other taking of any of the Trust Property, Trustor shall
continue to pay the Obligations at the time and in the manner provided for in
the Credit Agreement and the other Loan Documents, and the Obligations shall not
be reduced until, and then only to the extent that, any condemnation award or
settlement shall have been actually received and applied by Beneficiary to the
discharge of the Obligations. If the Trust Property is sold, through foreclosure
or otherwise, prior to the receipt by Beneficiary of such condemnation award or
settlement, Beneficiary shall have the right, whether or not a deficiency
judgment on any Loan Document shall have been sought, recovered or denied, to
receive such condemnation award or settlement, or a portion thereof sufficient
to pay the Obligations, whichever is less.

            (c) Any implied covenant in this Deed of Trust restricting the right
of Beneficiary to apply the proceeds of condemnation as described above is
waived by Trustor. Trustor hereby waives the provisions of any law prohibiting
Beneficiary from making elections regarding the application of condemnation
proceeds, including, without limitation, the provisions of California Code of
Civil Procedure Sections 1265.210 et seq.

            SECTION 5.06 Maintenance of Rights of Way, Easements, Licenses and
Other Rights. Trustor shall maintain, preserve and renew all rights of way,
easements, tenements, hereditaments, development rights and credits, zoning
rights, grants, privileges, appurtenances, licenses, franchises and other rights
reasonably necessary for the use or operation of the Trust Property from time to
time, or otherwise relevant to the value thereof, and Trustor shall not, without
the prior written consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the
present or future use or operation of the Trust Property. Trustor shall,
however, comply with all restrictive covenants

                                       19
<PAGE>

which may at any time affect the Trust Property, all applicable zoning
ordinances and all other public or private restrictions relating to the use of
the Trust Property.

            SECTION 5.07 Payment and Performance of Obligations. Trustor shall
duly and punctually pay and perform all of the Obligations.

            SECTION 5.08 Compliance with Permitted Liens and Other Obligations.
Trustor shall comply in all material respects with any and all obligations,
restrictions and requirements that may be set forth in each and every document
constituting a Permitted Lien. In addition, Trustor shall comply in all material
respects each and every obligation legally imposed upon it and/or relating to
the Trust Property pursuant to applicable law (including, without limitation,
all matters described in Section 4.05 hereof), contract or other agreement. It
is hereby acknowledged that Beneficiary's consent to a Permitted Lien as of the
date hereof shall in no way be deemed to constitute approval of any future Lien
which may be imposed upon any portion of the Trust Property, or any other
enforcement action affecting Trustor or the Trust Property, as a result of
Trustor's failure to perform or comply with its obligations under any document
constituting a Permitted Lien as of the date hereof.

            SECTION 5.09 Additional Affirmative Covenants. All affirmative
covenants made by the Borrowers or Guarantors or any of them in the Credit
Agreement are incorporated herein by reference and are hereby also made by
Trustor as to itself and the Trust Property as though such covenants were set
forth at length herein as the covenants of Trustor.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

            Trustor hereby covenants and agrees with Beneficiary that, until all
of the Obligations shall have been paid or performed in full and discharged:

            SECTION 6.01 Use Violations. Trustor shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Trust Property in any manner which (a) violates in any material respect any
Governmental Requirement, (b) may be dangerous unless safeguarded as required by
applicable law, (c) constitutes a public or private nuisance, or (d) makes void,
voidable or cancelable, or increases, substantially in excess of commercially
reasonably rates, the premium of, any insurance then in force with respect
thereto.

            SECTION 6.02 Waste. Trustor shall not commit or permit any material
waste with respect to the Trust Property.

            SECTION 6.03 Alterations. Trustor shall notify Beneficiary, in
writing and in advance, with respect to all proposed alterations, improvements
or additions to the Trust Property which are of a material nature, and, unless
and to the extent otherwise expressly provided in the Credit Agreement, Trustor
shall not effect any material alteration, improvement or addition to the Trust
Property without the prior written consent of Beneficiary.

            SECTION 6.04 No Further Encumbrances. Trustor shall not, without the
prior written consent of Beneficiary, create, place or permit to be created or
placed, or through any act

                                       20
<PAGE>

or failure to act, acquiesce in the placing of, or allow to remain, any
mortgage, pledge, Lien (statutory, constitutional or contractual), security
interest, encumbrance or charge on, or conditional sale or other title retention
agreement with respect to, the Trust Property, or any portion thereof or
interest therein, other than the Permitted Liens, regardless of whether the same
are subordinate to the Lien(s) and security interest(s) created by this Deed of
Trust.

            SECTION 6.05 Transfer Restrictions. Trustor shall not sell, lease,
assign, transfer or otherwise dispose of or abandon all or any part of the Trust
Property (or any interest therein), except as expressly permitted by, and in
accordance with the terms of, the Credit Agreement.

            SECTION 6.06 Loan and Credit Agreements; Additional Negative
Covenants. Trustor has received a copy of and is fully familiar with the terms
and provisions of the Credit Agreement and the other Loan Documents. All
negative covenants made by the Borrowers or Guarantors or any of them in the
Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby also made by Trustor as to itself and the Trust
Property as though such negative covenants were set forth at length herein as
the negative covenants of Trustor.

                                  ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Credit Agreement are hereby incorporated herein as if fully
set forth herein, and, without limiting the generality of the foregoing, the
occurrence of an "Event of Default" under the Credit Agreement or any other Loan
Document shall constitute an "Event of Default" hereunder. All notices and cure
periods described herein or in the Credit Agreement or any other Loan Document
shall not be applicable to any "Potential Event of Default" (as hereinafter
defined) if such Potential Event of Default has occurred as of the date on which
Beneficiary commences a nonjudicial foreclosure proceeding with respect to
another Potential Event of Default or Event of Default. Such event shall
constitute an independent Event of Default hereunder. For purposes hereof,
"Potential Event of Default" shall mean any event, but for the passage of time
or giving of notice, would be an Event of Default.

            SECTION 7.02 Acceleration. Upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights, powers or
remedies conferred herein or by operation of law, Beneficiary, in its sole
judgment and discretion, may declare the then unpaid principal balance of the
Loan (the "Principal Balance"), the accrued interest thereon and any other
accrued but unpaid portion of the Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
Trustor.

            SECTION 7.03 Foreclosure and Sale. If an Event of Default shall
occur and be continuing, Beneficiary shall have the right and option to with
foreclosure by power of sale in accordance with California Civil Code Section
2924 or other applicable law by notice to Trustee and shall, if required,
deposit with Trustee the Note, the original or a certified copy of this Deed

                                       21
<PAGE>

of Trust, and such other documents, receipts and evidences of expenditures made
and secured hereby as Trustee may require.

            Upon receipt of such notice from Beneficiary, Trustee shall cause to
be recorded and delivered to Trustor such notice of default as may then be
required by law and by this Deed of Trust. Trustee shall, without demand on
Trustor, after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been given as
required by law, sell the Trust Property or any portion thereof at the time and
place of sale fixed by it in said notice of sale, either as a whole or in
separate lots or parcels or items as Trustee shall deem expedient, and in such
order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United State (or other cash equivalent as is acceptable to
Trustee and Beneficiary) payable at the time of sale. Trustee shall deliver to
the purchaser or purchasers at such sale its good and sufficient deed or deeds
conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including, without limitation,
Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby
covenants to warrant and defend the title of such purchaser or purchasers.

            Trustee may postpone the sale of all or any portion of the Trust
Property from time to time in accordance with the laws of the State of
California.

            To the fullest extent allowed by law, Borrower hereby expressly
waives any right which it may have to direct the order in which any of the Trust
Property shall be sold in the event of any sale or sales pursuant to this Deed
of Trust.

            Upon any foreclosure sale, Beneficiary may bid for and purchase the
Trust Property and shall be entitled to apply all or any part of the unpaid
Obligations as a credit to the purchase price.

            Beneficiary may from time to time rescind any notice of default or
notice of sale before any Trustee's sale as provided above in accordance with
the laws of the State of California. The exercise by Beneficiary of such right
of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations or notices
of default to satisfy the obligations of this Deed of Trust, or otherwise affect
any provision, covenant or condition of the Credit Agreement or any Loan
Document or any of the rights, obligations or remedies of Trustee or Beneficiary
hereunder or thereunder.

            Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

            SECTION 7.04 Trustee's Successors, Substitutes and Agents. Trustee
or any successor to or substitute for Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Beneficiary. If Trustee or any successor to or
substitute for Trustee shall have given notice of sale hereunder, any successor

                                       22
<PAGE>

or substitute trustee thereafter appointed may complete the sale and the
conveyance of the Trust Property pursuant thereto as if such notice had been
given by the successor to or substitute for Trustee conducting the sale.

            SECTION 7.05 Receivership. If any of the Obligations shall become
due and payable and shall not be promptly paid, Beneficiary shall have the right
and power to proceed by a suit or suits in equity or at law, whether for the
specific performance of Beneficiary which Trustee may apply for and obtain as a
matter of right and without notice to Trustor, which notice is hereby expressly
waived by Trustor, the appointment of a receiver to collect the Rents of the
Trust Property and to preserve the security hereof in accordance with California
Code of Civil Procedure Section 564 (including, without limitation, in order to
enforce Beneficiary's rights under California Civil Code Section 2929.5), either
before or after any foreclosure sale or the sale of the Trust Property under the
order of a court or courts of competent jurisdiction or under executory or other
legal process, without regard to the value of the Trust Property as security for
the amount then due to Beneficiary, or the solvency of any entity or entities,
person or persons primarily or secondarily liable for the payment of such
amounts; the Rents of the Trust Property, in any such event, having heretofore
been assigned to Beneficiary pursuant to Section 3.01 hereof as additional
security for the payment of the Obligations secured hereby.

            Without limiting the foregoing, the receiver shall have the right to
apply Rents to cleanup, remediation or other response action concerning the
release or threatened release of Hazardous Materials, whether or not such
actions are pursuant to an order of any federal, state or local governmental
agency. Trustor hereby confirms the right of Beneficiary (or a receiver
appointed by Beneficiary) to enter upon and inspect all or any portion of the
Trust Property for the purpose of determining the existence, location, nature
and magnitude of any past or present release or threatened release of any
hazardous substance into, onto, beneath, or from the Trust Property in
accordance with the California Civil Code Section 2929.5. All reasonable costs
and expenses incurred by Beneficiary pursuant to this provision or pursuant to
California Civil Code Section 2929.5, including, without limitation, costs of
consultants and contractors, costs of repair of any physical injury to the Trust
Property normal and customary to the tests and studies, court costs and
attorneys' fees, costs and expenses, whether incurred in litigation or not and
whether before or after judgment, shall be payable by Trustor and, to the extent
advanced or incurred by Beneficiary, shall be reimbursed to Beneficiary by
Trustor upon demand. This provision is separate and several, and shall survive
merger into any judgment.

            SECTION 7.06 Judicial Foreclosure. If an Event of Default shall
occur and be continuing, Trustee or Beneficiary shall have the right and power
to proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Trust Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Trust Property under the order of a
court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by Trustee and/or Beneficiary in connection with any
such receivership shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear

                                       23
<PAGE>

interest from the date of such advance by Trustee and/or Beneficiary until paid
at the Default Rate.

            SECTION 7.07 Separate Sales. To the extent allowed by applicable
law, the Trust Property may be sold in one or more parcels and in such manner
and order as Beneficiary, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

            SECTION 7.08 Possession of Trust Property. Trustor agrees to the
full extent that it lawfully may, that, in case one or more of the Events of
Default shall have occurred and be continuing, then, and in every such case,
Trustee or Beneficiary shall have the right and power to enter into and upon and
take possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of expenditure until paid at the Default Rate,
all of which shall constitute a portion of the Obligations and shall be secured
by this Deed of Trust and all of the other Loan Documents. Trustor hereby
irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact
(coupled with an interest) to perform such acts and execute such documents as
Beneficiary, in its sole discretion, shall deem appropriate, including
endorsement of Trustor's name on any instruments. Regardless of any provision of
this Deed of Trust, the Credit Agreement or any other Loan Document, Beneficiary
shall not be considered to have accepted any property other than cash or
immediately available funds in satisfaction of any obligation of Trustor to
Beneficiary, unless Beneficiary shall have given express written notice of
Beneficiary's election to the contrary.

            SECTION 7.09 Occupancy After Foreclosure. In the event that there is
a foreclosure sale hereunder and at the time of such sale Trustor or Trustor's
representatives, successors or assigns or any other person claiming any interest
in the Trust Property by, through or under Trustor, are occupying or using the
Trust Property or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of either the landlord or tenant, at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser. To the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event that the
tenant fails to surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for possession of
the Trust Property (such as an action for forcible entry and detainer) in any
court having appropriate jurisdiction.

                                       24
<PAGE>

            SECTION 7.10 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Trustee or Beneficiary shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute
(including specifically those granted by the Applicable UCC). Each such right,
power and remedy, whether specifically herein given or otherwise existing, may
be exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right, power or
remedy. Beneficiary shall be entitled to collect all costs and expenses incurred
in pursuing such remedies. No delay or omission by Trustee or Beneficiary in the
exercise of any such right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

            SECTION 7.11 No Release of Obligations. Neither Trustor, any other
Borrower, nor any other Person now or hereafter obligated for the payment or
performance of all or any part of the Obligations shall be relieved of any such
obligation by reason of (a) the failure of Trustee or Beneficiary to comply with
any request of Trustor, any other Borrower or any other Person so obligated to
foreclose the Lien of this Deed of Trust to enforce any provision hereunder or
under the Credit Agreement; (b) the release, regardless of consideration, of the
Trust Property or any portion thereof or interest therein or the addition of any
other property to the Trust Property; (c) any agreement or stipulation between
any subsequent owner of the Trust Property and Beneficiary extending, renewing,
rearranging or in any other way modifying the terms of this Deed of Trust
without first having obtained the consent of, given notice to or paid any
consideration to Trustor , any other Borrower or any other Person, and in any
such event Trustor, all other Borrowers and all such other Persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Beneficiary; or (d) any other act or occurrence save and except the
complete payment and performance of all of the Obligations.

            SECTION 7.12 Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration, any part of the Trust Property without, as
to the remainder, in any way impairing, affecting, subordinating or releasing
the Lien or security interest created in or evidenced by this Deed of Trust or
its stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect.

            SECTION 7.13 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Trustor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) except for notices expressly
provided for herein or in the Credit Agreement, all notices of any Event of
Default or of Beneficiary's intention to accelerate maturity of the Obligations
or of Trustee's or Beneficiary's election to exercise or actual exercise of any
right, remedy or recourse provided for hereunder or under the

                                       25
<PAGE>

Credit Agreement; and (c) any right to a marshalling of assets, a sale in
inverse order of alienation or to direct the application of proceeds, including
any rights under California Civil Code Sections 2899 and 3433, and all rights of
Trustor under California Civil Code Section 2822; (d) all rights and remedies
which Borrower may have or be able to assert by reason of the Laws of the State
of California pertaining to the rights and remedies of sureties and (e) any and
all conflicts with any provisions of any of the Loan Documents. If any law
referred to in this Deed of Trust and now in force, of which Trustor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to
preclude the operation or application of the provisions hereof. Beneficiary
shall have the right to determine the order in which any or all of the Trust
Property shall be subjected to the remedies provided herein. Beneficiary shall
have the right to determine the order in which any or all portions of the
Obligations are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.

            SECTION 7.14 Discontinuance of Proceedings. In case Beneficiary
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the Credit Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Trustor and Beneficiary shall be restored to their
former positions with respect to the Obligations, this Deed of Trust, the Credit
Agreement, the Trust Property and otherwise, and the rights, remedies, recourses
and powers of Beneficiary shall continue as if same had never been invoked.

            SECTION 7.15 Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of and
any other amounts generated by the holding, leasing, operating or other use of
the Trust Property shall be applied by Beneficiary (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Credit Agreement or if not so provided, then in the
following order of priority, except to the extent otherwise required by
applicable law:

            (A) first, to the payment of the reasonable and necessary costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving the same, including reasonable (i) receivers'
fees, (ii) court costs, (iii) attorneys' and accountants' fees, (iv) costs of
advertisement and title search fees, and (v) the payment of any and all
Impositions, Liens, security interests or other rights, titles or interests
equal or superior to the Lien and security interest of this Deed of Trust
(except those to which the Trust Property has been sold subject to and without
in any way implying Beneficiary's prior consent to the creation thereof);

            (B) second, to the payment of all amounts other than the Principal
Balance and accrued but unpaid interest which may be due to Beneficiary
hereunder or under the other Loan Documents, together with interest thereon as
provided herein;

            (C) third, to the payment of the Obligations in such order and
manner as Beneficiary determines in its sole discretion; and

                                       26
<PAGE>

            (d) fourth, to Trustor or as otherwise required by any Governmental
Requirement.

            Trustor shall be liable for any deficiency remaining.

            SECTION 7.16 Uniform Commercial Code Remedies. Beneficiary shall
have all of the rights, remedies and recourses with respect to the Personalty
and the Fixtures afforded to it by the Applicable UCC, including, without
limitation, (i) the right to conduct a unified sale of such Personalty and
Fixtures in connection with a judicial or power of sale foreclosure of any
portion of the Trust Property that constitutes real property, (ii) any the right
to take possession of the Personalty and the Fixtures or any part thereof, and
(iii) to take such other measures as Beneficiary may deem necessary for the
care, protection and preservation of the Personalty and the Fixtures, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded by this Deed of Trust and the other Loan Documents.

            SECTION 7.17 Indemnity. In connection with any action taken by
Trustee, Beneficiary and/or any Indemnitee pursuant to this Deed of Trust,
Trustee, Beneficiary, and/or any such Indemnitee and their respective
Indemnified Parties shall not be liable for any Loss sustained by Trustor
resulting from (a) an assertion that Beneficiary, or any such Indemnitee or an
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Persons, or (b) any act or omission of Trustee, Beneficiary, or
any such Indemnitee or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary and/or
such other Lender or such Indemnified Party, nor shall Trustee, Beneficiary
and/or any other Lender or an Indemnified Party be obligated to perform or
discharge any obligation, duty or liability of Trustor. Trustor shall and does
hereby agree to indemnify Trustee and/or Beneficiary and each of the other
Lenders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Lender and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Lenders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or remedies hereunder, including such Losses
as may result from the ordinary negligence of Trustee, Beneficiary or any other
Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary or
such other Lender or such Indemnified Party. Should Trustee, Beneficiary and/or
any other Lender or an Indemnified Party make any expenditure on account of any
such Losses, the amount thereof, including costs, expenses and reasonable
attorneys' fees, shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date expended until paid at the Default Rate, shall
be a part of the Obligations and shall be secured by this Deed of Trust and the
other Loan Documents. Trustor hereby assents to, ratifies and confirms any and
all actions of Trustee and/or Beneficiary with respect to the Trust Property
taken under this Deed of Trust. The liabilities of Trustor, as set forth in this
Section 7.17, shall survive the termination of this Deed of Trust and the
payment and performance of the Obligations.

                                       27
<PAGE>

            SECTION 7.18 Waiver of Lien. In accordance with California Code of
Civil Procedure Section 726.5, Beneficiary may waive its lien against the Trust
Property constituting real property or any portion thereof, together with
fixtures or personal property constituting real property thereon, to the extent
such Trust Property constituting real property is found to be environmentally
impaired, and may exercise any and all rights and remedies of an unsecured
creditor against Trustor and all of Trustor's assets and Trust Property
constituting real property for the recovery of any deficiency, including without
limitation seeking an attachment order under California Code of Civil Procedure
Section 483.010. No such waiver shall be final or binding on Beneficiary unless
and until a final money judgment is obtained against Trustor. As between
Beneficiary and Trustor, for purposes of California Code of Civil Procedure
Section 726.5, Trustor shall have the burden of proving that the release or
threatened release was not knowingly or negligently caused or contributed to, or
knowingly or willfully permitted or acquiesced to by Trustor or any related
party (or any affiliate or agent of Trustor or any related party) and that
Trustor made written disclosure of the release to Beneficiary or that
Beneficiary otherwise obtained actual knowledge thereof prior to the making of
the loan evidenced by the Credit Agreement. Notwithstanding anything to the
contrary contained in this Deed of Trust, the Credit Agreement or the other Loan
Documents, Trustor shall be fully and personally liable for all judgments and
awards entered against Trustor pursuant to California Code of Civil Procedure
726.5 and such liability shall be an exception to any non-recourse or
exculpatory provision in this Deed of Trust or the other Loan Documents, if any,
and shall not be limited to the original principal amount of the obligations
secured by this Deed of Trust. Trustor's obligations hereunder shall survive the
foreclosure, deed in lieu of foreclosure, release, reconveyance or any other
transfer of the Trust Property constituting real property or this Deed of Trust.
For the purpose of any action brought under this Section, Trustor hereby waives
the defense of laches and any applicable statute of limitations. For purposes of
California Code of Civil Procedure 726.5, the acts, knowledge and notice of each
"726.5 Party" shall be attributed to and be deemed to have been performed by the
party or parties then obligated on and liable for payment of the Obligations. As
used herein, "726.5 Party" shall mean Trustor, any successor owner to Trustor of
all or any portion of the Trust Property constituting real property, any related
party of Trustor or any such successor and any affiliate or agent of Trustor,
any such successor or any such related party.

            SECTION 7.19 Action for Environmental Claims. In accordance with,
and subject to limitations of, California Code of Civil Procedure Section 736,
Beneficiary may seek a judgment that the Trustor has breached its covenants,
representations and/or warranties with respect to the environmental matters
contained in the Credit Agreement (the "Environmental Provisions"), and may
commence and maintain an action or actions in any court of competent
jurisdiction for enforcement of the Environmental Provisions and/or recovery of
any and all costs, damages, expenses, fees, penalties, fines, judgments,
indemnification payments to third parties, and other out-of-pocket costs or
expenses (including, without limitation, court costs, consultants' fees and
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment), incurred or advanced by Beneficiary pursuant to the
Environmental Provisions (collectively, the "Environmental Costs"), excluding,
however, any Environmental Costs not permitted to be recovered pursuant to
Section 736 of the California Code of Civil Procedure. Environmental Costs that
are not permitted to be recovered pursuant to Section 736 may be referred to
hereinafter as the "Unsecured Environmental Costs," and Environmental Costs
other than the Unsecured Environmental Costs may be referred to hereinafter as
the "Secured

                                       28
<PAGE>

Environmental Costs." Any Unsecured Environmental Costs shall not be secured by
this Deed of Trust; however, nothing herein shall prevent Beneficiary from
recovering any Unsecured Environmental Costs pursuant to the Indemnity Agreement
of even date herewith among Trustor, Beneficiary and certain other parties, to
the extent they are recoverable in accordance with said Indemnity Agreement. All
Secured Environmental Costs incurred by Beneficiary shall bear interest at the
default rate provided under the Note. All Secured Environmental Costs together
with interest thereon at the rate then in effect under the Credit Agreement
shall be secured by this Deed of Trust and shall enjoy the same priority as the
Obligations. Trustor acknowledges and agrees that notwithstanding any term or
provision contained in this Deed of Trust, the Credit Agreement or in the other
Loan Documents, Environmental Costs shall be exceptions to any nonrecourse or
exculpatory provision, if any, and Trustor shall be fully and personally liable
for Environmental Costs. Such liability shall not be limited to the original
principal amount of the obligations secured by this Deed of Trust. Trustor's
obligations hereunder shall survive foreclosure, deed in lieu of foreclosure,
release, reconveyance or any other transfer of the Trust Property constituting
real property or this Deed of Trust. For the purposes of any action brought
under this subparagraph Trustor hereby waives the defense of laches and any
applicable statute of limitations.

                                  ARTICLE VIII

                                     TRUSTEE

            SECTION 8.01 Duties, Rights, and Powers of Trustee. It shall be no
part of the duty of Trustee to see to any recording, filing or registration of
this Deed of Trust or any other instrument in addition or supplemental thereto,
or to give any notice thereof, or to see to the payment of or be under any duty
in respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Trust Property, or any part thereof, or against
Trustee, or to see to the performance or observance by Trustee of any of the
covenants and agreements contained herein. Trustee shall not be responsible for
the execution, acknowledgment or validity of this Deed of Trust or of any
instrument in addition or supplemental hereto or for the sufficiency of the
security purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Beneficiary. Trustee shall have the right
to confer with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee's own gross
negligence or willful misconduct, and Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by Trustee hereunder, believed by Trustee in good faith
to be genuine.

            SECTION 8.02 Successor Trustee. From time to time, by a writing
signed and acknowledged by Beneficiary and filed for record in the office of the
recorder of the County in which the Land is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date, book and page
of its recordation. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee
hereunder with the same effect as if originally named Trustee herein. A writing
recorded pursuant to the

                                       29
<PAGE>

provisions of this Section 8.02 shall be conclusive proof of the proper
substitution of such new trustee.

            SECTION 8.03 Retention of Moneys. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

            SECTION 8.04 Reconveyance. Upon written request of Beneficiary
stating all of the Obligations have been paid, performed and discharged, and the
Credit Agreement is terminated, and payment of its fees, Trustee shall reconvey,
without warranty, the Trust Property. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in such reconveyance may be described as "the person or persons legally
entitled hereto" or such other description as required by law in the State of
California.

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01 Instrument Construed as Deed of Trust, Etc. This Deed
of Trust may be construed as a deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

            SECTION 9.02 Performance at Trustor's Expense. The cost and expense
of performing or complying with any and all of the Obligations shall be borne
solely by Trustor, and no portion of such cost and expense shall be, in any way
or to any extent, credited against any installment on or portion of the
Obligations.

            SECTION 9.03 Survival of Obligations. Each and all of the
Obligations shall survive the execution and delivery of this Deed of Trust and
shall continue in full force and effect until all of the Obligations shall have
been fully satisfied.

            SECTION 9.04 Further Assurances. Trustor, upon the request of
Beneficiary, shall execute, acknowledge, deliver and record and/or file such
further instruments, including financing statements, and do such further acts as
may be reasonably necessary, desirable or proper to carry out more effectively
the purpose of this Deed of Trust and to subject to the Liens and security
interests hereof any property intended by the terms hereof to be covered hereby,
including any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Trust Property.

            SECTION 9.05 Notices. All notices or other communications required
or permitted to be given pursuant to this Deed of Trust shall be in writing and
shall be considered properly given if given in the manner and to the addresses
prescribed by Section 11.02 of the Credit Agreement to the parties and at the
addresses set forth in the first paragraph hereof, and to

                                       30
<PAGE>

the parties and at the addresses set forth in Section 11.02 of the Credit
Agreement; provided, however, that (a) service of notice as required by the laws
of any State or Commonwealth in which portions of the Trust Property may be
situated shall for all purposes be deemed appropriate and sufficient with the
giving of such notice thereunder, and (b) any party shall have the right to
change its address for notice hereunder to any other location within the
continental United States by the giving of ten (10) days' notice to the other
party in the manner set forth above.

            SECTION 9.06 No Waiver. Any failure by Beneficiary to insist, or any
election by Beneficiary not to insist, upon strict performance by Trustor of any
of the terms, provisions or conditions of this Deed of Trust shall not be deemed
to be a waiver of the same or of any other terms, provision or condition hereof,
and Beneficiary shall have the right, at any time or times thereafter, to insist
upon strict performance by Trustor of any and all of such terms, provisions and
conditions. Beneficiary may, in Beneficiary's sole and absolute discretion, (i)
in the case of a Default, determine whether such Default has been cured, and
(ii) in the case of an Event of Default, accept or reject any proposed cure of
an Event of Default. In no event shall any provision of this Deed of Trust or
any other Loan Document which provides that Beneficiary shall have certain
rights and/or remedies only during the continuance of an Event of Default be
construed so as to require Beneficiary to accept a cure of any such Event of
Default. Unless and until Beneficiary accepts any proposed cure of an Event of
Default, such Event of Default shall be deemed to be continuing for purposes of
this Deed of Trust and the other Loan Documents.

            SECTION 9.07 Beneficiary's Right to Perform; Beneficiary's
Expenditures.

            (a) Trustor agrees that if Trustor fails to perform any act or take
any action which Trustor is required to perform or take hereunder or under the
Credit Agreement or to pay any money which Trustor is required to pay hereunder
or under the Credit Agreement, Beneficiary may, but shall not be obligated to,
perform or cause to be performed such act or take such action or pay such money,
to the extent and only to the extent permitted under the Financinf Agreement.

            (b) All costs and expenses incurred by Beneficiary (or any
Indemnified Party), including, without limitation, attorneys fees, costs and
expenses, all monies paid by (or on behalf of) Beneficiary and the monetary
value of all services performed by (or on behalf of Beneficiary) in connection
with a Default or Event of Default hereunder or under any other Loan Document,
including, without limitation, the (i) the enforcement of any term or provision
of this Deed of Trust or any other Loan Document, (ii) the performance by
Beneficiary of any obligation of Trustor under this Deed of Trust or any other
Loan Document if Beneficiary elects to so perform, in its sole and absolute
discretion, and (iii) any action Beneficiary elects to take, in its sole and
absolute discretion, to protect its interest in or the value of the Trust
Property, shall be a demand obligation owing by Trustor to Beneficiary, as the
case may be, and to the extent any payment is made to a third Person,
Beneficiary, upon making such payment, shall be subrogated to all of the rights
of the Person receiving such payment. All such costs and expenses, monies and
the monetary value of such services performed shall (x) bear interest at the
Default Rate from the date of such incurrence, payment or performance, as
applicable, until paid, and (y) constitute (together with such interest) a
portion of the Obligations and shall be secured by this Deed of Trust and all of
the other Loan Documents. If Beneficiary shall elect to pay any

                                       31
<PAGE>

Imposition or other sums due with reference to the Trust Property, Beneficiary
may do so in reliance on any bill, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof. Attorneys' fees,
costs and expenses as used herein shall include, without limitation, such fees,
costs and expenses incurred in litigation or not, whether before or after
judgment and and consultants, court costs, expert witness fees, document
reproduction expenses, costs of exhibit preparation, courier charges, postage
and communication expenses. This provision is separate and several, and shall
survive merger into any judgment.

            Trustor shall and does hereby agree that, if all or a portion of the
Obligations has prior to the maturity date fixed in the Credit Agreement, become
due or been declared due by reason of an Event of Default the entire amount then
due under the terms of this Deed of Trust and the Credit Agreement shall include
all attorneys' fees and costs and expenses which are actually incurred as stated
above, notwithstanding the provisions of Section 2924c(d) and Section 2924d of
the California Civil Code.

            SECTION 9.08 Successors and Assigns. All of the terms hereof shall
apply to, be binding upon and inure to the benefit of the parties hereto, their
successors, assigns, heirs and legal representatives, and all other Persons
claiming by, through or under them; provided, however, that nothing herein shall
be deemed to imply any right on behalf of Trustor to assign its interest in any
of the Trust Property except as may be expressly set forth in the Credit
Agreement.

            SECTION 9.09 Severability. This Deed of Trust is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws and regulations of applicable Governmental Authorities and the
provisions hereof are intended to be limited to the extent necessary that they
will not render this Deed of Trust invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
provision hereof or the application thereof to any Person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Deed of Trust nor the application of such provision to other
Persons or circumstances shall be affected thereby, but rather shall be enforced
to the greatest extent permitted by applicable law.

            SECTION 9.10 Subrogation of Trustee. This Deed of Trust is made with
full substitution and subrogation of Trustee and successors in this trust to
Trustee and Trustee and such successors assigns in and to all covenants and
warranties by others heretofore given or made in respect of the Trust Property
or any part thereof.

            SECTION 9.11 Entire Agreement and Modification. This Deed of Trust
may not be amended, revised, waived, discharged, released or terminated orally,
but only by a written instrument or instruments executed by the party against
which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

            SECTION 9.12 Applicable Law. THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW YORK.
TRUSTOR AND BENEFICIARY FURTHER AGREE AND

                                       32
<PAGE>

STIPULATE THAT THIS DEED OF TRUST, THE CREDIT AGREEMENT AND THE LOAN DOCUMENTS
HAVE BEEN DELIVERED IN THE STATE OF NEW YORK WERE NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK, AND THAT THE STATE OF NEW YORK HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION. IT IS
THEREFORE THE INTENT OF TRUSTOR AND BENEFICIARY THAT THIS DEED OF TRUST SHALL BE
CONSTRUED AND INTERPRETED WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO NEW YORK CHOICE OF LAW PRINCIPLES);
PROVIDED, HOWEVER, THAT THE LAWS OF THE STATE OF CALIFORNIA SHALL APPLY TO THE
CREATION, PERFECTION AND PROCEDURES GOVERNING ENFORCEMENT OF ANY LIENS, SECURITY
INTERESTS AND ENCUMBRANCES GRANTED OR CREATED BY THIS DEED OF TRUST IN THE REAL
OR PERSONAL PROPERTY LOCATED IN (OR IN THE CASE OF INTANGIBLE PERSONAL PROPERTY,
HAVING A SITUS IN) THE STATE OF CALIFORNIA, AND THE MANAGEMENT, OPERATION,
DISPOSITION AND REALIZATION OF THE SECURITY PROVIDED THEREBY. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE LAWS OF THE STATE OF NEW YORK SHALL APPLY
TO (I) ALL MATTERS RELATING TO THE CHARGING AND COLLECTION OF INTEREST UNDER
THIS DEED OF TRUST AND WITH RESPECT TO THE OBLIGATIONS, (II) THE ENFORCEMENT OF
ALL RIGHTS UNDER THE CREDIT AGREEMENT, AND THE LOAN DOCUMENTS OTHER THAN THIS
DEED OF TRUST AND (III) THE RIGHT TO SUE TRUSTOR OR ANY OTHER PERSON OBLIGATED
UNDER THE LOAN AGREEMENT AND THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING
OBLIGATIONS OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE
UNDER ANY ONE ACTION AND ANTIDEFICIENCY RULES. TRUSTOR HEREBY AGREES THAT
BENEFICIARY MAY ENFORCE ITS RIGHTS UNDER THIS DEED OF TRUST AND ANY OF THE OTHER
LOAN DOCUMENTS, INCLUDING THE RIGHT TO SUE TRUSTOR OR ANY PERSON OBLIGATED UNDER
THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A
JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE, IN ACCORDANCE WITH NEW YORK
LAW, AND TRUSTOR HEREBY ACKNOWLEDGES THAT THE CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 580A, 580D AND 726 DO NOT APPLY TO THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS AND, TO THE EXTENT THEY APPLY WAIVES TO THE
MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHTS WHICH IT MAY HAVE UNDER THE SUCH
SECTIONS.

            SECTION 9.13 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Credit Agreement are used to pay indebtedness
secured by any outstanding Lien, security interest, charge or prior encumbrance
against the Trust Property, such proceeds shall be deemed to have been advanced
by Beneficiary at Trustor's request, and Beneficiary shall be subrogated to any
and all rights, security interests and Liens owned by any owner or holder of
such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by

                                       33
<PAGE>

Beneficiary, Trustor hereby waives and releases all demands and causes of action
for offsets and payments to, upon and in connection with the said indebtedness.

            SECTION 9.14 No Partnership. Nothing contained in this Deed of Trust
is intended to, or shall be construed to, create to any extent and in any manner
whatsoever any partnership, joint venture, or association between Trustor and
Beneficiary, or in any way make Beneficiary a co-principal with Trustor with
reference to the Trust Property, and any inferences to the contrary are hereby
expressly negated.

            SECTION 9.15 Headings. The Article, Section and Subsection headings
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

            SECTION 9.16 Release of Deed of Trust. If all of the Obligations
shall be paid, performed and discharged and the Credit Agreement is terminated,
Beneficiary shall forthwith cause satisfaction and discharge of this Deed of
Trust to be entered upon the record, at the sole cost and expense of Trustor,
and shall execute and deliver (or cause to be executed and delivered) such
instruments of satisfaction and discharge as may be appropriate, such
instruments to be duly acknowledged and in form for recording, at the sole cost
and expense of Trustor.

            SECTION 9.17 Limitation of Obligations with Respect to Trust
Property.

            (A) Neither Trustee nor Beneficiary or any Lender shall have any
duty to protect or preserve, or any liability with respect to the protection or
preservation of, any Trust Property or to preserve rights pertaining thereto
other than the duty to use reasonable care in the custody and preservation of
any Trust Property in its actual possession. Beneficiary shall be deemed to have
exercised reasonable care in the custody and preservation of any Trust Property
in its possession if such Trust Property is accorded treatment substantially
equal to that which Beneficiary accords its own like property. Beneficiary shall
be relieved of all responsibility for any Trust Property in its possession upon
surrendering it, or tendering surrender of it, to Trustor or to such other
Person entitled thereto by applicable law.

            (B) Nothing contained in this Deed of Trust shall be construed as
requiring or obligating Trustee, Beneficiary or any Lender, and neither Trustee
nor Beneficiary or any Lender shall be required or obligated, to (i) make any
demand or inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim or notice or take any action with respect to any
Trust Property or the monies due or to become due thereunder in connection
therewith, (ii) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders, offers or other matters relating to any Trust
Property, whether or not Beneficiary or any of the other Lenders has or is
deemed to have knowledge or notice thereof, (iii) take any necessary steps to
preserve rights against any prior parties with respect to any Trust Property, or
(iv) notify Trustor or any other Person of any decline in the value of any Trust
Property.

            SECTION 9.18 Inconsistency with Credit Agreement. To the fullest
extent possible, the terms and provisions of the Credit Agreement shall be read
together with the terms and provisions of this Deed of Trust such that the terms
and provisions of this Deed of Trust

                                       34
<PAGE>

shall supplement, rather than conflict with, the terms and provisions of the
Credit Agreement; provided, however, that, notwithstanding the foregoing, in the
event any of the terms or provisions of this Deed of Trust conflict with any of
the terms or provisions of the Credit Agreement, such that it is impractical for
such terms or provisions to coexist, the terms or provisions of the Credit
Agreement shall govern and control for all purposes; and, provided further, that
the inclusion in this Deed of Trust of terms and provisions, supplemental rights
or remedies in favor of a secured party but which are not addressed in the
Credit Agreement shall not be deemed to be a conflict with the Credit Agreement
and all such additional terms, provisions, supplemental rights or remedies
contained herein shall be given full force and effect.

            SECTION 9.19 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between Trustor and Beneficiary, or any Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Trustor for the use, forbearance or detention of the money
to be loaned under the Credit Agreement or any other Loan Document, or for the
payment or performance of any covenant or obligation contained herein or in the
Credit Agreement or any other Loan Document, exceed the maximum amount
permissible under applicable federal or state usury laws. If, under any
circumstances, fulfillment of any such provision, at the time performance of
such provision shall be due, shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall be
reduced to the limit of such validity. If, under any circumstances, Trustor
shall have paid an amount of money which is deemed to be interest and such
interest would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction
of the principal amount owing in respect of the Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
Trustor. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by Beneficiary (or
Lender) shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by applicable
law, be amortized, prorated, allocated and spread from the date of this Deed of
Trust until payment in full of the Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.

            SECTION 9.20 Covenants To Run With the Land. All of the grants,
representations, warranties, undertakings, covenants, terms, provisions and
conditions in this Deed of Trust shall run with the Land and shall apply to and
bind the successors and assigns of Trustor. If there shall be more than one
trustor, the covenants, representations and warranties made herein shall be
deemed to be joint and several.

            SECTION 9.21 Amount Secured; Last Dollar. So long as the balance of
the Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the Obligations secured by this Deed of
Trust, but shall, instead, be deemed to be applied against only such portions of
the Obligations that are not secured by this Deed of Trust.

                                       35
<PAGE>

            SECTION 9.22 Defense of Claims. Trustor shall promptly notify
Beneficiary in writing of the commencement of any legal proceedings affecting
Trustor's title to the Trust Property or Beneficiary's Lien on or security
interest in the Trust Property, or any part thereof, and shall take all such
action, employing attorneys agreeable to Beneficiary, as may be necessary to
preserve Trustor's and Beneficiary's rights affected thereby. If Trustor fails
or refuses to adequately or vigorously, in the sole judgment of Beneficiary,
defend Trustor's or Beneficiary's rights to the Trust Property, Beneficiary may
take such action on behalf of and in the name of Trustor and at Trustor's
expense. Moreover, Beneficiary may take (or cause its agents to take) such
independent action in connection therewith as they may in their discretion deem
proper, including, without limitation, the right to employ independent counsel
and to intervene in any suit affecting the Trust Property. All costs, expenses
and attorneys' fees incurred by Beneficiary (or its agents) pursuant to this
Section 9.22 or in connection with the defense by Beneficiary of any claims,
demands or litigation relating to Trustor, the Trust Property or the
transactions contemplated in this Deed of Trust shall be paid by Trustor on
demand, plus interest thereon from the date of the advance by Beneficiary until
reimbursement of Beneficiary at the Default Rate.

            SECTION 9.23 Exculpation Provisions. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES
THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST;
THAT IT HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST;
THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND
THAT IT RECOGNIZES THAT CERTAIN TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."

            SECTION 9.24 No Merger of Estates. So long as any part of the
Obligations remain unpaid, unperformed or undischarged, the fee, easement and
leasehold estates to the Trust Property shall not merge but rather shall remain
separate and distinct, notwithstanding the union of such estates either in
Trustor, Beneficiary, any lessee, any third-party purchaser or otherwise.

            SECTION 9.25 Suretyship Waivers. As used in this Section 9.25, the
term "Obligor" shall mean each any Obligor, other than the Trustor, obligated
for any of the Obligations secured by this Deed of Trust.

            (A) Representations and Warranties. Trustor represents and warrants
to Beneficiary that: (A) this Deed of Trust is executed, in part, at the request
of the Obligors; (B)

                                       36
<PAGE>

this Deed of Trust complies with all agreements between each Obligor regarding
Trustor's execution hereof; (C) Beneficiary has made no representation to any
Trustor as to the creditworthiness of any Obligor; and (D) Trustor has
established adequate means of obtaining from each Obligor on a continuing basis
financial and other information pertaining to such Obligor's financial
condition. Trustor agrees to keep adequately informed from such means of any
facts, events or circumstances which might in any way affect such Trustor's
risks hereunder. Trustor further agrees that Beneficiary shall have no
obligation to disclose to Trustor any information or material about any Obligor
which is acquired by Beneficiary in any manner. The liability of Trustor
hereunder shall be reinstated and revived, and the rights of Beneficiary shall
continue if and to the extent that for any reason any amount at any time paid on
account of any Obligation is rescinded or must otherwise be restored by
Beneficiary, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not been paid. The
determination as to whether any amount so paid must be rescinded or restored
shall be made by Beneficiary in its sole discretion; provided however, that if
Beneficiary chooses to contest any such matter at the request of Trustor,
Trustor agrees to indemnify and hold Beneficiary harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by Beneficiary in connection therewith, including without limitation, any
litigation with respect thereto.

            (b) General Suretyship Waivers.

                  (i) Trustor waives any right to require Beneficiary to: (i)
      proceed against any Obligor or any other person; (ii) marshal assets or
      proceed against or exhaust any security held from any Obligor or any other
      person; (iii) take any action or pursue any other remedy in Beneficiary's
      power; or (iv) make any presentment or demand for performance, or give any
      notice of nonperformance, protest, notice of protest or notice of dishonor
      hereunder or in connection with any obligations or evidences of
      indebtedness held by Beneficiary as security for or which constitute in
      whole or in part the Obligations, or in connection with the creation of
      new or additional obligations.

                  (ii) Trustor waives any defense to its obligations hereunder
      based upon or arising by reason of: (i) any disability or other defense of
      any Obligor or any other person; (ii) the cessation or limitation from any
      cause whatsoever, other than payment in full, of any Obligation; (iii) any
      lack of authority of any officer, director, partner, agent or any other
      person acting or purporting to act on behalf of any Obligor which is a
      corporation, partnership or other type of entity, or any defect in the
      formation of any such Obligor; (iv) the application by any Obligor of the
      proceeds of any Obligation for purposes other than the purposes
      represented by any Obligor to, or intended or understood by, Beneficiary
      or any Trustor; (v) any act or omission by Beneficiary which directly or
      indirectly results in or aids the discharge of any Obligor of any portion
      of the Obligations by operation of law or otherwise, or which in any way
      impairs or suspends any rights or remedies of Beneficiary against any
      Obligor; (vi) any impairment of the value of any interest in any security
      for the Obligations or any portion thereof, including without limitation,
      the failure to obtain or maintain perfection or recordation of any
      interest in any such security, the release of any such security without
      substitution, and/or the failure to preserve the value of, or to comply
      with applicable law in disposing of, any such security; or (vii) any
      modification of the Obligations, in any form whatsoever,

                                       37
<PAGE>

      including without limitation the renewal, extension, acceleration or other
      change in time for payment of, or other change in the terms of, the
      Obligations or any portion thereof, including increase or decrease of the
      rate of interest thereon. Until all Obligations shall have been paid in
      full, no Trustor shall have any right of subrogation, and Trustor waives
      any right to enforce any remedy which Beneficiary now has or may hereafter
      have against any Obligor or any other person, and waives any benefit of,
      or any right to participate in, any security now or hereafter held by
      Beneficiary. Trustor further waives all rights and defenses it may have
      arising out of: (1) any election of remedies by Beneficiary, even though
      that election of remedies, such as a non-judicial foreclosure with respect
      to any security for any portion of the Obligations, destroys Trustor's
      rights of subrogation or Trustor's rights to proceed against any Obligor
      for reimbursement; or (2) any loss of rights Trustor may suffer by reason
      of any rights, powers or remedies of any Obligor in connection with any
      anti-deficiency laws or any other laws limiting, qualifying or discharging
      any Obligor's obligations, whether by operation of Sections 726, 580a and
      580d of the Code of Civil Procedure as from time to time amended (to the
      extent California law applies or may be determined to apply), or
      otherwise, including any rights Trustor may have to a Section 580a fair
      market value hearing to determine the size of a deficiency following any
      trustee's foreclosure sale or other disposition of any security for any
      portion of the Obligations (to the extent California law applies or may be
      determined to apply).

                  (iii) If any of said waivers is determined to be contrary to
      any applicable law or public policy, such waiver shall be effective to the
      extent permitted by applicable law or public policy.

            (C) Additional Suretyship Waivers.

                  (i) Trustor hereby expressly waives and agrees not to assert
      or take advantage of any defense based upon:

                        (1) The incapacity, lack of authority, death or
            disability of any Obligor or any other person or entity;

                        (2) The failure of Beneficiary to commence an action
            against any Obligor or to proceed against or exhaust any security
            held by Beneficiary at any time, or to pursue any other remedy
            whatsoever at anytime;

                        (3) Any duty on the part of Beneficiary to disclose to
            Trustor any facts Beneficiary may now or hereafter know regarding
            any Obligor, regardless of whether Beneficiary has reason to believe
            (i) that any such facts materially increase the risk beyond that
            which Trustor intends to assume, or (ii) that such facts are unknown
            to Trustor, Trustor acknowledging that he, she or it is fully
            responsible for being and keeping informed of the financial
            condition and affairs of any Obligor;

                                       38
<PAGE>

                        (4) Lack of notice of default, demand of performance or
            notice of acceleration to any Obligor or any other party with
            respect to the Loans or any Obligor's obligations guarantied by
            Trustor;

                        (5) The consideration for the Loan Documents;

                        (6) The revocation or repudiation hereof by Trustor or
            the revocation or repudiation of any of the Loan Documents by any
            Obligor or any other person;

                        (7) The unenforceability in whole or in part of the Loan
            Documents against any Obligor;

                        (8) Any acts or omissions of Beneficiary which vary,
            increase or decrease the risk on Trustor;

                        (9) Any rights or defenses based upon an offset by
            Trustor against any obligation now or hereafter owed to Trustor by
            any Obligor;

                        (10) Any statute of limitations affecting the liability
            of Trustor hereunder, the liability of any Obligor or any other
            guarantor under the Loan Documents or the enforcement hereof, to the
            extent permitted by law;

                        (11) The application by any Obligor of the proceeds of
            the Loans or other financial accommodations under the Credit
            Agreement for purposes other than the purposes represented by any
            Obligor to Beneficiary and Trustor or intended or understood by
            Beneficiary or Trustor;

                        (12) An election of remedies by Beneficiary, including
            any election to proceed against any collateral by judicial or
            nonjudicial foreclosure, whether real property or personal property
            that is security for the any Obligor's obligations under the Loan
            Documents, or by deed in lieu thereof, and whether or not every
            aspect of any foreclosure sale is commercially reasonable, and
            whether or not any such election of remedies destroys or otherwise
            impairs the subrogation rights of Trustor or the rights of Trustor
            to proceed against any Obligor or any other guarantor by way of
            subrogation or for reimbursement or contribution, or all such
            rights;

                        (13) Any statute or rule of law which provides that the
            obligation of a surety must be neither larger in amount nor in any
            other aspects more burdensome than that of the principal obligor;

                        (14) Beneficiary's election, in any proceeding
            instituted under Title 11 of the Bankruptcy Code, of the application
            of Bankruptcy Code Section 1111(b)(2) or any successor statute;

                        (15) Any borrowing or any grant of a security interest
            under Bankruptcy Code Section 364; and

                                       39
<PAGE>

                        (16) Any other suretyship defense that may be available
            to Trustor. Without limiting the generality of the foregoing (to the
            extent California law applies or may be determined to apply),
            Trustor also waives (y) any defense based upon Beneficiary's
            election to waive its lien as to all or any security for the Loans
            or for the guarantor of any other person pursuant to California Code
            of Civil Procedure ("CCP ") Section 726.5, under any similar law in
            any other state that may be applicable because any Obligor's
            obligations are secured by a lien on real property in such state, or
            otherwise, and (z) any and all benefits which might otherwise be
            available to Trustor under California Civil Code ("Civil Code")
            Sections 2809, 2810, 2815, 2819, 2839, 2845 through 2850, 2899 and
            3433.

                  (ii) Trustor understands and acknowledges that if Beneficiary
      forecloses judicially or nonjudicially against any real property that is
      security for any Obligor's obligations under the Loan Documents (other
      than this Deed of Trust), that foreclosure could impair or destroy any
      ability that Trustor may have to seek reimbursement, contribution or
      indemnification from any such Obligor based on any right Trustor may have
      of subrogation, reimbursement, contribution or indemnification for any
      amounts paid by Trustor under the Loan Documents or realized by
      Beneficiary by way of foreclosure of this Deed of Trust. Trustor further
      understands and acknowledges that in the absence of this provision, the
      potential impairment or destruction of Trustor's rights, if any, may (to
      the extent California law applies or may be determined to apply) entitle
      Trustor to assert a defense to its obligations under this Deed of Trust
      and the Loan Documents based on CCP Section 580d as interpreted in Union
      Bank vs. Gradsky. By executing this Deed of Trust, Trustor freely,
      irrevocably and unconditionally:

                        (1) waives and relinquishes that defense, and agrees
            that Trustor will be fully liable for its obligations under the Loan
            Documents and the Trust Property will continue to be security for
            the Obligations, even though Beneficiary may foreclose judicially or
            nonjudicially against any real property that is security for the any
            Obligor's obligations under the Loan Documents;

                        (2) agrees that Trustor will not assert that defense in
            any action or proceeding that Beneficiary may commence to enforce
            the obligations of Trustor under this Deed of Trust and the Loan
            Documents;

                        (3) acknowledges and agrees that the rights and defenses
            waived by Trustor under the Loan Documents include any right or
            defense that Trustor may have or be entitled to assert based upon or
            arising out of any one or more of the following: (i) CCP Sections
            580a (which if Trustor had not given this waiver, would otherwise
            limit Trustor's liability (and the extent of the Obligations to
            which the Trust Property would be exposed) after any nonjudicial
            foreclosure sale to the difference between the amount of the
            Obligations and the fair market value of the property or interests
            sold at such nonjudicial foreclosure sale against any real property
            that is security for the an Obligor's obligations under the Loan
            Documents rather than the actual proceeds of such sale), 580b and
            580d (which if Trustor had not given this waiver, would otherwise
            limit Beneficiary's right to recover a deficiency judgment (or to
            foreclose this Deed of Trust and otherwise

                                       40
<PAGE>

            pursue the Trust Property) with respect to purchase money
            obligations and after any nonjudicial foreclosure sale against any
            real property that is security for the an Obligor's obligations
            under the Loan Documents, respectively), or 726 (which, if Trustor
            had not given this waiver, among other things, would otherwise
            require Beneficiary to exhaust all of its security against an
            Obligor or Obligors before Beneficiary would be entitled to exercise
            its remedies under this Deed of Trust or pursue a personal judgment
            for a deficiency against the any Obligor); or (ii) Civil Code
            Section 2848; and

                        (4) acknowledges and agrees that Beneficiary is relying
            on this waiver in making the Loan or other financial accommodations
            under the Credit Agreement, and that this waiver is a material part
            of the consideration that Beneficiary is receiving for making the
            Loans or other financial accommodations under the Credit Agreement.
            WITHOUT LIMITING THE FOREGOING, TRUSTOR WAIVES ALL RIGHTS AND
            DEFENSES THAT TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER
            THE LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THIS MEANS, AMONG
            OTHER THINGS:

                              a. BENEFICIARY MAY COLLECT FROM TRUSTOR OR
                        EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST WITHOUT
                        FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY
                        COLLATERAL PLEDGED BY ANY OBLIGOR; AND

                              b. IF BENEFICIARY FORECLOSES ON ANY REAL PROPERTY
                        COLLATERAL PLEDGED BY ANY OBLIGOR:

                                    (i) THE AMOUNT OF THE OBLIGATIONS MAY BE
                              REDUCED ONLY BY THE PRICE FOR WHICH THAT
                              COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN
                              IF THE COLLATERAL IS WORTH MORE THAN THE SALE
                              PRICE; AND

                                    (ii) BENEFICIARY MAY COLLECT FROM TRUSTOR
                              AND EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST
                              EVEN IF BENEFICIARY, BY FORECLOSING ON THE REAL
                              PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT
                              TRUSTOR MAY HAVE TO COLLECT FROM ANY OBLIGOR.

            THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND
            DEFENSES TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE
            LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THESE RIGHTS AND
            DEFENSES INCLUDE, BUT ARE

                                       41
<PAGE>

            NOT LIMITED TO, ANY RIGHTS OR DEFENSES BASED UPON CCP SECTIONS 580a,
            580b, 580d OR 726.

            SECTION 9.26 Beneficiary Statement. Beneficiary may collect a fee
not to exceed the maximum allowed by applicable law for furnishing the statement
of obligation as provided in Section 2943 of the Civil Code of California.

            SECTION 9.27 Request for Notice. Pursuant to Section 2924b(d) of the
California Civil Code, Trustor and Beneficiary request that a copy of any notice
of default and a copy of any notice of sale be mailed to Trustor and
Beneficiary, respectively, at the address for such party set forth herein

            SECTION 9.28 Release and Reconveyance. Lender will release and
reconvey its interest under this Deed of Trust to the Trust Property as required
by Section 7.04 of the Credit Agreement.

             [NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

                                       42
<PAGE>

      IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date
first above written.

                           TRUSTOR:

                           LAKES KEAN ARGOVITZ RESORTS-CALIFORNIA, L.L.C., a
                           Delaware limited liability company

                           By: /s/ Timothy J. Cope
                               ---------------------------------------
                               Timothy J. Cope, President and Chief Financial
                               Officer

                                       43
<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF New York                         )
                                          )   ss:
county of New York                        )

On June 21, 2006 before me, Linda Yonha Kim (here insert name and
title of the officer), personally appeared Timothy J. Cope, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                        /s/ Linda Yonha Kim
                                        ---------------------------
                                              Notary Public

                                       44
<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

Parcel 1:

That portion of Lot 5 of the Southwest Quarter of the Northwest Quarter of
Section 10, Township 17 South, Range 1 East, San Bernardino Meridian, in the
County of San Diego, State of California, according to the Official Plat
thereof, described as follows:

Beginning at the Southeasterly corner of said Lot 5; thence along the Southerly
line of said Lot 5 South 84(degree)47'00" West 601.86 feet to the Southeasterly
corner of that Parcel of Land conveyed to Orsen B. Thayer by Deed recorded July
19, 1888, in Book 125, Page 390 of Deeds; thence along the Easterly line of said
Thayer Land; North 0(degree)07'00" West 706.81 feet to the Westerly prolongation
of the Southerly line of that Parcel of Land conveyed to Amy B. Nobard by Deed
recorded July 24, 1930 as Document No. 35224 in Book 1795, Page 217 of Deeds;
thence along said prolongation and along the said Southerly line North
86(degree)23'40" East 614.36 feet to the Easterly line of said Lot 5; thence
along said Easterly Lot Line South 1(degree)01'25" West 690.83 feet to the Point
of Beginning.

Parcel 2:

All that portion of Lot 6 in Section 10, Township 17 South, Range 1 East, San
Bernardino Meridian, in the County of San Diego, State of California, according
to Official Plat thereof, lying West of the center line of the relocation of the
County Highway known as Route 16, Division 2, according to Map thereof on file
in the Office of the County Surveyor of San Diego County and lying South of the
South line of the Parcel of Land conveyed to William E. Lowe, by Deed dated
September 25, 1930 and recorded in Book 1820, Page 143 of Deeds, records of said
San Diego County.

Parcel 3:

The Easterly 8.00 feet of Lots 31 and 32 of County of San Diego Tract No. 3673,
in the County of San Diego, State of California, according to Map thereof No.
10781, filed in the Office of the County Recorder of San Diego County, November
30, 1983.

Also the Easterly 8.00 feet of the Southerly 0.40 feet of Lot 30 of County of
San Diego Tract No. 3673, in the County of San Diego, State of California,
according to Map thereof No. 10781, filed in the Office of the County Recorder
of San Diego County, November 30, 1983.

Parcel 4:

Lots 12 and 13 and that portion of Lot 11 lying Westerly of County Road Survey
No. 150, in Section 10, Township 17 South, Range 1 East, San Bernardino Base and
Meridian, in the County of San Diego, State of California, according to Official
Plat thereof.

Said land is also shown on Record of Survey Map No. 695, filed in the Office of
the County Recorder of San Diego County.

                                   Exhibit A-1
<PAGE>

Excepting therefrom that portion described as follows:

Commencing at Corner No. 16 of Rancho Jamul, according to the Record of Survey
Map No. 695, filed in the Office of the County Recorder of San Diego County;
thence South 88(degree)23'30" East along the Northerly line of said Rancho
Jamul, a distance of 1242.57 feet to the True Point of Beginning; thence
continuing South 88(degree)23'30" East along said Northerly line, a distance of
671.25 feet to the Southwesterly line of Highway Route 16, Division 2, also
known as Campo Road and State Highway 94; thence Northwesterly along said
Southwesterly line the following courses:

North 47(degree)30'30" West, 291.98 feet; North 46(degree)30'30" West, 264.02
feet; North 61(degree)03'30" West, 123.75 feet; North 47(degree)57'30" West,
189.19 feet; thence leaving said Southwesterly line South 01(degree)36'30" West,
546.89 feet to the True Point of Beginning.

Assessor's Parcel No: 597-042-13, 597-060-05

                                        2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>9
<FILENAME>c06339exv10w8.txt
<DESCRIPTION>DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SEUCRITY AGREEMENT AND FIXTURE FILING
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.8

THIS DEED OF TRUST WAS PREPARED BY
AND WHEN RECORDED, RETURN TO:

Latham & Watkins LLP
885 Third Avenue
New York, New York 10022

Attention: Elizabeth Jaffe, Esq.
Reference No.: 024819 0034

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

                                     made by

                       LAKES KAR SHINGLE SPRINGS, L.L.C .
                                    (TRUSTOR)

                                       to

                    FIDELITY NATIONAL TITLE INSURANCE COMPANY
                                    (TRUSTEE)

                               for the benefit of

                              BANK OF AMERICA, N.A.
                                  (BENEFICIARY)

                               PROPERTY LOCATION:

 42 and 34 acres on Shingle Springs Road, 6.51 and 5.012 acres on Pinnacle
                Court, 3051 Pinnacle Court and 4970 Artesia Road
                           Shingle Springs, California

                           DATED AS OF JUNE 22, 2006

    THIS ALSO CONSTITUTES FINANCING STATEMENTS FILED AS A FIXTURE FILING AND
   FINANCING STATEMENT PURSUANT TO SECTIONS 9501(a)(1) AND 9502(b) AND (c) OF
   THE CALIFORNIA UNIFORM COMMERCIAL CODE AND IS RECORDED AS A FIXTURE FILING

     PURSUANT TO SECTION 2924B(d) OF THE CALIFORNIA CIVIL CODE, TRUSTOR AND
   BENEFICIARY REQUEST THAT A COPY OF ANY NOTICE OF DEFAULT AND A COPY OF ANY
    NOTICE OF SALE BE MAILED TO TRUSTOR AND BENEFICIARY, RESPECTIVELY, AT THE
                    ADDRESS FOR SUCH PARTY SET FORTH HEREIN.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                    ----
<S>                                                                                                 <C>
ARTICLE I DEFINITIONS.............................................................................    2
         SECTION 1.01      Terms Defined Above....................................................    2
         SECTION 1.02      Definitions............................................................    2
         SECTION 1.03      Terminology............................................................    5
         SECTION 1.04      Other Defined Terms....................................................    6

ARTICLE II GRANT OF LIEN AND SECURITY INTEREST....................................................    6
         SECTION 2.01      Grant of Lien..........................................................    6
         SECTION 2.02      Grant of Security Interest.............................................    6
         SECTION 2.03      No Obligation of Beneficiary...........................................    7
         SECTION 2.04      Fixture Filing.........................................................    7
         SECTION 2.05      Future Advances........................................................    7
         SECTION 2.06      Intentionally Omitted..................................................    7

ARTICLE III ASSIGNMENT OF LEASES AND RENTS........................................................    7
         SECTION 3.01      Assignment.............................................................    7
         SECTION 3.02      Revocable License......................................................    8
         SECTION 3.03      Enforcement of Leases..................................................    8
         SECTION 3.04      Direction to Tenants...................................................    9
         SECTION 3.05      Appointment of Attorney-in-Fact........................................    9
         SECTION 3.06      No Liability of Beneficiary............................................   10
         SECTION 3.07      Trustor's Indemnities..................................................   10
         SECTION 3.08      No Modification of Trustor's Obligations...............................   11
         SECTION 3.09      Rights in Bankruptcy...................................................   11
         SECTION 3.10      Right to Enforce Under California Civil Code Section 2938..............   11

ARTICLE IV REPRESENTATIONS AND WARRANTIES.........................................................   13
         SECTION 4.01      Title to Trust Property and Lien of this Deed of Trust.................   13
         SECTION 4.02      Taxes and Other Payments...............................................   14
         SECTION 4.03      Power to Create Lien and Security......................................   14
         SECTION 4.04      Loan and Credit Agreements.............................................   14
         SECTION 4.05      Compliance with Laws...................................................   14
         SECTION 4.06      No Condemnation........................................................   15
         SECTION 4.07      Flood Zone.............................................................   15
         SECTION 4.08      Additional Environmental Representation................................   15

ARTICLE V AFFIRMATIVE COVENANTS...................................................................   15
         SECTION 5.01      Lien Status............................................................   15
         SECTION 5.02      Payment of Impositions.................................................   15
         SECTION 5.03      Repair.................................................................   16
         SECTION 5.04      Insurance and Application of Insurance Proceeds........................   16
         SECTION 5.05      Condemnation and Application of Condemnation Proceeds..................   18
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
         SECTION 5.06      Maintenance of Rights of Way, Easements, Licenses and Other Rights.....   19
         SECTION 5.07      Payment and Performance of Obligations.................................   19
         SECTION 5.08      Compliance with Permitted Liens and Other Obligations..................   20
         SECTION 5.09      Additional Affirmative Covenants.......................................   20

ARTICLE VI NEGATIVE COVENANTS.....................................................................   20
         SECTION 6.01      Use Violations.........................................................   20
         SECTION 6.02      Waste..................................................................   20
         SECTION 6.03      Alterations............................................................   20
         SECTION 6.04      No Further Encumbrances................................................   20
         SECTION 6.05      Transfer Restrictions..................................................   21
         SECTION 6.06      Loan and Credit Agreements; Additional Negative Covenants..............   21

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES........................................................   21
         SECTION 7.01      Event of Default.......................................................   21
         SECTION 7.02      Acceleration...........................................................   21
         SECTION 7.03      Foreclosure and Sale...................................................   21
         SECTION 7.04      Trustee's Successors, Substitutes and Agents...........................   22
         SECTION 7.05      Receivership...........................................................   22
         SECTION 7.06      Judicial Foreclosure...................................................   23
         SECTION 7.07      Separate Sales.........................................................   23
         SECTION 7.08      Possession of Trust Property...........................................   24
         SECTION 7.09      Occupancy After Foreclosure............................................   24
         SECTION 7.10      Remedies Cumulative, Concurrent and Nonexclusive.......................   24
         SECTION 7.11      No Release of Obligations..............................................   25
         SECTION 7.12      Release of and Resort to Collateral....................................   25
         SECTION 7.13      Waiver of Redemption, Notice and Marshalling of Assets.................   25
         SECTION 7.14      Discontinuance of Proceedings..........................................   26
         SECTION 7.15      Application of Proceeds................................................   26
         SECTION 7.16      Uniform Commercial Code Remedies.......................................   26
         SECTION 7.17      Indemnity..............................................................   27
         SECTION 7.18      Waiver of Lien.........................................................   27
         SECTION 7.19      Action for Environmental Claims........................................   28

ARTICLE VIII TRUSTEE..............................................................................   29
         SECTION 8.01      Duties, Rights, and Powers of Trustee..................................   29
         SECTION 8.02      Successor Trustee......................................................   29
         SECTION 8.03      Retention of Moneys....................................................   29
         SECTION 8.04      Reconveyance...........................................................   30

ARTICLE IX MISCELLANEOUS..........................................................................   30
         SECTION 9.01      Instrument Construed as Deed of Trust, Etc.............................   30
         SECTION 9.02      Performance at Trustor's Expense.......................................   30
         SECTION 9.03      Survival of Obligations................................................   30
         SECTION 9.04      Further Assurances.....................................................   30
         SECTION 9.05      Notices................................................................   30
</TABLE>

                                       ii
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<TABLE>
<S>                                                                                                  <C>
         SECTION 9.06      No Waiver..............................................................   31
         SECTION 9.07      Beneficiary's Right to Perform; Beneficiary's Expenditures.............   31
         SECTION 9.08      Successors and Assigns.................................................   32
         SECTION 9.09      Severability...........................................................   32
         SECTION 9.10      Subrogation of Trustee.................................................   32
         SECTION 9.11      Entire Agreement and Modification......................................   32
         SECTION 9.12      Applicable Law.........................................................   32
         SECTION 9.13      Satisfaction of Prior Encumbrance......................................   33
         SECTION 9.14      No Partnership.........................................................   33
         SECTION 9.15      Headings...............................................................   34
         SECTION 9.16      Release of Deed of Trust...............................................   34
         SECTION 9.17      Limitation of Obligations with Respect to Trust Property...............   34
         SECTION 9.18      Inconsistency with Credit Agreement....................................   34
         SECTION 9.19      Limitation on Interest Payable.........................................   35
         SECTION 9.20      Covenants To Run With the Land.........................................   35
         SECTION 9.21      Amount Secured; Last Dollar............................................   35
         SECTION 9.22      Defense of Claims......................................................   35
         SECTION 9.23      Exculpation Provisions.................................................   36
         SECTION 9.24      No Merger of Estates...................................................   36
         SECTION 9.25      Suretyship Waivers.....................................................   36
         SECTION 9.26      Beneficiary Statement..................................................   41
         SECTION 9.27      Request for Notice.....................................................   41
         SECTION 9.28      Release and Reconveyance...............................................   42

EXHIBIT A  -  LEGAL DESCRIPTION
</TABLE>

                                      iii
<PAGE>

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

            THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (hereinafter, together with any and all amendments,
supplements, modifications or restatements of any kind, referred to as this
"Deed of Trust"), is made as of June 22, 2006, by LAKES KAR SHINGLE SPRINGS,
L.L.C., a Delaware limited liability company ("Trustor"), having its principal
place of business at c/o Lakes Entertainment, Inc., 130 Cheshire Lane, Suite
101, Minnetonka, Minnesota 55309, Attention: Damon E. Schramm, Esq., to Fidelity
National Title Insurance Company, a California corporation (including any
successor trustee at the time acting as such hereunder, "Trustee"), for the
benefit of BANK OF AMERICA, N.A., having its principal place of business at 100
N. Tyron Street, Charlotte, North Carolina 28255-0001, Attention: Douglas Jones
(in such capacity, together with its successors and assigns, "Beneficiary"), for
itself and in its capacity as Administrative Agent ("Administrative Agent") for
each of the financial institutions and their respective successors and assigns
which from time to time shall be a "Lender" under the Credit Agreement (as
hereinafter defined).

                                    RECITALS:

            WHEREAS, Trustor, a subsidiary of Parent, as hereinafter defined, is
the owner and holder of fee simple title in and to the Land (as hereinafter
defined) described on Exhibit A attached hereto and made a part hereof;

            WHEREAS, on the date hereof, Trustor, Lakes Entertainment, Inc.
("Parent"), Lakes Gaming and Resorts, LLC ("Borrower") and the Guarantors (as
defined in the Credit Agreement), entered into that certain Credit Agreement
with the Beneficiary, the Lenders party thereto and Banc of America Securities,
LLC, as sole lead arranger and sole book manager (as the same may be amended,
modified or otherwise supplemented and in effect from time to time, the "Credit
Agreement"), pursuant to which the Lenders agreed to extend to Borrower a
certain senior secured term loan facility in the aggregate original principal
amount of up to ONE HUNDRED AND FIVE MILLION and 00/100 Dollars
($105,000,000.00) (the "Loan");

            WHEREAS, Trustor will derive direct economic benefit from the Loan;

            WHEREAS, as a condition to Beneficiary executing the Credit
Agreement, Beneficiary is requiring that Trustor grant to Beneficiary, on behalf
of the Lenders, a security interest in and a first deed of trust lien upon the
Trust Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Credit Agreement, this Deed of Trust, and the
other Loan Documents (as hereinafter defined) (except for "Unsecured
Environmental Costs", as defined in Section 7.19 below), and (b) the performance
by Trustor of all terms, covenants, conditions, provisions, agreements and
liabilities contained in the Credit Agreement, this Deed of Trust, and the other
Loan Documents.

            NOW, THEREFORE, in order to comply with the terms and conditions of
the Credit Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Trustor hereby agrees with
Beneficiary as follows:

                                       1
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01 Terms Defined Above. As used in this Deed of Trust, the
terms defined in the introductory paragraph to this Deed of Trust and in the
Recitals set forth above shall have the meanings respectively assigned to them
above.

            SECTION 1.02 Definitions. As used herein, the following terms shall
have the following meanings:

            "Applicable UCC" means the Uniform Commercial Code as presently in
effect in the State or Commonwealth where the Trust Property is located.

            "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101, et. seq.), as amended, and any successor statute.

            "Buildings" means any and all buildings, structures, garages,
utility sheds, workrooms, air conditioning towers, open parking areas and other
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

            "Default" has the meaning assigned to such term in the Credit
Agreement.

            "Default Rate" has the meaning assigned to such term in the Credit
Agreement.

            "Event of Default" has the meaning assigned to such term in Section
7.01 hereof.

            "Fixtures" means all materials, supplies, equipment, apparatus and
other items now or hereafter acquired by Trustor and incorporated into the Trust
Property so as to constitute fixtures under the laws of the state in which such
items are located.

            "Governmental Authority" has the meaning assigned to such term in
the Credit Agreement.

            "Governmental Requirements" means any and all present and future
judicial decisions, statutes, rulings, rules, regulations, permits, certificates
or ordinances of any Governmental Authority in any way applicable to Trustor or
the Trust Property, including the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof.

            "Impositions" means any and all real estate and personal property
taxes; water, gas, sewer, electricity and other utility rates and charges;
charges for any easement, license or agreement maintained for the benefit of the
Trust Property; any and all other taxes, charges and assessments, whether
general or special, ordinary or extraordinary, foreseen or unforeseen, of any
kind and nature whatsoever which at any time prior to or after the execution
hereof may be assessed, levied or imposed upon the Trust Property or the
ownership, use, occupancy, benefit or

                                       2
<PAGE>

enjoyment thereof, together with any interest, costs or penalties that may
become payable in connection therewith.

            "Indemnified Parties" means, with respect to any Person entitled to
the benefit of an indemnity, such Person's officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, attorneys,
accountants and experts. The term "Indemnified Party" means any one of such
Persons.

            "Indemnitees" has the meaning assigned to such term in the Credit
Agreement.

            "Land" means the real property or interest therein described in
Exhibit A attached hereto, and all rights, titles and interests appurtenant
thereto.

            "Leases" means any and all leases, master leases, subleases,
licenses, concessions or other agreements (whether written or oral, and whether
now or hereafter in effect) which grant to third Persons a possessory interest
in and to, or the right to use, all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty, together with all security and other deposits
made in connection therewith and any guarantee of the obligations of the
landlord or the tenant thereunder.

            "License" has the meaning assigned to such term in Section 3.02(a)
hereof.

            "Lien" has the meaning assigned to such term in the Credit
Agreement.

            "Loan Documents" means, collectively, the Credit Agreement, this
Deed of Trust, and all other instruments, agreements and other documents
executed and delivered pursuant hereto or thereto or otherwise included in the
definition of the term "Loan Documents" in the Credit Agreement.

            "Losses" means all obligations, damages, claims, causes of action,
costs, fines, fees, charges, penalties, deficiencies, losses, diminutions in
value, expenses (including court costs, fees and expenses of attorneys,
accountants, consultants and other experts) and other liabilities, and, with
respect to any indemnity, includes all attorneys' fees, costs and expenses in
connection with the enforcement and collection of such indemnity. The term
"Loss" means any one of such Losses.

            "Trust Property" means all of Trustor's right, title, interest and
estate, whether now owned or hereafter acquired, in and to the Land, the
Buildings, the Fixtures and the Personalty, together with:

            (I)    all rights, privileges, tenements, hereditaments,
                   rights-of-way, easements, air rights, development rights or
                   credits, zoning rights, appendages and appurtenances in
                   anywise appertaining thereto, and all right, title and
                   interest of Trustor in and to any streets, ways, alleys,
                   strips or gores of land adjoining the Land or any part
                   thereof, and all right, title and interest of Trustor, if
                   any, in and to all rights, royalties and profits with respect
                   to all minerals, coal, oil, gas and other substances of any
                   kind or character on or underlying the Land, together with
                   all right, title and interest of Trustor

                                       3
<PAGE>

                   in and to all water and water rights (whether riparian,
                   appropriative or otherwise and whether or not appurtenant);

            (II)   all rights of Trustor (but not its obligations) under any
                   contracts and agreements, including, without limitation,
                   construction contracts and architectural agreements, relating
                   to the Land, the Buildings, the Fixtures or the Personalty;

            (III)  all of Trustor's right, title and interest in and to all
                   permits, licenses, franchises, certificates, authorizations,
                   consents, approvals and other rights and privileges (each, a
                   "Permit") obtained in connection with the Land, the
                   Buildings, the Fixtures or the Personalty or the use or
                   operation thereof;

            (IV)   all of Trustor's right, title and interest in and to all
                   plans and specifications, designs, schematics, drawings and
                   other information, materials and matters heretofore or
                   hereafter prepared relating to the Land, the Buildings, the
                   Fixtures or the Personalty;

            (V)    all of Trustor's right, title and interest in and to all
                   proceeds arising from or by virtue of the sale, lease or
                   other disposition of the Land, the Buildings, the Fixtures or
                   the Personalty or any part thereof or any interest therein or
                   from the operation thereof;

            (VI)   all of Trustor's right, title and interest in and to all
                   Leases now or hereafter in effect and all Rents, royalties,
                   bonuses, issues, profits, revenues or other benefits arising
                   from or attributable to the Land, the Buildings, the Fixtures
                   or the Personalty;

            (VII)  all of Trustor's right, title and interest in and to all
                   betterments, additions, alterations, appurtenances,
                   substitutions, replacements and revisions to the Land, the
                   Buildings, the Fixtures or the Personalty and all reversions
                   and remainders relating thereto;

            (VIII) all of Trustor's right, title and interest in and to any
                   awards, remuneration, settlements or compensation now or
                   hereafter made by any Governmental Authority pertaining to
                   the Land, the Buildings, the Fixtures or the Personalty,
                   including those arising from or attributable to any vacation
                   of, or change of grade in, any streets affecting the Land or
                   the Buildings;

            (IX)   all of Trustor's right, title and interest in and to any and
                   all other security and collateral of any nature whatsoever,
                   whether now or hereafter given, for the repayment,
                   performance and discharge of the Obligations (as hereinafter
                   defined);

            (X)    all of Trustor's right, title and interest in and to all
                   awards, payments and proceeds of conversion, whether
                   voluntary or involuntary, of any of the Land, the Buildings,
                   the Fixtures, the Personalty or any of the property

                                       4
<PAGE>

                   and rights described in the foregoing clauses (i) through
                   (ix), including without limitation, all insurance,
                   condemnation and tort claims, refunds of real estate taxes
                   and assessments, rent claims and other obligations
                   dischargeable in cash or cash equivalents; and

            (XI)   all other property and rights of Trustor of every kind and
                   character relating to and/or used or to be used in connection
                   with the foregoing, and all proceeds and products of any of
                   the foregoing.

            EXCLUDING, HOWEVER, all motor vehicles and forklifts now or
hereafter located on the Land and only to the extent contemplated by the Credit
Agreement.

As used in this Deed of Trust, the term "Trust Property" shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

            "Obligations" has the meaning assigned to such term in the Credit
Agreement but shall specifically not include "Unsecured Environmental Costs" as
defined in Section 7.19 below.

            "Permitted Liens" has the meaning assigned to such term in the
Credit Agreement.

            "Person" has the meaning assigned to such term in the Credit
Agreement.

            "Personalty" means all of Trustor's right, title and interest in and
to all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private, including all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs, and all other
personal property (other than Fixtures) of any kind or character), and including
such property that is now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are or may be used in or related to
the planning, development, financing or operation of the Trust Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

            "Principal Balance" has the meaning assigned to such term in Section
7.02 hereof.

            "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Trustor acquires title
thereto), and other benefits paid or payable by parties (other than Trustor) for
using, leasing, licensing, possessing, operating from, residing in, benefiting
from or otherwise enjoying all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty.

            SECTION 1.03 Terminology. Except as otherwise provided herein:

                                       5
<PAGE>

            (a) references to Articles and Sections shall mean the corresponding
Article or Section of this Deed of Trust;

            (b) words used herein in the singular, where the context so permits,
shall be deemed to include the plural and vice versa, and the definitions of
words used in the singular herein shall apply to such words when used in the
plural where the context so permits and vice versa;

            (c) the words "herein," "hereof," "hereunder," and other words of
similar import when used in this Deed of Trust refer to this Deed of Trust as a
whole, and not to any particular Article or Section; and

            (d) the words "includes" or "including" mean includes or including,
without limitation.

            SECTION 1.04 Other Defined Terms. Any capitalized term used in this
Deed of Trust and not otherwise defined herein shall have the meaning assigned
to such term in the Credit Agreement.

                                   ARTICLE II

                       GRANT OF LIEN AND SECURITY INTEREST

            SECTION 2.01 Grant of Lien. To secure the full and timely payment,
performance and discharge of all of the Obligations, Trustor hereby irrevocably
GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS and CONVEYS unto Trustee and
Trustee's successors, assigns and substitutes in trust hereunder, WITH POWER OF
SALE and right of entry and possession, for the use and benefit of Beneficiary,
in its capacity as Administrative Agent for the Lenders, the real and personal
property, right, title, interest and estate in, to and under the Trust Property,
subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the Trust Property
unto Trustee and Trustee's successors, assigns and substitutes in trust
hereunder, subject to the terms and conditions of this Deed of Trust, with POWER
OF SALE, forever, and Trustor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto
Beneficiary against every Person whomsoever lawfully claiming or to claim the
same or any part, subject, however, to the Permitted Liens; provided, however,
that if Trustor shall pay (or cause to be paid) and perform and discharge (or
cause to be performed and discharged) all of the Obligations on or before the
date on which the same are to be paid, performed and discharged, then the Liens
estates and rights granted by this Deed of Trust shall cease and terminate.

            SECTION 2.02 Grant of Security Interest. This Deed of Trust shall
also constitute and serve as a "security agreement" within the meaning of, and
shall constitute a first and prior security interest under, the Applicable UCC
with respect to the Personalty and the Fixtures. To this end, Trustor by these
presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto
Beneficiary, as Administrative Agent for the Lenders pursuant to the Credit
Agreement, a security interest in all of Trustor's right, title and interest in,
to and under the Personalty and the Fixtures, to secure the full and timely
payment, performance

                                       6
<PAGE>

and discharge of the Obligations. Trustor hereby consents to Beneficiary filing
and recording financing statements (and continuations thereof) with the
appropriate filing and recording offices in order to perfect (and maintain the
perfection of) the security interests granted herein.

            SECTION 2.03 No Obligation of Beneficiary. The assignment and
security interest herein granted to Beneficiary shall not be deemed or construed
to constitute Beneficiary as a mortgagee-in-possession of the Trust Property,
obligate Beneficiary to lease the Trust Property or attempt to do the same, or
to take any action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever.

            SECTION 2.04 Fixture Filing. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (a) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the Land described or to which reference is made herein or
on Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is to be
filed of record in the real estate records as a financing statement and shall
constitute a "fixture filing" for purposes of the Applicable UCC; and (c)
Trustor is the record owner of the real estate or interests in the real estate
constituting the Trust Property hereunder. Information concerning the security
interest herein granted may be obtained at the addresses set forth on the first
page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor
(Trustor) are set forth on the first page hereof. In that regard, the following
information is provided:

            Name of Debtor: LAKES KAR SHINGLE SPRINGS, L.L.C.

            Type of Organization: limited liability company

            State: Delaware

            FEIN: 41-1946958

            Organizational ID Number: 199930610015

            SECTION 2.05 Future Advances. It is the intention of Trustor and
Beneficiary that this Deed of Trust shall secure future advances and
readavances, and the lien and security interest created by this Deed of Trust
shall attach upon execution and have priority from the time of recording as to
all advances, whether obligatory or discretionary, until this Deed of Trust is
released of record.

            SECTION 2.06 Intentionally Omitted

                                   ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

            SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Credit
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Trustor has presently, absolutely and irrevocably GRANTED, ASSIGNED,
TRANSFERRED and CONVEYED, and by these presents does presently, absolutely and
irrevocably GRANT, ASSIGN, TRANSFER

                                       7
<PAGE>

and CONVEY, unto Beneficiary, as Administrative Agent for the Lenders pursuant
to the Credit Agreement, as security for the payment, performance and discharge
of the Obligations, all of the Leases and Rents (if any), subject only to the
Permitted Liens applicable thereto and the License (as hereinafter defined);
provided, however, that if Trustor shall pay (or cause to be paid) and perform
and discharge (or cause to be performed and discharged) all of the Obligations
on or before the date on which the same are to be paid, performed and
discharged, then this assignment shall terminate, and all rights, titles and
interests conveyed pursuant to this assignment shall become vested in Trustor.

            SECTION 3.02 Revocable License.

            (a) Beneficiary hereby grants to Trustor a revocable license (the
"License"), nonexclusive with the rights of Beneficiary reserved in Sections
3.02(b), 3.04, and 3.05 hereof, to exercise and enjoy all incidences of the
status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor. Trustor hereby agrees to receive all Rents and hold the same as a
trust fund to be applied, and to apply the Rents so collected, except to the
extent otherwise provided in the Credit Agreement, first to the payment,
performance and discharge of the Obligations and then to the payment of the
Impositions. Thereafter, Trustor may use the balance of the Rents collected in
any manner not inconsistent with the Loan Documents.

            (b) If an Event of Default shall occur and be continuing, the
License shall immediately and automatically terminate without the necessity of
any action by Beneficiary or any other Person, and Beneficiary shall have the
right in such event to exercise the rights and remedies provided under this Deed
of Trust or otherwise available to Beneficiary under applicable law. Upon demand
by Beneficiary at any time that an Event of Default shall have occurred, Trustor
shall promptly pay to Beneficiary all security deposits under the Leases and all
Rents allocable to any period commencing from and after the occurrence of such
Event of Default. Any Rents received hereunder by Beneficiary shall be applied
and disbursed to the payment, performance and discharge of the Obligations,
subject to the terms of the Credit Agreement; provided, however, that, subject
to any applicable requirement of law, any security deposits actually received by
Beneficiary shall be held, applied and disbursed as provided in the applicable
Leases.

            SECTION 3.03 Enforcement of Leases. Trustor shall (a) submit any and
all proposed Leases (including subleases provided to Trustor for approval) to
Beneficiary for approval prior to the execution thereof or consent thereto, as
applicable; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) maintain each Lease in full force and effect
during the term thereof; (d) provide Beneficiary with prompt notice of each
notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of default received from (or relating to) a tenant
under a Lease, and otherwise promptly reasonably indicate that a material
default or termination of a Lease may occur (other than by reason of the
expiration of the term of such Lease); (e) appear in and defend any action or
proceeding in any manner connected with any of the Leases; (f) deliver to
Beneficiary true and complete copies of all Leases; and (g) deliver to
Beneficiary all such further information, and execute and deliver to

                                       8
<PAGE>

Beneficiary such further assurances and assignments, with respect to the Leases
as Beneficiary may from time to time reasonably request. Without Beneficiary's
prior written consent, Trustor shall not (i) do or knowingly permit to be done
anything to materially impair the value of any of the Leases; (ii) except for
security or similar deposits, collect any of the Rent more than one (1) month in
advance of the time when the same becomes due under the terms of any Lease;
(iii) discount any future accruing Rents; (iv) amend, modify, accept the
surrender of or terminate any of the Leases; or (v) assign or grant a security
interest in or to any of the Leases or Rents.

            SECTION 3.04 Direction to Tenants. Upon the occurrence and during
the continuance of an Event of Default, Trustor hereby authorizes and directs,
and shall, at the direction of Beneficiary, further authorize and direct, in
writing, the tenant under each Lease to pay directly to, or as directed by,
Beneficiary all Rents accruing or due under its Lease without proof to the
tenant of the occurrence and continuance of such Event of Default. Trustor
hereby authorizes the tenant under each Lease to rely upon and comply with any
notice or demand from Beneficiary for payment of Rents to Beneficiary, and
Trustor shall have no claim against any tenant for Rents paid by such tenant to
Beneficiary pursuant to such notice or demand. All Rents actually collected by
Beneficiary pursuant to this Section 3.04 shall be applied in accordance with
the Credit Agreement.

            SECTION 3.05 Appointment of Attorney-in-Fact.

            (a) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to,
upon the occurrence and during the continuance of an Event of Default, demand,
sue for, attach, levy, recover and receive any of the Rents and any premium or
penalty payable upon the exercise by any third Person under any Lease of a
privilege of cancellation originally provided in such Lease and to give proper
receipts, releases and acquittances therefor and, after deducting expenses of
collection, to apply the net proceeds as provided in the Credit Agreement.
Trustor hereby authorizes and directs any such third Person to deliver such
payment to Beneficiary in accordance with this Article III, and Trustor hereby
ratifies and confirms all that its said attorney-in-fact, the Beneficiary, shall
do or cause to be done in accordance with this Deed of Trust and by virtue of
the powers granted hereby. The foregoing appointment is irrevocable and
continuing, and such rights, powers and privileges shall be exclusive in
Beneficiary, and its successors and assigns, so long as any part of the
Obligations remains unpaid or unperformed and undischarged.

            (b) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid

                                       9
<PAGE>

or unperformed and undischarged. Trustor hereby represents and warrants that it
has not at any time prior to the date hereof exercised (or appointed any Person
as attorney-in-fact to exercise) any of the rights described in this Section
3.05(b), and Trustor hereby covenants not to exercise (or appoint any other
Person as attorney-in-fact to exercise) any such right, nor (except at
Beneficiary's written request) to subordinate any such Lease to the lien of this
Deed of Trust or to any other mortgage, deed of trust, assignment or security
agreement or to any ground lease or surface lease.

            SECTION 3.06 No Liability of Beneficiary. Neither the acceptance
hereof nor the exercise of the rights and remedies hereunder nor any other
action on the part of Beneficiary or any Person exercising the rights of
Beneficiary or any Lender hereunder shall be construed to: (a) be an assumption
by Beneficiary or any such Person or to otherwise make Beneficiary or such
Person liable or responsible for the performance of any of the obligations of
Trustor under or with respect to the Leases or for any Rent, security deposit or
other amount delivered to Trustor, provided that Beneficiary or any such Person
exercising the rights of Beneficiary shall be accountable for any Rents,
security deposits or other amounts actually received by Beneficiary or such
Person, as the case may be; or (b) obligate Beneficiary or any such Person to
take any action under or with respect to the Leases or with respect to the Trust
Property, to incur any expense or perform or discharge any duty or obligation
under or with respect to the Leases or with respect to the Trust Property, to
appear in or defend any action or proceeding relating to the Leases or the Trust
Property, to constitute Beneficiary as a mortgagee-in-possession (unless
Beneficiary actually enters and takes possession of the Trust Property), or to
be liable in any way for any injury or damage to Persons or property sustained
by any Person in or about the Trust Property, other than to the extent caused by
the willful misconduct or gross negligence of Beneficiary or any Person
exercising the rights of Beneficiary hereunder.

            SECTION 3.07 Trustor's Indemnities. Trustor hereby agrees to
protect, indemnify and hold harmless Beneficiary and each of the other
Indemnitees and each Indemnified Party related to Beneficiary or such other
Indemnitees from and against any and all Losses which Beneficiary or any such
other Indemnitees or Indemnified Party may incur under or by reason of this
Article III, or for any action taken by Beneficiary or any such other Lender or
Indemnified Party hereunder, or by reason or in defense of any and all claims
and demands whatsoever which may be asserted against Beneficiary or any such
other Indemnitees or Indemnified Party arising out of the Leases, including,
without limitation, any claim by any third Person for credit on account of Rents
paid to and received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Beneficiary
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Beneficiary or any such
other Indemnitees or Indemnified Party. In the event that Beneficiary or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys' fees, with interest thereon at the Default Rate, shall be
payable by Trustor to Beneficiary within ten (10) days after demand therefor,
and shall be secured hereby and by all other security for the payment and
performance of the Obligations, including, without limitation, the lien and
security interest of this Deed of Trust. The liabilities of Trustor as set forth
in this Section 3.07 shall survive the termination of this Deed of Trust and the
repayment of the Obligations.

                                       10
<PAGE>

            SECTION 3.08 No Modification of Trustor's Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Trustor to
make prompt payment of all Obligations as and when the same become due,
regardless of whether the Rents described in this Article III are sufficient to
pay the Obligations, and the security provided to Beneficiary pursuant to this
Article III shall be cumulative of all other security of any and every character
now or hereafter existing to secure payment of the Obligations. SECTION 3.09
Rights in Bankruptcy. Upon execution of this Deed of Trust, Beneficiary, and not
Trustor, shall be the creditor of any Tenant in respect of assignments for the
benefit of creditors and bankruptcy, reorganization, insolvency, dissolution or
receivership proceedings affecting any such Tenant; provided, however, that
Trustor shall be the party obligated to make timely filings of claims in such
proceedings or to otherwise pursue creditor's rights therein. Notwithstanding
the foregoing, Beneficiary shall have the right, but not the obligation, to file
such claims instead of Trustor and if Beneficiary does file a claim, Trustor
agrees that Beneficiary (a) is entitled to all distributions on such claim to
the exclusion of Trustor and (b) has the exclusive right to vote such claim and
otherwise to participate in the administration of the estate in connection with
such claim. Beneficiary shall have the option to apply any monies received by it
as such creditor to any of the obligations of Trustor under the Loan Documents
the order set forth in the Loan Documents. If a petition is filed under the
Bankruptcy Code by or against Trustor, and Trustor, as landlord under any Lease,
decides to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code,
then Trustor shall give Beneficiary at least ten (10) days' prior written notice
of the date when Trustor shall apply to the bankruptcy court for authority to
reject the Lease. Beneficiary may, but shall not be obligated to, send Trustor
within such ten-day period a written notice stating that (a) Beneficiary demands
that Trustor assume and assign the Lease to Beneficiary pursuant to Section 365
of the Bankruptcy Code, and (b) Beneficiary covenants to cure or provide
adequate assurance of future performance under the Lease. If Beneficiary sends
such notice, Trustor shall not reject the Lease provided Beneficiary complies
with clause (b) of the preceding sentence.

            SECTION 3.10 Right to Enforce Under California Civil Code Section
2938. Without limiting any other rights or remedies of Beneficiary set forth in
this Deed of Trust or under any of the other Loan Documents to which Trustor is
a party, or available at law or in equity, at any time upon or following the
occurrence of any Event of Default, Beneficiary shall have the right to enforce
all of the rights and remedies of an Beneficiary under Section 2938 of the
California Civil Code ("Section 2938"). In the event that Beneficiary shall
elect to enforce this Deed of Trust in accordance with Section 2938, the
following procedures shall apply, as applicable:

                  (i) Beneficiary may send a demand notice in the form
      prescribed by Section 2938 to, in the case of enforcement under Section
      2938(c)(3), one or more of the tenants of the Trust Property, with a copy
      to Trustor and any other Beneficiary under a recorded assignment of
      leases, rents, issues and profits with respect to the Trust Property, or,
      in the case of enforcement under Section 2938(c)(4), to Trustor with a
      copy to any such other Beneficiarys in accordance with the procedures set
      forth therein. Without limiting Beneficiary's rights to any amounts
      received by Trustor after an Event of Default, Trustor shall immediately
      turn over to Beneficiary any Rents received by Trustor from any tenant of
      the Trust Property from and after Beneficiary's enforcement of this

                                       11
<PAGE>

      assignment under either of such Sections 2938(c)(3) or (4), it being
      understood that Trustor shall be deemed to hold such amounts as trustee
      for Beneficiary until such amounts have been paid to Beneficiary. In
      addition, Trustor shall also cause any collection agent for Trustor or any
      other person who has collected for Trustor's benefit relating to the
      period from and after Beneficiary's enforcement of this assignment under
      either of such Sections 2938(c)(3) or (4), to turn such Rents over to
      Beneficiary.

                  (ii) Notwithstanding anything to the contrary contained in
      this Deed of Trust or any other Loan Document, if Beneficiary shall
      proceed to enforce this assignment by means other than the appointment of
      a receiver and consequently receives Rents as a result thereof, and
      Beneficiary receives written demand from Trustor (or any other party
      entitled under law to make demand on Beneficiary) to pay the reasonable
      costs of protecting and preserving the Trust Property, Beneficiary may
      elect either to pay (either directly to the party to whom owed, or by
      joint check payable to Trustor and such party) or authorize Trustor to
      pay, such costs (such payments being referred to herein as "Protective
      Payments"), conditioned upon Trustor furnishing to Beneficiary all
      information (such as invoices, bills, contracts, or purchase orders)
      necessary in order for Beneficiary to identify the party to whom payment
      is owed or the work, service or item for which payment is requested and to
      establish that such Protective Payments are required to be paid or
      authorized under this Section. If Trustor is authorized to pay any
      Protective Payments under this Section, Beneficiary reserves the right to
      deposit the amounts necessary to pay such Protective Payments into a
      non-interest bearing checking account, in which Trustor shall have granted
      to Beneficiary a perfected, first priority security interest, from which
      Trustor shall be obligated to draw the funds necessary to pay such
      Protective Payments. In the event that Beneficiary agrees or is required
      under any circumstances to pay or authorize the payment of any Protective
      Payments consisting of costs of improvement of the Trust Property or any
      portion thereof (or any other costs the non-payment of which would entitle
      the payee to enforce mechanic's or materialman's liens or similar rights),
      Beneficiary shall be authorized, before paying or authorizing the payment
      of any such payments, to require compliance with standard construction
      loan disbursement conditions with respect to such costs, including,
      without limitation, the receipt of unconditional mechanics' lien waivers
      with respect to the work for which such costs are to be paid. (iii) In no
      event shall Beneficiary be obligated to pay or authorize the payment of
      Protective Payments in excess of any Rents actually received by
      Beneficiary as a result of the enforcement of Section (i) of this Section.

                  (iv) Nothing contained in this Section shall limit the rights
      of Beneficiary under any other provision of Deed of Trust.

                  (v) Nothing contained in this Section shall limit either (x)
      Beneficiary's right to cease at any time any further enforcement of this
      Assignment under Section 2938 by sending written notice of the
      cancellation thereof to each party to whom a demand notice was sent, or
      (y) Beneficiary's right to seek the appointment of a receiver, either of
      which if enforced by Beneficiary, shall terminate Beneficiary's
      obligations under Section (i) of this Section.

                                       12
<PAGE>

                  (vi) In no event shall any enforcement of Beneficiary's rights
      under this Section, including, without limitation, the payment or
      authorization of payment of any Protective Payments, make Beneficiary a
      "mortgagee-in-possession" or limit, waive, or otherwise derogate any of
      Beneficiary's other rights and remedies available to it under the Loan
      Documents to which Trustor is a party or at law. In no event shall any
      exercise of lights by the Beneficiary under this Section, including,
      without limitation, the payment or authorization of payment of any
      Protective Payments, be construed to require the Beneficiary to operate or
      manage the Trust Property or be construed as an assumption by Beneficiary
      of any obligation to operate or manage the Trust Property, and all
      liabilities and obligations in relation to the operation and management of
      the Trust Property shall remain exclusively that of the Trustor.

            (b)   Any Rents received by Beneficiary as a result of any such
enforcement measures shall be applied as provided in this Deed of Trust.

            (c)   Without in any way limiting Trustor's other indemnification
obligations set forth in this Assignment and in any of the Loan Documents to
which Trustor is a party, Trustor shall indemnify, defend, protect, and hold
harmless Beneficiary, and its successors and assigns, from and against any and
all losses, costs, expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses), damages, liabilities, or claims asserted
against or suffered by Beneficiary (i) arising from any Protective Payments
made, or authorized to be made, by Beneficiary in good faith, and (ii) arising
from any work performed or goods or services furnished in connection with the
ownership or operation of the Trust Property at any time during which
Beneficiary shall be enforcing its rights under this Section.

            (d)   Without limiting the restrictions on assignment set forth in
this Assignment and any of the other Loan Documents to which Trustor is a party,
each Beneficiary of any interest in the Rents shall acquire its interest in the
Rents subject to the rights of the Beneficiary set forth in this Assignment, and
shall acquire no greater rights with respect to the payment of Protective
Payments than the rights of Trustor as set forth in this Section.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary (but to
the extent any representation or warranty in this Article IV is substantively
the same as a representation or warranty contained in Article V of the Credit
Agreement and such representation or warranty is qualified by a materiality or
other qualifier in the Credit Agreement, such representation or warranty herein
shall be subject to the same materiality or other qualifier as in Article V of
the Credit Agreement) as follows:

            SECTION 4.01 Title to Trust Property and Lien of this Deed of Trust.
Trustor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good, marketable and indefeasible title to the Fixtures,
the Personalty and the other Trust Property. The Trust Property is free and
clear of any and all Liens, charges, encumbrances, security interests and
adverse claims whatsoever, except for (i) all Liens, charges, encumbrances,
security

                                       13
<PAGE>

interests and adverse claims specifically identified as exceptions on Schedule B
of the policy of title insurance accepted by Beneficiary in connection herewith,
or (ii) those Liens set forth in Section 5.08 of the Credit Agreement.

            SECTION 4.02 Taxes and Other Payments. Trustor has filed all
federal, state, commonwealth, county, municipal and city income and other
material tax returns required to have been filed by it and has paid all taxes
and other Impositions which have become due pursuant to such returns or pursuant
to any assessments or charges received by it, and Trustor does not know of any
basis for any additional assessment or charge in respect of any such taxes or
other Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Trust Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

            SECTION 4.03 Power to Create Lien and Security. Trustor has full
power and lawful authority to grant, bargain, sell, assign, transfer, mortgage
and convey a Lien and security interest in all of the Trust Property in the
manner and form herein provided and without obtaining the authorization,
approval, consent or waiver of any grantor, lessor, sublessor, Governmental
Authority or other Person whomsoever.

            SECTION 4.04 Loan and Credit Agreements. Trustor has received a copy
of and is fully familiar with the terms and provisions of the Credit Agreement
and the other Loan Documents. All representations and warranties made by Trustor
in the Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby made by Trustor as to itself and the Trust Property as
though such representations and warranties were set forth at length herein as
the representations and warranties of Trustor.

            SECTION 4.05 Compliance with Laws. All of the improvements on the
Land (i) comply with all material requirements of all applicable laws and
ordinances with respect to zoning, subdivision, construction, building and land
use, including, without limitation, requirements with respect to parking, access
and certificates of occupancy (and similar certificates), and (ii) comply with,
and shall remain in compliance with, applicable health, fire and building codes.
All of the Buildings lie wholly within the boundaries and building restriction
lines of the Land. No improvements on adjoining properties encroach upon the
Land, and no easements or other encumbrances upon the Land encroach upon or
under any of the Buildings or any portion of the Trust Property. All of the
Buildings and the use of the Trust Property materially comply with, and shall
remain in material compliance with, all applicable statutes, rules, regulations
and private covenants now or hereafter relating to the ownership, construction,
use or operation of the Trust Property, including all applicable statutes, rules
and regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use. All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Trust Property have been obtained and
are in full force and effect. Trustor has not received any notice of, or other
communication with respect to, an alleged violation with respect to any of the
foregoing.

                                       14
<PAGE>

            SECTION 4.06 No Condemnation. No part of any property subject to
this Deed of Trust has been taken in condemnation or other like proceeding nor
is any proceeding pending, threatened or known to be contemplated for the
partial or total condemnation or taking of the Trust Property.

            SECTION 4.07 Flood Zone. The Trust Property is not located in an
area identified by the Federal Emergency Management Agency ("FEMA") as having
special flood hazards or if the Land or any part thereof is identified by the
Federal Emergency Management Agency as an area having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone V),
then Trustor has obtained the insurance required under Section 5.04(a)(v) of
this Deed of Trust.

            SECTION 4.08 Additional Environmental Representation. The Trust
Property has not been designated as a "hazardous waste property" and to Tenant's
knowledge, the Trust Property has not been designated as a "border zone
property" pursuant to Section 25220, et. seq. of the California Health and
Safety Code.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

            Trustor hereby unconditionally covenants and agrees with Beneficiary
as follows:

            SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Credit Agreement, Trustor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Trust Property, or any portion
thereof or interest therein, with any other Lien or security interest of any
nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Deed of Trust, and,
if any such Lien or security interest is asserted against the Trust Property,
Trustor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Trustor in
good faith and in accordance with the terms of the Credit Agreement) or take
such other action as may be necessary to cause the same to be released of record
and otherwise, and (b) within ten (10) days after the date on which Mortgagor
receives notice of such Lien or security interest. Such notice shall specify who
is asserting such Lien or security interest and shall detail the origin and
nature of the underlying claim giving rise to such asserted Lien or security
interest.

            SECTION 5.02 Payment of Impositions. Trustor shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however, that Trustor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Trust Property, pay the Impositions in
installments. Notwithstanding the foregoing, Trustor may in good faith, by
appropriate proceedings and upon notice to Beneficiary, contest the validity,
applicability or amount of any asserted tax or assessment, subject to any more
restrictive provisions applicable to any such contest contained in the Credit
Agreement and (without

                                       15
<PAGE>

limiting the foregoing) so long as (a) such contest is diligently pursued, (b)
Beneficiary determines, in its opinion reasonably exercised, that such contest
suspends the obligation to pay the tax and that nonpayment of such tax or
assessment will not result in the sale, loss, forfeiture or diminution of the
Trust Property or any part thereof or any interest of Beneficiary therein, and
(c) unless expressly provided to the contrary in the Credit Agreement, prior to
the earlier of the commencement of such contest or the delinquency date of the
asserted tax or assessment, Trustor deposits with Beneficiary an amount
determined by Beneficiary to be adequate to cover the payment of such tax or
assessment and a reasonable additional sum to cover possible interest, costs and
penalties; provided, however, that Trustor shall promptly cause to be paid any
amount adjudged by a court of competent jurisdiction to be due, with all
interest, costs and penalties thereon, promptly after such judgment becomes
final (and, subject to Beneficiary's rights and remedies during an Event of
Default, Beneficiary shall make any sum deposited pursuant to clause (c) above
available for such payment); and provided, further, that in any event each such
contest shall be concluded, the taxes, assessments, interest, costs and
penalties shall be paid prior to the date any writ or order is issued under
which the Trust Property may be sold, lost or forfeited.

            SECTION 5.03 Repair. Trustor shall keep the Trust Property in good
order and condition (reasonable wear and tear excepted) and shall make all
repairs, replacements and improvements thereof and thereto, interior and
exterior, structural and non-structural, ordinary and extraordinary, which are
necessary to keep the same in such order and condition. Trustor shall also use
reasonable efforts to prevent any act or occurrence which might impair the value
or usefulness of the Trust Property for its intended usage.

            SECTION 5.04 Insurance and Application of Insurance Proceeds.

            (A)   During the term of this Deed of Trust, Trustor, at its sole
cost and expense, shall maintain, or cause to be maintained the following
policies of insurance, with respect to the Trust Property:

                  (i) If applicable or appropriate, Casualty (property)
      insurance against loss or damage by fire, lightning and such other perils
      as are included in a standard "special form" policy (formerly known as an
      "all-risk" endorsement policy), and against loss or damage by all other
      risks and hazards covered by a standard extended coverage insurance policy
      including, without limitation, riot and civil commotion, terrorist
      actions, vandalism, malicious mischief, burglary and theft, in an amount
      equal to the greater of (A) the then full replacement cost of the
      improvements, without deduction for physical depreciation and (B) such
      amount that the insurer would not deem Trustor a co-insurer under said
      policies. The policies of insurance required under this Section 5.04 shall
      contain a "Replacement Cost" endorsement with a waiver of depreciation and
      an "Agreed Amount" or "No Coinsurance" endorsement and shall otherwise
      comply with the Credit Agreement.

                  (ii) Commercial General Liability insurance to the extent
      required under the Credit Agreement, including a broad form comprehensive
      general liability endorsement and coverages for broad form property
      damage, contractual damages and personal injuries (including death
      resulting therefrom) and containing minimum limits

                                       16
<PAGE>

      per occurrence of $1,000,000.00 and $2,000,000.00 in the aggregate for any
      policy year with no deductible.

                  (iii) Rental loss and/or business interruption insurance in an
      amount equal to the estimated gross revenues from the operations of the
      Trust Property for a period of twelve (12) months, if applicable or
      appropriate.

                  (iv) Insurance against loss or damage from (A) leakage of
      sprinkler systems and (B) explosion of steam boilers, air conditioning
      equipment, high pressure piping, machinery and equipment, pressure vessels
      or similar apparatus now or hereafter installed on the improvements
      (without exclusion for explosions), if applicable or appropriate.

                  (v) Flood insurance if all or any portion of the Trust
      Property is located in an area now or hereafter designated by the Federal
      Emergency Management Agency as an area having special flood hazards
      (including, without limitation, those areas designated as Zone A or Zone
      V), and in which flood insurance has been made available under the U.S.
      National Flood Insurance Program, in an amount equal to the full
      replacement cost of the Buildings, Fixtures and Personalty now or
      hereafter located on the Trust Property or such other amount as may be
      agreed to by Beneficiary in writing, if applicable or appropriate.

                  (vi) If the Trust Property is or ever becomes non-conforming
      with respect to zoning, ordinance or law coverage to compensate for loss
      of value or property resulting from operation of law and the cost of
      demolition and the increased cost of construction in such amounts as may
      be requested by Beneficiary.

                  (vii) Any other insurance with respect to the Trust Property
      that may be required under the Credit Agreement.

                  (viii) Such other insurance as may from time to time be
      reasonably required by Beneficiary in order to protect its interests.

            All such insurance policies with respect to the Trust Property shall
contain a standard, non-contributory mortgagee clause naming Beneficiary, and
its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Trustor shall not take out separate insurance
with respect to the Trust Property concurrent in form or contributing in the
event of loss with that required to be maintained hereunder or under the Credit
Agreement unless Beneficiary is named as an additional insured thereon under a
standard mortgagee clause acceptable to Beneficiary and each such policy is
otherwise in form and substance acceptable to Beneficiary.

            (b)   In the event of the foreclosure of this Deed of Trust, or in
the event of any transfer of title to the Trust Property, or any part thereof,
by foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Trust Property, or such part thereof, shall succeed to all of
Trustor's rights with respect to the Trust Property, including any rights to
unexpired, unearned or returnable insurance premiums, subject to limitations on
the assignment

                                       17
<PAGE>

of blanket policies, but limited to such rights as relate to the Trust Property
or such part thereof. If Beneficiary acquires title to the Trust Property, or
any part thereof, in any manner, Beneficiary shall thereupon (as between Trustor
and Beneficiary) become the sole and absolute owner of the insurance policies
with respect to the Trust Property, and all insurance proceeds payable
thereunder with respect to the Trust Property, with the sole right to collect
and retain all unearned or returnable premiums thereon with respect to the Trust
Property, or such part thereof, if any.

            (c) If any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property shall occur, Trustor shall file and
prosecute its claim or claims for any insurance proceeds in good faith and with
due diligence and cause the same to be collected and paid over to Beneficiary,
and Trustor hereby irrevocably authorizes and empowers Beneficiary, in the name
of Trustor or otherwise, to collect and receipt for any such insurance proceeds
and to adjust any insurance claims and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Trustor shall, upon demand of Beneficiary, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such insurance proceeds to Beneficiary, free and clear
of any Liens whatsoever. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact for each such purpose (which appointment is coupled
with an interest) and authorizes any Person to act upon the foregoing
appointment.

            (d) Following any damage to, destruction or loss of or other
casualty with respect to any of the Trust Property, Beneficiary shall apply the
entire amount of any insurance proceeds in accordance with the provisions of the
Credit Agreement or, if there is no provision contained in the Credit Agreement
governing how the same are to be applied, then Beneficiary shall apply the
entire amount thereof to the payment of the Obligations, whether or not then due
and payable, in such manner and order as Beneficiary may elect. In all events,
unless expressly provided to the contrary in the Credit Agreement, Trustor
hereby covenants and agrees to promptly commence and to diligently prosecute the
restoration of the Trust Property upon the occurrence of any casualty loss
affecting the Trust Property, without regard to the availability or adequacy of
insurance proceeds, but in all events in a manner approved by Beneficiary.
Notwithstanding any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Credit Agreement
and the other Loan Documents until the Obligations have been paid in full. If
the Trust Property is sold, through foreclosure or otherwise, prior to the
receipt by Beneficiary of such insurance proceeds, Beneficiary shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such insurance proceeds, or a portion
thereof sufficient to pay the then unpaid Obligations, whichever is less.

            SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

            (a) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Trust Property, or any portion thereof or interest therein, Trustor shall
notify Beneficiary of such proceeding. Trustor shall then, if requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the Credit
Agreement,

                                       18
<PAGE>

cause any awards or settlements to be paid over to Beneficiary for disposition
pursuant to the terms of this Deed of Trust. Beneficiary shall be entitled to
participate in any such proceeding, at Trustor's sole cost and expense, and
Trustor shall deliver or cause to be delivered to Beneficiary such instruments
as may be requested by Beneficiary from time to time to permit such
participation.

            (b) If the Trust Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement payable to Trustor by virtue of its interest
in the Trust Property shall be, and by these presents is, assigned, transferred
and set over unto Beneficiary to be held by Beneficiary, subject to the Lien and
security interest of this Deed of Trust, and disbursed in accordance with the
provisions of the Credit Agreement or, if there is no provision contained in the
Credit Agreement governing how the same is to be disbursed, then Beneficiary
shall apply the entire amount thereof to the payment of the Obligations, whether
or not then due and payable, in such manner and order as Beneficiary may elect.
In all events, unless otherwise expressly provided to the contrary in the Credit
Agreement, Trustor hereby covenants and agrees to commence and diligently to
prosecute the restoration of the Trust Property upon the occurrence of any
condemnation or other taking affecting the Trust Property, without regard to the
availability or adequacy of any award or settlement. Notwithstanding any
condemnation or other taking of any of the Trust Property, Trustor shall
continue to pay the Obligations at the time and in the manner provided for in
the Credit Agreement and the other Loan Documents, and the Obligations shall not
be reduced until, and then only to the extent that, any condemnation award or
settlement shall have been actually received and applied by Beneficiary to the
discharge of the Obligations. If the Trust Property is sold, through foreclosure
or otherwise, prior to the receipt by Beneficiary of such condemnation award or
settlement, Beneficiary shall have the right, whether or not a deficiency
judgment on any Loan Document shall have been sought, recovered or denied, to
receive such condemnation award or settlement, or a portion thereof sufficient
to pay the Obligations, whichever is less.

            (c) Any implied covenant in this Deed of Trust restricting the right
of Beneficiary to apply the proceeds of condemnation as described above is
waived by Trustor. Trustor hereby waives the provisions of any law prohibiting
Beneficiary from making elections regarding the application of condemnation
proceeds, including, without limitation, the provisions of California Code of
Civil Procedure Sections 1265.210 et seq.

            SECTION 5.06 Maintenance of Rights of Way, Easements, Licenses and
Other Rights. Trustor shall maintain, preserve and renew all rights of way,
easements, tenements, hereditaments, development rights and credits, zoning
rights, grants, privileges, appurtenances, licenses, franchises and other rights
reasonably necessary for the use or operation of the Trust Property from time to
time, or otherwise relevant to the value thereof, and Trustor shall not, without
the prior written consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the
present or future use or operation of the Trust Property. Trustor shall,
however, comply with all restrictive covenants which may at any time affect the
Trust Property, all applicable zoning ordinances and all other public or private
restrictions relating to the use of the Trust Property.

            SECTION 5.07 Payment and Performance of Obligations. Trustor shall
duly and punctually pay and perform all of the Obligations.

                                       19
<PAGE>

            SECTION 5.08 Compliance with Permitted Liens and Other Obligations.
Trustor shall comply in all material respects with any and all obligations,
restrictions and requirements that may be set forth in each and every document
constituting a Permitted Lien. In addition, Trustor shall comply in all material
respects each and every obligation legally imposed upon it and/or relating to
the Trust Property pursuant to applicable law (including, without limitation,
all matters described in Section 4.05 hereof), contract or other agreement. It
is hereby acknowledged that Beneficiary's consent to a Permitted Lien as of the
date hereof shall in no way be deemed to constitute approval of any future Lien
which may be imposed upon any portion of the Trust Property, or any other
enforcement action affecting Trustor or the Trust Property, as a result of
Trustor's failure to perform or comply with its obligations under any document
constituting a Permitted Lien as of the date hereof.

            SECTION 5.09 Additional Affirmative Covenants. All affirmative
covenants made by the Borrowers or Guarantors or any of them in the Credit
Agreement are incorporated herein by reference and are hereby also made by
Trustor as to itself and the Trust Property as though such covenants were set
forth at length herein as the covenants of Trustor.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

            Trustor hereby covenants and agrees with Beneficiary that, until all
of the Obligations shall have been paid or performed in full and discharged:

            SECTION 6.01 Use Violations. Trustor shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Trust Property in any manner which (a) violates in any material respect any
Governmental Requirement, (b) may be dangerous unless safeguarded as required by
applicable law, (c) constitutes a public or private nuisance, or (d) makes void,
voidable or cancelable, or increases, substantially in excess of commercially
reasonably rates, the premium of, any insurance then in force with respect
thereto.

            SECTION 6.02 Waste. Trustor shall not commit or permit any material
waste with respect to the Trust Property.

            SECTION 6.03 Alterations. Trustor shall notify Beneficiary, in
writing and in advance, with respect to all proposed alterations, improvements
or additions to the Trust Property which are of a material nature, and, unless
and to the extent otherwise expressly provided in the Credit Agreement, Trustor
shall not effect any material alteration, improvement or addition to the Trust
Property without the prior written consent of Beneficiary.

            SECTION 6.04 No Further Encumbrances. Trustor shall not, without the
prior written consent of Beneficiary, create, place or permit to be created or
placed, or through any act or failure to act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, Lien (statutory, constitutional or
contractual), security interest, encumbrance or charge on, or conditional sale
or other title retention agreement with respect to, the Trust Property, or any
portion thereof or interest therein, other than the Permitted Liens, regardless
of whether the same are subordinate to the Lien(s) and security interest(s)
created by this Deed of Trust.

                                       20
<PAGE>

            SECTION 6.05 Transfer Restrictions. Trustor shall not sell, lease,
assign, transfer or otherwise dispose of or abandon all or any part of the Trust
Property (or any interest therein), except as expressly permitted by, and in
accordance with the terms of, the Credit Agreement.

            SECTION 6.06 Loan and Credit Agreements; Additional Negative
Covenants. Trustor has received a copy of and is fully familiar with the terms
and provisions of the Credit Agreement and the other Loan Documents. All
negative covenants made by the Borrowers or Guarantors or any of them in the
Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby also made by Trustor as to itself and the Trust
Property as though such negative covenants were set forth at length herein as
the negative covenants of Trustor.

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Credit Agreement are hereby incorporated herein as if fully
set forth herein, and, without limiting the generality of the foregoing, the
occurrence of an "Event of Default" under the Credit Agreement or any other Loan
Document shall constitute an "Event of Default" hereunder. All notices and cure
periods described herein or in the Credit Agreement or any other Loan Document
shall not be applicable to any "Potential Event of Default" (as hereinafter
defined) if such Potential Event of Default has occurred as of the date on which
Beneficiary commences a nonjudicial foreclosure proceeding with respect to
another Potential Event of Default or Event of Default. Such event shall
constitute an independent Event of Default hereunder. For purposes hereof,
"Potential Event of Default" shall mean any event, but for the passage of time
or giving of notice, would be an Event of Default.

            SECTION 7.02 Acceleration. Upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights, powers or
remedies conferred herein or by operation of law, Beneficiary, in its sole
judgment and discretion, may declare the then unpaid principal balance of the
Loan (the "Principal Balance"), the accrued interest thereon and any other
accrued but unpaid portion of the Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
Trustor.

            SECTION 7.03 Foreclosure and Sale. If an Event of Default shall
occur and be continuing, Beneficiary shall have the right and option to with
foreclosure by power of sale in accordance with California Civil Code Section
2924 or other applicable law by notice to Trustee and shall, if required,
deposit with Trustee the Note, the original or a certified copy of this Deed of
Trust, and such other documents, receipts and evidences of expenditures made and
secured hereby as Trustee may require.

            Upon receipt of such notice from Beneficiary, Trustee shall cause to
be recorded and delivered to Trustor such notice of default as may then be
required by law and by this Deed of Trust. Trustee shall, without demand on
Trustor, after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been

                                       21
<PAGE>

given as required by law, sell the Trust Property or any portion thereof at the
time and place of sale fixed by it in said notice of sale, either as a whole or
in separate lots or parcels or items as Trustee shall deem expedient, and in
such order as it may determine, at public auction to the highest bidder for cash
in lawful money of the United State (or other cash equivalent as is acceptable
to Trustee and Beneficiary) payable at the time of sale. Trustee shall deliver
to the purchaser or purchasers at such sale its good and sufficient deed or
deeds conveying the property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including, without
limitation, Trustor, Trustee or Beneficiary, may purchase at such sale, and
Trustor hereby covenants to warrant and defend the title of such purchaser or
purchasers.

            Trustee may postpone the sale of all or any portion of the Trust
Property from time to time in accordance with the laws of the State of
California.

            To the fullest extent allowed by law, Borrower hereby expressly
waives any right which it may have to direct the order in which any of the Trust
Property shall be sold in the event of any sale or sales pursuant to this Deed
of Trust.

            Upon any foreclosure sale, Beneficiary may bid for and purchase the
Trust Property and shall be entitled to apply all or any part of the unpaid
Obligations as a credit to the purchase price.

            Beneficiary may from time to time rescind any notice of default or
notice of sale before any Trustee's sale as provided above in accordance with
the laws of the State of California. The exercise by Beneficiary of such right
of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations or notices
of default to satisfy the obligations of this Deed of Trust, or otherwise affect
any provision, covenant or condition of the Credit Agreement or any Loan
Document or any of the rights, obligations or remedies of Trustee or Beneficiary
hereunder or thereunder.

            Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

            SECTION 7.04 Trustee's Successors, Substitutes and Agents. Trustee
or any successor to or substitute for Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Beneficiary. If Trustee or any successor to or
substitute for Trustee shall have given notice of sale hereunder, any successor
or substitute trustee thereafter appointed may complete the sale and the
conveyance of the Trust Property pursuant thereto as if such notice had been
given by the successor to or substitute for Trustee conducting the sale.

            SECTION 7.05 Receivership. If any of the Obligations shall become
due and payable and shall not be promptly paid, Beneficiary shall have the right
and power to proceed by a suit or suits in equity or at law, whether for the
specific performance of Beneficiary which

                                       22
<PAGE>

Trustee may apply for and obtain as a matter of right and without notice to
Trustor, which notice is hereby expressly waived by Trustor, the appointment of
a receiver to collect the Rents of the Trust Property and to preserve the
security hereof in accordance with California Code of Civil Procedure Section
564 (including, without limitation, in order to enforce Beneficiary's rights
under California Civil Code Section 2929.5), either before or after any
foreclosure sale or the sale of the Trust Property under the order of a court or
courts of competent jurisdiction or under executory or other legal process,
without regard to the value of the Trust Property as security for the amount
then due to Beneficiary, or the solvency of any entity or entities, person or
persons primarily or secondarily liable for the payment of such amounts; the
Rents of the Trust Property, in any such event, having heretofore been assigned
to Beneficiary pursuant to Section 3.01 hereof as additional security for the
payment of the Obligations secured hereby.

            Without limiting the foregoing, the receiver shall have the right to
apply Rents to cleanup, remediation or other response action concerning the
release or threatened release of Hazardous Materials, whether or not such
actions are pursuant to an order of any federal, state or local governmental
agency. Trustor hereby confirms the right of Beneficiary (or a receiver
appointed by Beneficiary) to enter upon and inspect all or any portion of the
Trust Property for the purpose of determining the existence, location, nature
and magnitude of any past or present release or threatened release of any
hazardous substance into, onto, beneath, or from the Trust Property in
accordance with the California Civil Code Section 2929.5. All reasonable costs
and expenses incurred by Beneficiary pursuant to this provision or pursuant to
California Civil Code Section 2929.5, including, without limitation, costs of
consultants and contractors, costs of repair of any physical injury to the Trust
Property normal and customary to the tests and studies, court costs and
attorneys' fees, costs and expenses, whether incurred in litigation or not and
whether before or after judgment, shall be payable by Trustor and, to the extent
advanced or incurred by Beneficiary, shall be reimbursed to Beneficiary by
Trustor upon demand. This provision is separate and several, and shall survive
merger into any judgment.

            SECTION 7.06 Judicial Foreclosure. If an Event of Default shall
occur and be continuing, Trustee or Beneficiary shall have the right and power
to proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Trust Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Trust Property under the order of a
court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by Trustee and/or Beneficiary in connection with any
such receivership shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of such advance by Trustee and/or Beneficiary
until paid at the Default Rate.

            SECTION 7.07 Separate Sales. To the extent allowed by applicable
law, the Trust Property may be sold in one or more parcels and in such manner
and order as Beneficiary, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

                                       23
<PAGE>

            SECTION 7.08 Possession of Trust Property. Trustor agrees to the
full extent that it lawfully may, that, in case one or more of the Events of
Default shall have occurred and be continuing, then, and in every such case,
Trustee or Beneficiary shall have the right and power to enter into and upon and
take possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of expenditure until paid at the Default Rate,
all of which shall constitute a portion of the Obligations and shall be secured
by this Deed of Trust and all of the other Loan Documents. Trustor hereby
irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact
(coupled with an interest) to perform such acts and execute such documents as
Beneficiary, in its sole discretion, shall deem appropriate, including
endorsement of Trustor's name on any instruments. Regardless of any provision of
this Deed of Trust, the Credit Agreement or any other Loan Document, Beneficiary
shall not be considered to have accepted any property other than cash or
immediately available funds in satisfaction of any obligation of Trustor to
Beneficiary, unless Beneficiary shall have given express written notice of
Beneficiary's election to the contrary.

            SECTION 7.09 Occupancy After Foreclosure. In the event that there is
a foreclosure sale hereunder and at the time of such sale Trustor or Trustor's
representatives, successors or assigns or any other person claiming any interest
in the Trust Property by, through or under Trustor, are occupying or using the
Trust Property or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of either the landlord or tenant, at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser. To the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event that the
tenant fails to surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for possession of
the Trust Property (such as an action for forcible entry and detainer) in any
court having appropriate jurisdiction.

            SECTION 7.10 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Trustee or Beneficiary shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute
(including specifically those granted by the Applicable UCC). Each such right,
power and remedy, whether specifically herein given or otherwise existing, may
be exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or

                                       24
<PAGE>

thereafter, any other right, power or remedy. Beneficiary shall be entitled to
collect all costs and expenses incurred in pursuing such remedies. No delay or
omission by Trustee or Beneficiary in the exercise of any such right, power or
remedy shall impair any such right, power or remedy or operate as a waiver
thereof or of any other right, power or remedy then or thereafter existing.

            SECTION 7.11 No Release of Obligations. Neither Trustor, any other
Borrower, nor any other Person now or hereafter obligated for the payment or
performance of all or any part of the Obligations shall be relieved of any such
obligation by reason of (a) the failure of Trustee or Beneficiary to comply with
any request of Trustor, any other Borrower or any other Person so obligated to
foreclose the Lien of this Deed of Trust to enforce any provision hereunder or
under the Credit Agreement; (b) the release, regardless of consideration, of the
Trust Property or any portion thereof or interest therein or the addition of any
other property to the Trust Property; (c) any agreement or stipulation between
any subsequent owner of the Trust Property and Beneficiary extending, renewing,
rearranging or in any other way modifying the terms of this Deed of Trust
without first having obtained the consent of, given notice to or paid any
consideration to Trustor , any other Borrower or any other Person, and in any
such event Trustor, all other Borrowers and all such other Persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Beneficiary; or (d) any other act or occurrence save and except the
complete payment and performance of all of the Obligations.

            SECTION 7.12 Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration, any part of the Trust Property without, as
to the remainder, in any way impairing, affecting, subordinating or releasing
the Lien or security interest created in or evidenced by this Deed of Trust or
its stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect.

            SECTION 7.13 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Trustor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) except for notices expressly
provided for herein or in the Credit Agreement, all notices of any Event of
Default or of Beneficiary's intention to accelerate maturity of the Obligations
or of Trustee's or Beneficiary's election to exercise or actual exercise of any
right, remedy or recourse provided for hereunder or under the Credit Agreement;
and (c) any right to a marshalling of assets, a sale in inverse order of
alienation or to direct the application of proceeds, including any rights under
California Civil Code Sections 2899 and 3433, and all rights of Trustor under
California Civil Code Section 2822; (d) all rights and remedies which Borrower
may have or be able to assert by reason of the Laws of the State of California
pertaining to the rights and remedies of sureties and (e) any and all conflicts
with any provisions of any of the Loan Documents. If any law referred to in this
Deed of Trust and now in force, of which Trustor or its successor or successors
might take advantage despite the provisions hereof, shall hereafter be repealed
or cease to be in force, such

                                       25
<PAGE>

law shall thereafter be deemed not to constitute any part of the contract herein
contained or to preclude the operation or application of the provisions hereof.
Beneficiary shall have the right to determine the order in which any or all of
the Trust Property shall be subjected to the remedies provided herein.
Beneficiary shall have the right to determine the order in which any or all
portions of the Obligations are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Nothing contained herein shall be
deemed to be a waiver of Trustor's rights under Section 2924c of the California
Civil Code.

            SECTION 7.14 Discontinuance of Proceedings. In case Beneficiary
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the Credit Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Trustor and Beneficiary shall be restored to their
former positions with respect to the Obligations, this Deed of Trust, the Credit
Agreement, the Trust Property and otherwise, and the rights, remedies, recourses
and powers of Beneficiary shall continue as if same had never been invoked.

            SECTION 7.15 Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of and
any other amounts generated by the holding, leasing, operating or other use of
the Trust Property shall be applied by Beneficiary (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Credit Agreement or if not so provided, then in the
following order of priority, except to the extent otherwise required by
applicable law:

            (A) first, to the payment of the reasonable and necessary costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving the same, including reasonable (i) receivers'
fees, (ii) court costs, (iii) attorneys' and accountants' fees, (iv) costs of
advertisement and title search fees, and (v) the payment of any and all
Impositions, Liens, security interests or other rights, titles or interests
equal or superior to the Lien and security interest of this Deed of Trust
(except those to which the Trust Property has been sold subject to and without
in any way implying Beneficiary's prior consent to the creation thereof);

            (B) second, to the payment of all amounts other than the Principal
Balance and accrued but unpaid interest which may be due to Beneficiary
hereunder or under the other Loan Documents, together with interest thereon as
provided herein;

            (C) third, to the payment of the Obligations in such order and
manner as Beneficiary determines in its sole discretion; and

            (D) fourth, to Trustor or as otherwise required by any Governmental
Requirement.

Trustor shall be liable for any deficiency remaining.

            SECTION 7.16 Uniform Commercial Code Remedies. Beneficiary shall
have all of the rights, remedies and recourses with respect to the Personalty
and the Fixtures afforded to it by the Applicable UCC, including, without
limitation, (i) the right to conduct a unified sale of such Personalty and
Fixtures in connection with a judicial or power of sale foreclosure of any

                                       26
<PAGE>

portion of the Trust Property that constitutes real property, (ii) any the right
to take possession of the Personalty and the Fixtures or any part thereof, and
(iii) to take such other measures as Beneficiary may deem necessary for the
care, protection and preservation of the Personalty and the Fixtures, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded by this Deed of Trust and the other Loan Documents.

            SECTION 7.17 Indemnity. In connection with any action taken by
Trustee, Beneficiary and/or any Indemnitee pursuant to this Deed of Trust,
Trustee, Beneficiary, and/or any such Indemnitee and their respective
Indemnified Parties shall not be liable for any Loss sustained by Trustor
resulting from (a) an assertion that Beneficiary, or any such Indemnitee or an
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Persons, or (b) any act or omission of Trustee, Beneficiary, or
any such Indemnitee or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary and/or
such other Lender or such Indemnified Party, nor shall Trustee, Beneficiary
and/or any other Lender or an Indemnified Party be obligated to perform or
discharge any obligation, duty or liability of Trustor. Trustor shall and does
hereby agree to indemnify Trustee and/or Beneficiary and each of the other
Lenders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Lender and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Lenders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or remedies hereunder, including such Losses
as may result from the ordinary negligence of Trustee, Beneficiary or any other
Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary or
such other Lender or such Indemnified Party. Should Trustee, Beneficiary and/or
any other Lender or an Indemnified Party make any expenditure on account of any
such Losses, the amount thereof, including costs, expenses and reasonable
attorneys' fees, shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date expended until paid at the Default Rate, shall
be a part of the Obligations and shall be secured by this Deed of Trust and the
other Loan Documents. Trustor hereby assents to, ratifies and confirms any and
all actions of Trustee and/or Beneficiary with respect to the Trust Property
taken under this Deed of Trust. The liabilities of Trustor, as set forth in this
Section 7.17, shall survive the termination of this Deed of Trust and the
payment and performance of the Obligations.

            SECTION 7.18 Waiver of Lien. In accordance with California Code of
Civil Procedure Section 726.5, Beneficiary may waive its lien against the Trust
Property constituting real property or any portion thereof, together with
fixtures or personal property constituting real property thereon, to the extent
such Trust Property constituting real property is found to be environmentally
impaired, and may exercise any and all rights and remedies of an unsecured
creditor against Trustor and all of Trustor's assets and Trust Property
constituting real property for the recovery of any deficiency, including without
limitation seeking an attachment order under California Code of Civil Procedure
Section 483.010. No such waiver shall be final or

                                       27
<PAGE>

binding on Beneficiary unless and until a final money judgment is obtained
against Trustor. As between Beneficiary and Trustor, for purposes of California
Code of Civil Procedure Section 726.5, Trustor shall have the burden of proving
that the release or threatened release was not knowingly or negligently caused
or contributed to, or knowingly or willfully permitted or acquiesced to by
Trustor or any related party (or any affiliate or agent of Trustor or any
related party) and that Trustor made written disclosure of the release to
Beneficiary or that Beneficiary otherwise obtained actual knowledge thereof
prior to the making of the loan evidenced by the Credit Agreement.
Notwithstanding anything to the contrary contained in this Deed of Trust, the
Credit Agreement or the other Loan Documents, Trustor shall be fully and
personally liable for all judgments and awards entered against Trustor pursuant
to California Code of Civil Procedure 726.5 and such liability shall be an
exception to any non-recourse or exculpatory provision in this Deed of Trust or
the other Loan Documents, if any, and shall not be limited to the original
principal amount of the obligations secured by this Deed of Trust. Trustor's
obligations hereunder shall survive the foreclosure, deed in lieu of
foreclosure, release, reconveyance or any other transfer of the Trust Property
constituting real property or this Deed of Trust. For the purpose of any action
brought under this Section, Trustor hereby waives the defense of laches and any
applicable statute of limitations. For purposes of California Code of Civil
Procedure 726.5, the acts, knowledge and notice of each "726.5 Party" shall be
attributed to and be deemed to have been performed by the party or parties then
obligated on and liable for payment of the Obligations. As used herein, "726.5
Party" shall mean Trustor, any successor owner to Trustor of all or any portion
of the Trust Property constituting real property, any related party of Trustor
or any such successor and any affiliate or agent of Trustor, any such successor
or any such related party.

            SECTION 7.19 Action for Environmental Claims. In accordance with,
and subject to limitations of, California Code of Civil Procedure Section 736,
Beneficiary may seek a judgment that the Trustor has breached its covenants,
representations and/or warranties with respect to the environmental matters
contained in the Credit Agreement (the "Environmental Provisions"), and may
commence and maintain an action or actions in any court of competent
jurisdiction for enforcement of the Environmental Provisions and/or recovery of
any and all costs, damages, expenses, fees, penalties, fines, judgments,
indemnification payments to third parties, and other out-of-pocket costs or
expenses (including, without limitation, court costs, consultants' fees and
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment), incurred or advanced by Beneficiary pursuant to the
Environmental Provisions (collectively, the "Environmental Costs"), excluding,
however, any Environmental Costs not permitted to be recovered pursuant to
Section 736 of the California Code of Civil Procedure. Environmental Costs that
are not permitted to be recovered pursuant to Section 736 may be referred to
hereinafter as the "Unsecured Environmental Costs," and Environmental Costs
other than the Unsecured Environmental Costs may be referred to hereinafter as
the "Secured Environmental Costs." Any Unsecured Environmental Costs shall not
be secured by this Deed of Trust; however, nothing herein shall prevent
Beneficiary from recovering any Unsecured Environmental Costs pursuant to the
Indemnity Agreement of even date herewith among Trustor, Beneficiary and certain
other parties, to the extent they are recoverable in accordance with said
Indemnity Agreement. All Secured Environmental Costs incurred by Beneficiary
shall bear interest at the default rate provided under the Note. All Secured
Environmental Costs together with interest thereon at the rate then in effect
under the Credit Agreement shall be secured by this Deed of Trust and shall
enjoy the same priority as the Obligations. Trustor acknowledges and

                                       28
<PAGE>

agrees that notwithstanding any term or provision contained in this Deed of
Trust, the Credit Agreement or in the other Loan Documents, Environmental Costs
shall be exceptions to any nonrecourse or exculpatory provision, if any, and
Trustor shall be fully and personally liable for Environmental Costs. Such
liability shall not be limited to the original principal amount of the
obligations secured by this Deed of Trust. Trustor's obligations hereunder shall
survive foreclosure, deed in lieu of foreclosure, release, reconveyance or any
other transfer of the Trust Property constituting real property or this Deed of
Trust. For the purposes of any action brought under this subparagraph Trustor
hereby waives the defense of laches and any applicable statute of limitations.

                                  ARTICLE VIII

                                     TRUSTEE

            SECTION 8.01 Duties, Rights, and Powers of Trustee. It shall be no
part of the duty of Trustee to see to any recording, filing or registration of
this Deed of Trust or any other instrument in addition or supplemental thereto,
or to give any notice thereof, or to see to the payment of or be under any duty
in respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Trust Property, or any part thereof, or against
Trustee, or to see to the performance or observance by Trustee of any of the
covenants and agreements contained herein. Trustee shall not be responsible for
the execution, acknowledgment or validity of this Deed of Trust or of any
instrument in addition or supplemental hereto or for the sufficiency of the
security purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Beneficiary. Trustee shall have the right
to confer with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee's own gross
negligence or willful misconduct, and Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by Trustee hereunder, believed by Trustee in good faith
to be genuine.

            SECTION 8.02 Successor Trustee. From time to time, by a writing
signed and acknowledged by Beneficiary and filed for record in the office of the
recorder of the County in which the Land is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date, book and page
of its recordation. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee
hereunder with the same effect as if originally named Trustee herein. A writing
recorded pursuant to the provisions of this Section 8.02 shall be conclusive
proof of the proper substitution of such new trustee.

            SECTION 8.03 Retention of Moneys. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

                                       29
<PAGE>

            SECTION 8.04 Reconveyance. Upon written request of Beneficiary
stating all of the Obligations have been paid, performed and discharged, and the
Credit Agreement is terminated, and payment of its fees, Trustee shall reconvey,
without warranty, the Trust Property. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in such reconveyance may be described as "the person or persons legally
entitled hereto" or such other description as required by law in the State of
California.

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01 Instrument Construed as Deed of Trust, Etc. This Deed
of Trust may be construed as a deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

            SECTION 9.02 Performance at Trustor's Expense. The cost and expense
of performing or complying with any and all of the Obligations shall be borne
solely by Trustor, and no portion of such cost and expense shall be, in any way
or to any extent, credited against any installment on or portion of the
Obligations.

            SECTION 9.03 Survival of Obligations. Each and all of the
Obligations shall survive the execution and delivery of this Deed of Trust and
shall continue in full force and effect until all of the Obligations shall have
been fully satisfied.

            SECTION 9.04 Further Assurances. Trustor, upon the request of
Beneficiary, shall execute, acknowledge, deliver and record and/or file such
further instruments, including financing statements, and do such further acts as
may be reasonably necessary, desirable or proper to carry out more effectively
the purpose of this Deed of Trust and to subject to the Liens and security
interests hereof any property intended by the terms hereof to be covered hereby,
including any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Trust Property.

            SECTION 9.05 Notices. All notices or other communications required
or permitted to be given pursuant to this Deed of Trust shall be in writing and
shall be considered properly given if given in the manner and to the addresses
prescribed by Section 11.02 of the Credit Agreement to the parties and at the
addresses set forth in the first paragraph hereof, and to the parties and at the
addresses set forth in Section 11.02 of the Credit Agreement; provided, however,
that (a) service of notice as required by the laws of any State or Commonwealth
in which portions of the Trust Property may be situated shall for all purposes
be deemed appropriate and sufficient with the giving of such notice thereunder,
and (b) any party shall have the right to change its address for notice
hereunder to any other location within the continental United States by the
giving of ten (10) days' notice to the other party in the manner set forth
above.

                                       30
<PAGE>

            SECTION 9.06 No Waiver. Any failure by Beneficiary to insist, or any
election by Beneficiary not to insist, upon strict performance by Trustor of any
of the terms, provisions or conditions of this Deed of Trust shall not be deemed
to be a waiver of the same or of any other terms, provision or condition hereof,
and Beneficiary shall have the right, at any time or times thereafter, to insist
upon strict performance by Trustor of any and all of such terms, provisions and
conditions. Beneficiary may, in Beneficiary's sole and absolute discretion, (i)
in the case of a Default, determine whether such Default has been cured, and
(ii) in the case of an Event of Default, accept or reject any proposed cure of
an Event of Default. In no event shall any provision of this Deed of Trust or
any other Loan Document which provides that Beneficiary shall have certain
rights and/or remedies only during the continuance of an Event of Default be
construed so as to require Beneficiary to accept a cure of any such Event of
Default. Unless and until Beneficiary accepts any proposed cure of an Event of
Default, such Event of Default shall be deemed to be continuing for purposes of
this Deed of Trust and the other Loan Documents.

            SECTION 9.07 Beneficiary's Right to Perform; Beneficiary's
Expenditures.

            (A) Trustor agrees that if Trustor fails to perform any act or take
any action which Trustor is required to perform or take hereunder or under the
Credit Agreement or to pay any money which Trustor is required to pay hereunder
or under the Credit Agreement, Beneficiary may, but shall not be obligated to,
perform or cause to be performed such act or take such action or pay such money
to the extent and only to the extent permitted under the Credit Agreement.

            (B) All costs and expenses incurred by Beneficiary (or any
Indemnified Party), including, without limitation, attorneys fees, costs and
expenses, all monies paid by (or on behalf of) Beneficiary and the monetary
value of all services performed by (or on behalf of Beneficiary) in connection
with a Default or Event of Default hereunder or under any other Loan Document,
including, without limitation, the (i) the enforcement of any term or provision
of this Deed of Trust or any other Loan Document, (ii) the performance by
Beneficiary of any obligation of Trustor under this Deed of Trust or any other
Loan Document if Beneficiary elects to so perform, in its sole and absolute
discretion, and (iii) any action Beneficiary elects to take, in its sole and
absolute discretion, to protect its interest in or the value of the Trust
Property, shall be a demand obligation owing by Trustor to Beneficiary, as the
case may be, and to the extent any payment is made to a third Person,
Beneficiary, upon making such payment, shall be subrogated to all of the rights
of the Person receiving such payment. All such costs and expenses, monies and
the monetary value of such services performed shall (x) bear interest at the
Default Rate from the date of such incurrence, payment or performance, as
applicable, until paid, and (y) constitute (together with such interest) a
portion of the Obligations and shall be secured by this Deed of Trust and all of
the other Loan Documents. If Beneficiary shall elect to pay any Imposition or
other sums due with reference to the Trust Property, Beneficiary may do so in
reliance on any bill, statement or assessment procured from the appropriate
Governmental Authority or other issuer thereof. Attorneys' fees, costs and
expenses as used herein shall include, without limitation, such fees, costs and
expenses incurred in litigation or not, whether before or after judgment and and
consultants, court costs, expert witness fees, document reproduction expenses,
costs of exhibit preparation, courier charges, postage and communication
expenses. This provision is separate and several, and shall survive merger into
any judgment.

                                       31
<PAGE>

            Trustor shall and does hereby agree that, if all or a portion of the
Obligations has prior to the maturity date fixed in the Credit Agreement, become
due or been declared due by reason of an Event of Default the entire amount then
due under the terms of this Deed of Trust and the Credit Agreement shall include
all attorneys' fees and costs and expenses which are actually incurred as stated
above, notwithstanding the provisions of Section 2924c(d) and Section 2924d of
the California Civil Code.

            SECTION 9.08 Successors and Assigns. All of the terms hereof shall
apply to, be binding upon and inure to the benefit of the parties hereto, their
successors, assigns, heirs and legal representatives, and all other Persons
claiming by, through or under them; provided, however, that nothing herein shall
be deemed to imply any right on behalf of Trustor to assign its interest in any
of the Trust Property except as may be expressly set forth in the Credit
Agreement.

            SECTION 9.09 Severability. This Deed of Trust is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws and regulations of applicable Governmental Authorities and the
provisions hereof are intended to be limited to the extent necessary that they
will not render this Deed of Trust invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
provision hereof or the application thereof to any Person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Deed of Trust nor the application of such provision to other
Persons or circumstances shall be affected thereby, but rather shall be enforced
to the greatest extent permitted by applicable law.

            SECTION 9.10 Subrogation of Trustee. This Deed of Trust is made with
full substitution and subrogation of Trustee and successors in this trust to
Trustee and Trustee and such successors assigns in and to all covenants and
warranties by others heretofore given or made in respect of the Trust Property
or any part thereof.

            SECTION 9.11 Entire Agreement and Modification. This Deed of Trust
may not be amended, revised, waived, discharged, released or terminated orally,
but only by a written instrument or instruments executed by the party against
which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

            SECTION 9.12 Applicable Law. THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW YORK.
TRUSTOR AND BENEFICIARY FURTHER AGREE AND STIPULATE THAT THIS DEED OF TRUST, THE
CREDIT AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW
YORK WERE NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW YORK, AND THAT
THE STATE OF NEW YORK HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION. IT IS THEREFORE THE INTENT OF TRUSTOR AND BENEFICIARY
THAT THIS DEED OF TRUST SHALL BE CONSTRUED AND INTERPRETED WITH, AND GOVERNED
BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK

                                       32
<PAGE>

(WITHOUT GIVING EFFECT TO NEW YORK CHOICE OF LAW PRINCIPLES); PROVIDED, HOWEVER,
THAT THE LAWS OF THE STATE OF CALIFORNIA SHALL APPLY TO THE CREATION, PERFECTION
AND PROCEDURES GOVERNING ENFORCEMENT OF ANY LIENS, SECURITY INTERESTS AND
ENCUMBRANCES GRANTED OR CREATED BY THIS DEED OF TRUST IN THE REAL OR PERSONAL
PROPERTY LOCATED IN (OR IN THE CASE OF INTANGIBLE PERSONAL PROPERTY, HAVING A
SITUS IN) THE STATE OF CALIFORNIA, AND THE MANAGEMENT, OPERATION, DISPOSITION
AND REALIZATION OF THE SECURITY PROVIDED THEREBY. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THE LAWS OF THE STATE OF NEW YORK SHALL APPLY TO
(I) ALL MATTERS RELATING TO THE CHARGING AND COLLECTION OF INTEREST UNDER THIS
DEED OF TRUST AND WITH RESPECT TO THE OBLIGATIONS, (II) THE ENFORCEMENT OF ALL
RIGHTS UNDER THE CREDIT AGREEMENT, AND THE LOAN DOCUMENTS OTHER THAN THIS DEED
OF TRUST AND (III) THE RIGHT TO SUE TRUSTOR OR ANY OTHER PERSON OBLIGATED UNDER
THE LOAN AGREEMENT AND THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS
OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE UNDER ANY ONE
ACTION AND ANTIDEFICIENCY RULES. TRUSTOR HEREBY AGREES THAT BENEFICIARY MAY
ENFORCE ITS RIGHTS UNDER THIS DEED OF TRUST AND ANY OF THE OTHER LOAN DOCUMENTS,
INCLUDING THE RIGHT TO SUE TRUSTOR OR ANY PERSON OBLIGATED UNDER THE LOAN
DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A JUDGMENT FOR ANY
DEFICIENCY FOLLOWING FORECLOSURE, IN ACCORDANCE WITH NEW YORK LAW, AND TRUSTOR
HEREBY ACKNOWLEDGES THAT THE CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A,
580D AND 726 DO NOT APPLY TO THIS DEED OF TRUST, THE CREDIT AGREEMENT AND THE
LOAN DOCUMENTS AND, TO THE EXTENT THEY APPLY WAIVES TO THE MAXIMUM EXTENT
PERMITTED BY LAW ANY RIGHTS WHICH IT MAY HAVE UNDER THE SUCH SECTIONS.

            SECTION 9.13 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Credit Agreement are used to pay indebtedness
secured by any outstanding Lien, security interest, charge or prior encumbrance
against the Trust Property, such proceeds shall be deemed to have been advanced
by Beneficiary at Trustor's request, and Beneficiary shall be subrogated to any
and all rights, security interests and Liens owned by any owner or holder of
such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Beneficiary, Trustor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

            SECTION 9.14 No Partnership. Nothing contained in this Deed of Trust
is intended to, or shall be construed to, create to any extent and in any manner
whatsoever any partnership, joint venture, or association between Trustor and
Beneficiary, or in any way make Beneficiary a co-principal with Trustor with
reference to the Trust Property, and any inferences to the contrary are hereby
expressly negated.

                                       33
<PAGE>

            SECTION 9.15 Headings. The Article, Section and Subsection headings
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

            SECTION 9.16 Release of Deed of Trust. If all of the Obligations
shall be paid, performed and discharged, and the Credit Agreement is terminated,
Beneficiary shall forthwith cause satisfaction and discharge of this Deed of
Trust to be entered upon the record, at the sole cost and expense of Trustor,
and shall execute and deliver (or cause to be executed and delivered) such
instruments of satisfaction and discharge as may be appropriate, such
instruments to be duly acknowledged and in form for recording, at the sole cost
and expense of Trustor.

            SECTION 9.17 Limitation of Obligations with Respect to Trust
Property.

            (a) Neither Trustee nor Beneficiary or any Lender shall have any
duty to protect or preserve, or any liability with respect to the protection or
preservation of, any Trust Property or to preserve rights pertaining thereto
other than the duty to use reasonable care in the custody and preservation of
any Trust Property in its actual possession. Beneficiary shall be deemed to have
exercised reasonable care in the custody and preservation of any Trust Property
in its possession if such Trust Property is accorded treatment substantially
equal to that which Beneficiary accords its own like property. Beneficiary shall
be relieved of all responsibility for any Trust Property in its possession upon
surrendering it, or tendering surrender of it, to Trustor or to such other
Person entitled thereto by applicable law.

            (b) Nothing contained in this Deed of Trust shall be construed as
requiring or obligating Trustee, Beneficiary or any Lender, and neither Trustee
nor Beneficiary or any Lender shall be required or obligated, to (i) make any
demand or inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim or notice or take any action with respect to any
Trust Property or the monies due or to become due thereunder in connection
therewith, (ii) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders, offers or other matters relating to any Trust
Property, whether or not Beneficiary or any of the other Lenders has or is
deemed to have knowledge or notice thereof, (iii) take any necessary steps to
preserve rights against any prior parties with respect to any Trust Property, or
(iv) notify Trustor or any other Person of any decline in the value of any Trust
Property.

            SECTION 9.18 Inconsistency with Credit Agreement. To the fullest
extent possible, the terms and provisions of the Credit Agreement shall be read
together with the terms and provisions of this Deed of Trust such that the terms
and provisions of this Deed of Trust shall supplement, rather than conflict
with, the terms and provisions of the Credit Agreement; provided, however, that,
notwithstanding the foregoing, in the event any of the terms or provisions of
this Deed of Trust conflict with any of the terms or provisions of the Credit
Agreement, such that it is impractical for such terms or provisions to coexist,
the terms or provisions of the Credit Agreement shall govern and control for all
purposes; and, provided further, that the inclusion in this Deed of Trust of
terms and provisions, supplemental rights or remedies in favor of a secured
party but which are not addressed in the Credit Agreement shall not be deemed to
be a conflict with the Credit Agreement and all such additional terms,
provisions, supplemental rights or remedies contained herein shall be given full
force and effect.

                                       34
<PAGE>

            SECTION 9.19 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between Trustor and Beneficiary, or any Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Trustor for the use, forbearance or detention of the money
to be loaned under the Credit Agreement or any other Loan Document, or for the
payment or performance of any covenant or obligation contained herein or in the
Credit Agreement or any other Loan Document, exceed the maximum amount
permissible under applicable federal or state usury laws. If, under any
circumstances, fulfillment of any such provision, at the time performance of
such provision shall be due, shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall be
reduced to the limit of such validity. If, under any circumstances, Trustor
shall have paid an amount of money which is deemed to be interest and such
interest would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction
of the principal amount owing in respect of the Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
Trustor. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by Beneficiary (or
Lender) shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by applicable
law, be amortized, prorated, allocated and spread from the date of this Deed of
Trust until payment in full of the Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.

            SECTION 9.20 Covenants To Run With the Land. All of the grants,
representations, warranties, undertakings, covenants, terms, provisions and
conditions in this Deed of Trust shall run with the Land and shall apply to and
bind the successors and assigns of Trustor. If there shall be more than one
trustor, the covenants, representations and warranties made herein shall be
deemed to be joint and several.

            SECTION 9.21 Amount Secured; Last Dollar. So long as the balance of
the Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the Obligations secured by this Deed of
Trust, but shall, instead, be deemed to be applied against only such portions of
the Obligations that are not secured by this Deed of Trust.

            SECTION 9.22 Defense of Claims. Trustor shall promptly notify
Beneficiary in writing of the commencement of any legal proceedings affecting
Trustor's title to the Trust Property or Beneficiary's Lien on or security
interest in the Trust Property, or any part thereof, and shall take all such
action, employing attorneys agreeable to Beneficiary, as may be necessary to
preserve Trustor's and Beneficiary's rights affected thereby. If Trustor fails
or refuses to adequately or vigorously, in the sole judgment of Beneficiary,
defend Trustor's or Beneficiary's rights to the Trust Property, Beneficiary may
take such action on behalf of and in the name of Trustor and at Trustor's
expense. Moreover, Beneficiary may take (or cause its agents to take) such
independent action in connection therewith as they may in their discretion deem
proper, including, without limitation, the right to employ independent counsel
and to intervene in any suit affecting the Trust Property. All costs, expenses
and attorneys' fees incurred by Beneficiary

                                       35
<PAGE>

(or its agents) pursuant to this Section 9.22 or in connection with the defense
by Beneficiary of any claims, demands or litigation relating to Trustor, the
Trust Property or the transactions contemplated in this Deed of Trust shall be
paid by Trustor on demand, plus interest thereon from the date of the advance by
Beneficiary until reimbursement of Beneficiary at the Default Rate.

            SECTION 9.23 Exculpation Provisions. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES
THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST;
THAT IT HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST;
THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND
THAT IT RECOGNIZES THAT CERTAIN TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."

            SECTION 9.24 No Merger of Estates. So long as any part of the
Obligations remain unpaid, unperformed or undischarged, the fee, easement and
leasehold estates to the Trust Property shall not merge but rather shall remain
separate and distinct, notwithstanding the union of such estates either in
Trustor, Beneficiary, any lessee, any third-party purchaser or otherwise.

            SECTION 9.25 Suretyship Waivers. As used in this Section 9.25, the
term "Obligor" shall mean each any Obligor, other than the Trustor, obligated
for any of the Obligations secured by this Deed of Trust.

            (a) Representations and Warranties. Trustor represents and warrants
to Beneficiary that: (A) this Deed of Trust is executed, in part, at the request
of the Obligors; (B) this Deed of Trust complies with all agreements between
each Obligor regarding Trustor's execution hereof; (C) Beneficiary has made no
representation to any Trustor as to the creditworthiness of any Obligor; and (D)
Trustor has established adequate means of obtaining from each Obligor on a
continuing basis financial and other information pertaining to such Obligor's
financial condition. Trustor agrees to keep adequately informed from such means
of any facts, events or circumstances which might in any way affect such
Trustor's risks hereunder. Trustor further agrees that Beneficiary shall have no
obligation to disclose to Trustor any information or material about any Obligor
which is acquired by Beneficiary in any manner. The liability of Trustor
hereunder shall be reinstated and revived, and the rights of Beneficiary shall
continue if and to the extent that for any reason any amount at any time paid on
account of any Obligation is rescinded or must otherwise be restored by
Beneficiary, whether as a result of any

                                       36
<PAGE>

proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Beneficiary in its sole
discretion; provided however, that if Beneficiary chooses to contest any such
matter at the request of Trustor, Trustor agrees to indemnify and hold
Beneficiary harmless from and against all costs and expenses, including
reasonable attorneys' fees, expended or incurred by Beneficiary in connection
therewith, including without limitation, any litigation with respect thereto.

            (B)   General Suretyship Waivers.

                  (i)   Trustor waives any right to require Beneficiary to: (i)
      proceed against any Obligor or any other person; (ii) marshal assets or
      proceed against or exhaust any security held from any Obligor or any other
      person; (iii) take any action or pursue any other remedy in Beneficiary's
      power; or (iv) make any presentment or demand for performance, or give any
      notice of nonperformance, protest, notice of protest or notice of dishonor
      hereunder or in connection with any obligations or evidences of
      indebtedness held by Beneficiary as security for or which constitute in
      whole or in part the Obligations, or in connection with the creation of
      new or additional obligations.

                  (ii)  Trustor waives any defense to its obligations hereunder
      based upon or arising by reason of: (i) any disability or other defense of
      any Obligor or any other person; (ii) the cessation or limitation from any
      cause whatsoever, other than payment in full, of any Obligation; (iii) any
      lack of authority of any officer, director, partner, agent or any other
      person acting or purporting to act on behalf of any Obligor which is a
      corporation, partnership or other type of entity, or any defect in the
      formation of any such Obligor; (iv) the application by any Obligor of the
      proceeds of any Obligation for purposes other than the purposes
      represented by any Obligor to, or intended or understood by, Beneficiary
      or any Trustor; (v) any act or omission by Beneficiary which directly or
      indirectly results in or aids the discharge of any Obligor of any portion
      of the Obligations by operation of law or otherwise, or which in any way
      impairs or suspends any rights or remedies of Beneficiary against any
      Obligor; (vi) any impairment of the value of any interest in any security
      for the Obligations or any portion thereof, including without limitation,
      the failure to obtain or maintain perfection or recordation of any
      interest in any such security, the release of any such security without
      substitution, and/or the failure to preserve the value of, or to comply
      with applicable law in disposing of, any such security; or (vii) any
      modification of the Obligations, in any form whatsoever, including without
      limitation the renewal, extension, acceleration or other change in time
      for payment of, or other change in the terms of, the Obligations or any
      portion thereof, including increase or decrease of the rate of interest
      thereon. Until all Obligations shall have been paid in full, no Trustor
      shall have any right of subrogation, and Trustor waives any right to
      enforce any remedy which Beneficiary now has or may hereafter have against
      any Obligor or any other person, and waives any benefit of, or any right
      to participate in, any security now or hereafter held by Beneficiary.
      Trustor further waives all rights and defenses it may have arising out of:
      (1) any election of remedies by Beneficiary, even though that election of
      remedies, such as a non-judicial foreclosure with respect to any security
      for any portion of the Obligations, destroys Trustor's rights of
      subrogation or Trustor's rights to proceed against any Obligor for
      reimbursement; or

                                       37
<PAGE>

      (2) any loss of rights Trustor may suffer by reason of any rights, powers
      or remedies of any Obligor in connection with any anti-deficiency laws or
      any other laws limiting, qualifying or discharging any Obligor's
      obligations, whether by operation of Sections 726, 580a and 580d of the
      Code of Civil Procedure as from time to time amended (to the extent
      California law applies or may be determined to apply), or otherwise,
      including any rights Trustor may have to a Section 580a fair market value
      hearing to determine the size of a deficiency following any trustee's
      foreclosure sale or other disposition of any security for any portion of
      the Obligations (to the extent California law applies or may be determined
      to apply).

                  (iii) If any of said waivers is determined to be contrary to
      any applicable law or public policy, such waiver shall be effective to the
      extent permitted by applicable law or public policy.

            (c)   Additional Suretyship Waivers.

                  (i)   Trustor hereby expressly waives and agrees not to assert
      or take advantage of any defense based upon:

                        (1) The incapacity, lack of authority, death or
            disability of any Obligor or any other person or entity;

                        (2) The failure of Beneficiary to commence an action
            against any Obligor or to proceed against or exhaust any security
            held by Beneficiary at any time, or to pursue any other remedy
            whatsoever at anytime;

                        (3) Any duty on the part of Beneficiary to disclose to
            Trustor any facts Beneficiary may now or hereafter know regarding
            any Obligor, regardless of whether Beneficiary has reason to believe
            (i) that any such facts materially increase the risk beyond that
            which Trustor intends to assume, or (ii) that such facts are unknown
            to Trustor, Trustor acknowledging that he, she or it is fully
            responsible for being and keeping informed of the financial
            condition and affairs of any Obligor;

                        (4) Lack of notice of default, demand of performance or
            notice of acceleration to any Obligor or any other party with
            respect to the Loans or any Obligor's obligations guarantied by
            Trustor;

                        (5) The consideration for the Loan Documents;

                        (6) The revocation or repudiation hereof by Trustor or
            the revocation or repudiation of any of the Loan Documents by any
            Obligor or any other person;

                        (7) The unenforceability in whole or in part of the Loan
            Documents against any Obligor;

                                       38
<PAGE>

                        (8) Any acts or omissions of Beneficiary which vary,
            increase or decrease the risk on Trustor;

                        (9) Any rights or defenses based upon an offset by
            Trustor against any obligation now or hereafter owed to Trustor by
            any Obligor;

                        (10) Any statute of limitations affecting the liability
            of Trustor hereunder, the liability of any Obligor or any other
            guarantor under the Loan Documents or the enforcement hereof, to the
            extent permitted by law;

                        (11) The application by any Obligor of the proceeds of
            the Loans or other financial accommodations under the Credit
            Agreement for purposes other than the purposes represented by any
            Obligor to Beneficiary and Trustor or intended or understood by
            Beneficiary or Trustor;

                        (12) An election of remedies by Beneficiary, including
            any election to proceed against any collateral by judicial or
            nonjudicial foreclosure, whether real property or personal property
            that is security for the any Obligor's obligations under the Loan
            Documents, or by deed in lieu thereof, and whether or not every
            aspect of any foreclosure sale is commercially reasonable, and
            whether or not any such election of remedies destroys or otherwise
            impairs the subrogation rights of Trustor or the rights of Trustor
            to proceed against any Obligor or any other guarantor by way of
            subrogation or for reimbursement or contribution, or all such
            rights;

                        (13) Any statute or rule of law which provides that the
            obligation of a surety must be neither larger in amount nor in any
            other aspects more burdensome than that of the principal obligor;

                        (14) Beneficiary's election, in any proceeding
            instituted under Title 11 of the Bankruptcy Code, of the application
            of Bankruptcy Code Section 1111(b)(2) or any successor statute;

                        (15) Any borrowing or any grant of a security interest
            under Bankruptcy Code Section 364; and

                        (16) Any other suretyship defense that may be available
            to Trustor. Without limiting the generality of the foregoing (to the
            extent California law applies or may be determined to apply),
            Trustor also waives (y) any defense based upon Beneficiary's
            election to waive its lien as to all or any security for the Loans
            or for the guarantor of any other person pursuant to California Code
            of Civil Procedure ("CCP ") Section 726.5, under any similar law in
            any other state that may be applicable because any Obligor's
            obligations are secured by a lien on real property in such state, or
            otherwise, and (z) any and all benefits which might otherwise be
            available to Trustor under California Civil Code ("Civil Code")
            Sections 2809, 2810, 2815, 2819, 2839, 2845 through 2850, 2899 and
            3433.

                                       39
<PAGE>

                  (ii)  Trustor understands and acknowledges that if Beneficiary
      forecloses judicially or nonjudicially against any real property that is
      security for any Obligor's obligations under the Loan Documents (other
      than this Deed of Trust), that foreclosure could impair or destroy any
      ability that Trustor may have to seek reimbursement, contribution or
      indemnification from any such Obligor based on any right Trustor may have
      of subrogation, reimbursement, contribution or indemnification for any
      amounts paid by Trustor under the Loan Documents or realized by
      Beneficiary by way of foreclosure of this Deed of Trust. Trustor further
      understands and acknowledges that in the absence of this provision, the
      potential impairment or destruction of Trustor's rights, if any, may (to
      the extent California law applies or may be determined to apply) entitle
      Trustor to assert a defense to its obligations under this Deed of Trust
      and the Loan Documents based on CCP Section 580d as interpreted in Union
      Bank vs. Gradsky. By executing this Deed of Trust, Trustor freely,
      irrevocably and unconditionally:

                        (1) waives and relinquishes that defense, and agrees
            that Trustor will be fully liable for its obligations under the Loan
            Documents and the Trust Property will continue to be security for
            the Obligations, even though Beneficiary may foreclose judicially or
            nonjudicially against any real property that is security for the any
            Obligor's obligations under the Loan Documents;

                        (2) agrees that Trustor will not assert that defense in
            any action or proceeding that Beneficiary may commence to enforce
            the obligations of Trustor under this Deed of Trust and the Loan
            Documents;

                        (3) acknowledges and agrees that the rights and defenses
            waived by Trustor under the Loan Documents include any right or
            defense that Trustor may have or be entitled to assert based upon or
            arising out of any one or more of the following: (i) CCP Sections
            580a (which if Trustor had not given this waiver, would otherwise
            limit Trustor's liability (and the extent of the Obligations to
            which the Trust Property would be exposed) after any nonjudicial
            foreclosure sale to the difference between the amount of the
            Obligations and the fair market value of the property or interests
            sold at such nonjudicial foreclosure sale against any real property
            that is security for the an Obligor's obligations under the Loan
            Documents rather than the actual proceeds of such sale), 580b and
            580d (which if Trustor had not given this waiver, would otherwise
            limit Beneficiary's right to recover a deficiency judgment (or to
            foreclose this Deed of Trust and otherwise pursue the Trust
            Property) with respect to purchase money obligations and after any
            nonjudicial foreclosure sale against any real property that is
            security for the an Obligor's obligations under the Loan Documents,
            respectively), or 726 (which, if Trustor had not given this waiver,
            among other things, would otherwise require Beneficiary to exhaust
            all of its security against an Obligor or Obligors before
            Beneficiary would be entitled to exercise its remedies under this
            Deed of Trust or pursue a personal judgment for a deficiency against
            the any Obligor); or (ii) Civil Code Section 2848; and

                        (4) acknowledges and agrees that Beneficiary is relying
            on this waiver in making the Loan or other financial accommodations
            under the Credit

                                       40
<PAGE>

            Agreement, and that this waiver is a material part of the
            consideration that Beneficiary is receiving for making the Loans or
            other financial accommodations under the Credit Agreement. WITHOUT
            LIMITING THE FOREGOING, TRUSTOR WAIVES ALL RIGHTS AND DEFENSES THAT
            TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE LOAN
            DOCUMENTS ARE SECURED BY REAL PROPERTY. THIS MEANS, AMONG OTHER
            THINGS:

                              a.    BENEFICIARY MAY COLLECT FROM TRUSTOR OR
                        EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST WITHOUT
                        FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY
                        COLLATERAL PLEDGED BY ANY OBLIGOR; AND

                              b.    IF BENEFICIARY FORECLOSES ON ANY REAL
                        PROPERTY COLLATERAL PLEDGED BY ANY OBLIGOR:

                                    (i) THE AMOUNT OF THE OBLIGATIONS MAY BE
                              REDUCED ONLY BY THE PRICE FOR WHICH THAT
                              COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN
                              IF THE COLLATERAL IS WORTH MORE THAN THE SALE
                              PRICE; AND

                                    (ii) BENEFICIARY MAY COLLECT FROM TRUSTOR
                              AND EXERCISE ITS REMEDIES UNDER THIS DEED OF
                              TRUST EVEN IF BENEFICIARY, BY FORECLOSING ON THE
                              REAL PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT
                              TRUSTOR MAY HAVE TO COLLECT FROM ANY OBLIGOR.

            THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND
            DEFENSES TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE
            LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THESE RIGHTS AND
            DEFENSES INCLUDE, BUT ARE NOT LIMITED TO, ANY RIGHTS OR DEFENSES
            BASED UPON CCP SECTIONS 580a, 580b, 580d OR 726.

            SECTION 9.26 Beneficiary Statement. Beneficiary may collect a fee
not to exceed the maximum allowed by applicable law for furnishing the statement
of obligation as provided in Section 2943 of the Civil Code of California.

            SECTION 9.27 Request for Notice. Pursuant to Section 2924b(d) of the
California Civil Code, Trustor and Beneficiary request that a copy of any notice
of default and a copy of any notice of sale be mailed to Trustor and
Beneficiary, respectively, at the address for such party set forth herein

                                       41
<PAGE>

            SECTION 9.28 Release and Reconveyance. Lender will release and
reconvey its interest under this Deed of Trust to the Trust Property as required
by Section 7.04 of the Credit Agreement.

             [NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

                                       42
<PAGE>

      IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the
date first above written.

                                    TRUSTOR:

                                    LAKES KAR SHINGLE SPRINGS, L.L.C., a
                                    Delaware limited liability company

                                    By: /s/ Timothy J. Cope
                                        ----------------------------------------
                                        Timothy J. Cope, Chief Financial Officer

                                       43
<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF NEW YORK                   )
                                    ) ss:
county of New York                  )

On June 21, 2006 before me, Linda Yonha Kim (here insert name and
title of the officer), personally appeared Timothy J. Cope, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                    /s/ Linda Yonha Kim
                                    --------------------------------------------
                                                    Notary Public

                                       44

<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE UNINCORPORATED AREA, COUNTY
OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL ONE:

PARCEL 1, AS SHOWN ON THAT CERTAIN PARCEL MAP ENTITLED "PARCEL MAP, A POR. S.W.
1/4 SEC 29, T.10N., R.10E., M.D.B.&M., BEING PARCEL D, P.M. 12-125", FILED IN
THE OFFICE OF THE COUNTY RECORDER OF EL DORADO COUNTY ON MARCH 23, 1978, IN BOOK
19 OF PARCEL MAPS, AT PAGE 72.

APN:  319-110-13-100

PARCEL TWO:

PARCEL 3, AS SHOWN ON THAT CERTAIN PARCEL MAP FILED IN THE OFFICE OF THE COUNTY
RECORDER OF EL DORADO, STATE OF CALIFORNIA, ON FEBRUARY 8, 1977, IN BOOK 14, OF
PARCEL MAPS, AT PAGE 22.

APN:  319-110-09-100

PARCEL THREE:

PARCEL 2, AS SHOWN UPON THE MAP ENTITLED "PARCEL MAP, A POR. S.W. 1/4 SEC. 29
T.10N. R.10E., M.D.M. BEING PARCEL D. P.M. 12-125" FILED IN THE OFFICE OF THE
COUNTY RECORDER, COUNTY OF EL DORADO, STATE OF CALIFORNIA, ON MARCH 23, 1978 IN
BOOK 19 OF PARCEL MAPS AT PAGE 72.

APN:  319-110-14-100

PARCEL FOUR:

PARCEL 9, AS SAID PARCEL IS SHOWN ON THAT CERTAIN PARCEL MAP ENTITLED "PORTION
OF SECTIONS 29, 30, 31 & 32, T.10 N., R.10E., M.D.B.&M., AND PORTION OF SECTION
6, T.9N., R.10E, M.D.M.", FILED AUGUST 31, 1972 IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY IN BOOK 1 OF PARCEL MAPS, AT PAGE 163.

APN:  319-210-18-100, 319-230-49-100, 319-230-48-100

PARCEL FIVE:

PARCEL 1, AS SHOWN ON THE PARCEL MAP FILED APRIL 4, 1978 IN BOOK 19 OF PARCEL
MAPS, AT PAGE 81, EL DORADO COUNTY RECORDS.

                                   Exhibit A-1
<PAGE>

APN:  319-110-17-100

PARCEL 6:

PARCEL 13, AS SAID PARCEL IS SHOWN ON THAT CERTAIN PARCEL MAP ENTITLED "PORTION
OF SECTIONS 29, 30, 31, AND 32, T.10N., R.10E., AND PORTION OF SECTION 6 T.9N.,
R.10E, M.D.M.", FILED AUGUST 31, 1972 IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY IN BOOK 1 OF PARCEL MAPS AT PAGE 163.

APN:  319-220-18-100

                                       2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>10
<FILENAME>c06339exv10w9.txt
<DESCRIPTION>DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SEUCRITY AGREEMENT AND FIXTURE FILING
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.9

THIS DEED OF TRUST WAS PREPARED BY
AND WHEN RECORDED, RETURN TO:

Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attention: Elizabeth Jaffe, Esq.
Reference No.: 024819 0034

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

                                     made by

                           LAKES SHINGLE SPRINGS, INC.
                                    (TRUSTOR)

                                       to

                    FIDELITY NATIONAL TITLE INSURANCE COMPANY
                                    (TRUSTEE)

                               for the benefit of

                              BANK OF AMERICA, N.A.
                                  (BENEFICIARY)

                               PROPERTY LOCATION:

                           5000 and 5020 Artesia Road
                           Shingle Springs, California

                           DATED AS OF JUNE 22, 2006

    THIS ALSO CONSTITUTES FINANCING STATEMENTS FILED AS A FIXTURE FILING AND
   FINANCING STATEMENT PURSUANT TO SECTIONS 9501(A)(1) AND 9502(B) AND (C) OF
   THE CALIFORNIA UNIFORM COMMERCIAL CODE AND IS RECORDED AS A FIXTURE FILING

     PURSUANT TO SECTION 2924B(D) OF THE CALIFORNIA CIVIL CODE, TRUSTOR AND
   BENEFICIARY REQUEST THAT A COPY OF ANY NOTICE OF DEFAULT AND A COPY OF ANY
    NOTICE OF SALE BE MAILED TO TRUSTOR AND BENEFICIARY, RESPECTIVELY, AT THE
                    ADDRESS FOR SUCH PARTY SET FORTH HEREIN.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
ARTICLE I DEFINITIONS............................................................................    2
         SECTION 1.01      Terms Defined Above...................................................    2
         SECTION 1.02      Definitions...........................................................    2
         SECTION 1.03      Terminology...........................................................    5
         SECTION 1.04      Other Defined Terms...................................................    6

ARTICLE II GRANT OF LIEN AND SECURITY INTEREST...................................................    6
         SECTION 2.01      Grant of Lien.........................................................    6
         SECTION 2.02      Grant of Security Interest............................................    6
         SECTION 2.03      No Obligation of Beneficiary..........................................    7
         SECTION 2.04      Fixture Filing........................................................    7
         SECTION 2.05      Future Advances.......................................................    7
         SECTION 2.06      Intentionally Omitted.................................................    7

ARTICLE III ASSIGNMENT OF LEASES AND RENTS.......................................................    7
         SECTION 3.01      Assignment............................................................    7
         SECTION 3.02      Revocable License.....................................................    8
         SECTION 3.03      Enforcement of Leases.................................................    8
         SECTION 3.04      Direction to Tenants..................................................    9
         SECTION 3.05      Appointment of Attorney-in-Fact.......................................    9
         SECTION 3.06      No Liability of Beneficiary...........................................   10
         SECTION 3.07      Trustor's Indemnities.................................................   10
         SECTION 3.08      No Modification of Trustor's Obligations..............................   11
         SECTION 3.09      Rights in Bankruptcy..................................................   11
         SECTION 3.10      Right to Enforce Under California Civil Code Section 2938.............   11

ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................   13
         SECTION 4.01      Title to Trust Property and Lien of this Deed of Trust................   13
         SECTION 4.02      Taxes and Other Payments..............................................   14
         SECTION 4.03      Power to Create Lien and Security.....................................   14
         SECTION 4.04      Loan and Credit Agreements............................................   14
         SECTION 4.05      Compliance with Laws..................................................   14
         SECTION 4.06      No Condemnation.......................................................   15
         SECTION 4.07      Flood Zone............................................................   15
         SECTION 4.08      Additional Environmental Representation...............................   15

ARTICLE V AFFIRMATIVE COVENANTS..................................................................   15
         SECTION 5.01      Lien Status...........................................................   15
         SECTION 5.02      Payment of Impositions................................................   15
         SECTION 5.03      Repair................................................................   16
         SECTION 5.04      Insurance and Application of Insurance Proceeds.......................   16
         SECTION 5.05      Condemnation and Application of Condemnation Proceeds.................   18
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                                 <C>
         SECTION 5.06      Maintenance of Rights of Way, Easements, Licenses and Other Rights....   19
         SECTION 5.07      Payment and Performance of Obligations................................   20
         SECTION 5.08      Compliance with Permitted Liens and Other Obligations.................   20
         SECTION 5.09      Additional Affirmative Covenants......................................   20

ARTICLE VI NEGATIVE COVENANTS....................................................................   20
         SECTION 6.01      Use Violations........................................................   20
         SECTION 6.02      Waste.................................................................   20
         SECTION 6.03      Alterations...........................................................   20
         SECTION 6.04      No Further Encumbrances...............................................   20
         SECTION 6.05      Transfer Restrictions.................................................   21
         SECTION 6.06      Loan and Credit Agreements; Additional Negative Covenants.............   21

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.......................................................   21
         SECTION 7.01      Event of Default......................................................   21
         SECTION 7.02      Acceleration..........................................................   21
         SECTION 7.03      Foreclosure and Sale..................................................   21
         SECTION 7.04      Trustee's Successors, Substitutes and Agents..........................   22
         SECTION 7.05      Receivership..........................................................   23
         SECTION 7.06      Judicial Foreclosure..................................................   23
         SECTION 7.07      Separate Sales........................................................   24
         SECTION 7.08      Possession of Trust Property..........................................   24
         SECTION 7.09      Occupancy After Foreclosure...........................................   24
         SECTION 7.10      Remedies Cumulative, Concurrent and Nonexclusive......................   25
         SECTION 7.11      No Release of Obligations.............................................   25
         SECTION 7.12      Release of and Resort to Collateral...................................   25
         SECTION 7.13      Waiver of Redemption, Notice and Marshalling of Assets................   25
         SECTION 7.14      Discontinuance of Proceedings.........................................   26
         SECTION 7.15      Application of Proceeds...............................................   26
         SECTION 7.16      Uniform Commercial Code Remedies......................................   27
         SECTION 7.17      Indemnity.............................................................   27
         SECTION 7.18      Waiver of Lien........................................................   28
         SECTION 7.19      Action for Environmental Claims.......................................   28

ARTICLE VIII TRUSTEE.............................................................................   29
         SECTION 8.01      Duties, Rights, and Powers of Trustee.................................   29
         SECTION 8.02      Successor Trustee.....................................................   29
         SECTION 8.03      Retention of Moneys...................................................   30
         SECTION 8.04      Reconveyance..........................................................   30

ARTICLE IX MISCELLANEOUS.........................................................................   30
         SECTION 9.01      Instrument Construed as Deed of Trust, Etc............................   30
         SECTION 9.02      Performance at Trustor's Expense......................................   30
         SECTION 9.03      Survival of Obligations...............................................   30
         SECTION 9.04      Further Assurances....................................................   30
         SECTION 9.05      Notices...............................................................   30
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                 <C>
         SECTION 9.06      No Waiver.............................................................   31
         SECTION 9.07      Beneficiary's Right to Perform; Beneficiary's Expenditures............   31
         SECTION 9.08      Successors and Assigns................................................   32
         SECTION 9.09      Severability..........................................................   32
         SECTION 9.10      Subrogation of Trustee................................................   32
         SECTION 9.11      Entire Agreement and Modification.....................................   32
         SECTION 9.12      Applicable Law........................................................   32
         SECTION 9.13      Satisfaction of Prior Encumbrance.....................................   33
         SECTION 9.14      No Partnership........................................................   34
         SECTION 9.15      Headings..............................................................   34
         SECTION 9.16      Release of Deed of Trust..............................................   34
         SECTION 9.17      Limitation of Obligations with Respect to Trust Property..............   34
         SECTION 9.18      Inconsistency with Credit Agreement...................................   34
         SECTION 9.19      Limitation on Interest Payable........................................   35
         SECTION 9.20      Covenants To Run With the Land........................................   35
         SECTION 9.21      Amount Secured; Last Dollar...........................................   35
         SECTION 9.22      Defense of Claims.....................................................   36
         SECTION 9.23      Exculpation Provisions................................................   36
         SECTION 9.24      No Merger of Estates..................................................   36
         SECTION 9.25      Suretyship Waivers....................................................   36
         SECTION 9.26      Beneficiary Statement.................................................   42
         SECTION 9.27      Request for Notice....................................................   42
         SECTION 9.28      Release and Reconveyance..............................................   42

EXHIBIT A - LEGAL DESCRIPTION
</TABLE>

                                      iii
<PAGE>

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

            THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (hereinafter, together with any and all amendments,
supplements, modifications or restatements of any kind, referred to as this
"Deed of Trust"), is made as of June ___, 2006, by LAKES SHINGLE SPRINGS, INC.,
a Minnesota corporation ("Trustor"), having its principal place of business at
c/o Lakes Entertainment, Inc., 130 Cheshire Lane, Suite 101, Minnetonka,
Minnesota 55309, Attention: Damon E. Schramm, Esq., to Fidelity National Title
Insurance Company, a California corporation (including any successor trustee at
the time acting as such hereunder, "Trustee"), for the benefit of BANK OF
AMERICA, N.A., having its principal place of business at 100 N. Tyron Street,
Charlotte, North Carolina 28255-0001, Attention: Douglas Jones (in such
capacity, together with its successors and assigns, "Beneficiary"), for itself
and in its capacity of Administrative Agent ("Administrative Agent") for each of
the financial institutions and their respective successors and assigns which
from time to time shall be a "Lender" under the Credit Agreement (as hereinafter
defined).

                                    RECITALS:

            WHEREAS, Trustor, a subsidiary of Parent, as hereinafter defined, is
the owner and holder of fee simple title in and to the Land (as hereinafter
defined) described on Exhibit A attached hereto and made a part hereof;

            WHEREAS, on the date hereof, Trustor, Lakes Entertainment, Inc.
("Parent"), Lakes Gaming and Resort, LLC ("Borrower") and the Guarantors (as
defined in the Credit Agreement) entered into that certain Credit Agreement with
Beneficiary, the Lenders party thereto and Banc of America Securities, LLC, as
sole lead arranger and sole book manager (as the same may be amended, modified
or otherwise supplemented and in effect from time to time, the "Credit
Agreement"), pursuant to which the Lenders agreed to extend to Borrower a
certain senior secured term loan facility in the aggregate original principal
amount of up to ONE HUNDRED AND FIVE MILLION and 00/100 Dollars
($105,000,000.00) (the "Loan");

            WHEREAS, Trustor will derive direct economic benefit from the Loan;

            WHEREAS, as a condition to Beneficiary executing the Credit
Agreement, Beneficiary is requiring that Trustor grant to Beneficiary, on behalf
of the Lenders, a security interest in and a first deed of trust lien upon the
Trust Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Credit Agreement, this Deed of Trust, and the
other Loan Documents (as hereinafter defined) (except for "Unsecured
Environmental Costs", as defined in Section 7.19 below), and (b) the performance
by Trustor of all terms, covenants, conditions, provisions, agreements and
liabilities contained in the Credit Agreement, this Deed of Trust, and the other
Loan Documents.

            NOW, THEREFORE, in order to comply with the terms and conditions of
the Credit Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Trustor hereby agrees with
Beneficiary as follows:

                                       1
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01 Terms Defined Above. As used in this Deed of Trust, the
terms defined in the introductory paragraph to this Deed of Trust and in the
Recitals set forth above shall have the meanings respectively assigned to them
above.

            SECTION 1.02 Definitions. As used herein, the following terms shall
have the following meanings:

            "Applicable UCC" means the Uniform Commercial Code as presently in
effect in the State or Commonwealth where the Trust Property is located.

            "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101, et. seq.), as amended, and any successor statute.

            "Buildings" means any and all buildings, structures, garages,
utility sheds, workrooms, air conditioning towers, open parking areas and other
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

            "Default" has the meaning assigned to such term in the Credit
Agreement.

            "Default Rate" has the meaning assigned to such term in the Credit
Agreement.

            "Event of Default" has the meaning assigned to such term in Section
7.01 hereof.

            "Fixtures" means all materials, supplies, equipment, apparatus and
other items now or hereafter acquired by Trustor and incorporated into the Trust
Property so as to constitute fixtures under the laws of the state in which such
items are located.

            "Governmental Authority" has the meaning assigned to such term in
the Credit Agreement.

            "Governmental Requirements" means any and all present and future
judicial decisions, statutes, rulings, rules, regulations, permits, certificates
or ordinances of any Governmental Authority in any way applicable to Trustor or
the Trust Property, including the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof.

            "Impositions" means any and all real estate and personal property
taxes; water, gas, sewer, electricity and other utility rates and charges;
charges for any easement, license or agreement maintained for the benefit of the
Trust Property; any and all other taxes, charges and assessments, whether
general or special, ordinary or extraordinary, foreseen or unforeseen, of any
kind and nature whatsoever which at any time prior to or after the execution
hereof may be assessed, levied or imposed upon the Trust Property or the
ownership, use, occupancy, benefit or

                                       2
<PAGE>

enjoyment thereof, together with any interest, costs or penalties that may
become payable in connection therewith.

            "Indemnified Parties" means, with respect to any Person entitled to
the benefit of an indemnity, such Person's officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, attorneys,
accountants and experts. The term "Indemnified Party" means any one of such
Persons.

            "Indemnitees" has the meaning assigned to such term in the Credit
Agreement.

            "Land" means the real property or interest therein described in
Exhibit A attached hereto, and all rights, titles and interests appurtenant
thereto.

            "Leases" means any and all leases, master leases, subleases,
licenses, concessions or other agreements (whether written or oral, and whether
now or hereafter in effect) which grant to third Persons a possessory interest
in and to, or the right to use, all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty, together with all security and other deposits
made in connection therewith and any guarantee of the obligations of the
landlord or the tenant thereunder.

            "License" has the meaning assigned to such term in Section 3.02(a)
hereof.

            "Lien" has the meaning assigned to such term in the Credit
Agreement.

            "Loan Documents" means, collectively, the Credit Agreement, this
Deed of Trust, and all other instruments, agreements and other documents
executed and delivered pursuant hereto or thereto or otherwise included in the
definition of the term "Loan Documents" in the Credit Agreement.

            "Losses" means all obligations, damages, claims, causes of action,
costs, fines, fees, charges, penalties, deficiencies, losses, diminutions in
value, expenses (including court costs, fees and expenses of attorneys,
accountants, consultants and other experts) and other liabilities, and, with
respect to any indemnity, includes all attorneys' fees, costs and expenses in
connection with the enforcement and collection of such indemnity. The term
"Loss" means any one of such Losses.

            "Trust Property" means all of Trustor's right, title, interest and
estate, whether now owned or hereafter acquired, in and to the Land, the
Buildings, the Fixtures and the Personalty, together with:

            (I)    all rights, privileges, tenements, hereditaments,
                   rights-of-way, easements, air rights, development rights or
                   credits, zoning rights, appendages and appurtenances in
                   anywise appertaining thereto, and all right, title and
                   interest of Trustor in and to any streets, ways, alleys,
                   strips or gores of land adjoining the Land or any part
                   thereof, and all right, title and interest of Trustor, if
                   any, in and to all rights, royalties and profits with respect
                   to all minerals, coal, oil, gas and other substances of any
                   kind or character on or underlying the Land, together with
                   all right, title and interest of Trustor

                                       3
<PAGE>

                   in and to all water and water rights (whether riparian,
                   appropriative or otherwise and whether or not appurtenant);

            (ii)   all rights of Trustor (but not its obligations) under any
                   contracts and agreements, including, without limitation,
                   construction contracts and architectural agreements, relating
                   to the Land, the Buildings, the Fixtures or the Personalty;

            (iii)  all of Trustor's right, title and interest in and to all
                   permits, licenses, franchises, certificates, authorizations,
                   consents, approvals and other rights and privileges (each, a
                   "Permit") obtained in connection with the Land, the
                   Buildings, the Fixtures or the Personalty or the use or
                   operation thereof;

            (iv)   all of Trustor's right, title and interest in and to all
                   plans and specifications, designs, schematics, drawings and
                   other information, materials and matters heretofore or
                   hereafter prepared relating to the Land, the Buildings, the
                   Fixtures or the Personalty;

            (v)    all of Trustor's right, title and interest in and to all
                   proceeds arising from or by virtue of the sale, lease or
                   other disposition of the Land, the Buildings, the Fixtures or
                   the Personalty or any part thereof or any interest therein or
                   from the operation thereof;

            (vi)   all of Trustor's right, title and interest in and to all
                   Leases now or hereafter in effect and all Rents, royalties,
                   bonuses, issues, profits, revenues or other benefits arising
                   from or attributable to the Land, the Buildings, the Fixtures
                   or the Personalty;

            (vii)  all of Trustor's right, title and interest in and to all
                   betterments, additions, alterations, appurtenances,
                   substitutions, replacements and revisions to the Land, the
                   Buildings, the Fixtures or the Personalty and all reversions
                   and remainders relating thereto;

            (viii) all of Trustor's right, title and interest in and to any
                   awards, remuneration, settlements or compensation now or
                   hereafter made by any Governmental Authority pertaining to
                   the Land, the Buildings, the Fixtures or the Personalty,
                   including those arising from or attributable to any vacation
                   of, or change of grade in, any streets affecting the Land or
                   the Buildings;

            (ix)   all of Trustor's right, title and interest in and to any and
                   all other security and collateral of any nature whatsoever,
                   whether now or hereafter given, for the repayment,
                   performance and discharge of the Obligations (as hereinafter
                   defined);

            (x)    all of Trustor's right, title and interest in and to all
                   awards, payments and proceeds of conversion, whether
                   voluntary or involuntary, of any of the Land, the Buildings,
                   the Fixtures, the Personalty or any of the property

                                       4
<PAGE>

                   and rights described in the foregoing clauses (i) through
                   (ix), including without limitation, all insurance,
                   condemnation and tort claims, refunds of real estate taxes
                   and assessments, rent claims and other obligations
                   dischargeable in cash or cash equivalents; and

            (xi)   all other property and rights of Trustor of every kind and
                   character relating to and/or used or to be used in connection
                   with the foregoing, and all proceeds and products of any of
                   the foregoing.

            EXCLUDING, HOWEVER, all motor vehicles and forklifts now or
hereafter located on the Land and only to the extent contemplated by the Credit
Agreement.

As used in this Deed of Trust, the term "Trust Property" shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

            "Obligations" has the meaning assigned to such term in the Credit
Agreement but shall specifically not include "Unsecured Environmental Costs" as
defined in Section 7.19 below.

            "Permitted Liens" has the meaning assigned to such term in the
Credit Agreement.

            "Person" has the meaning assigned to such term in the Credit
Agreement.

            "Personalty" means all of Trustor's right, title and interest in and
to all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private, including all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs, and all other
personal property (other than Fixtures) of any kind or character), and including
such property that is now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are or may be used in or related to
the planning, development, financing or operation of the Trust Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

            "Principal Balance" has the meaning assigned to such term in Section
7.02 hereof.

            "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Trustor acquires title
thereto), and other benefits paid or payable by parties (other than Trustor) for
using, leasing, licensing, possessing, operating from, residing in, benefiting
from or otherwise enjoying all or any part of the Land, the Buildings, the
Fixtures and/or the Personalty.

            SECTION 1.03 Terminology. Except as otherwise provided herein:

                                       5
<PAGE>

            (a) references to Articles and Sections shall mean the corresponding
Article or Section of this Deed of Trust;

            (b) words used herein in the singular, where the context so permits,
shall be deemed to include the plural and vice versa, and the definitions of
words used in the singular herein shall apply to such words when used in the
plural where the context so permits and vice versa;

            (c) the words "herein," "hereof," "hereunder," and other words of
similar import when used in this Deed of Trust refer to this Deed of Trust as a
whole, and not to any particular Article or Section; and

            (d) the words "includes" or "including" mean includes or including,
without limitation. SECTION 1.04 Other Defined Terms. Any capitalized term used
in this Deed of Trust and not otherwise defined herein shall have the meaning
assigned to such term in the Credit Agreement.

                                   ARTICLE II

                       GRANT OF LIEN AND SECURITY INTEREST

            SECTION 2.01 Grant of Lien. To secure the full and timely payment,
performance and discharge of all of the Obligations, Trustor hereby irrevocably
GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS and CONVEYS unto Trustee and
Trustee's successors, assigns and substitutes in trust hereunder, WITH POWER OF
SALE and right of entry and possession, for the use and benefit of Beneficiary,
in its capacity as Administrative Agent for the Lenders, the real and personal
property, right, title, interest and estate in, to and under the Trust Property,
subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the Trust Property
unto Trustee and Trustee's successors, assigns and substitutes in trust
hereunder, subject to the terms and conditions of this Deed of Trust, with POWER
OF SALE, forever, and Trustor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto
Beneficiary against every Person whomsoever lawfully claiming or to claim the
same or any part, subject, however, to the Permitted Liens; provided, however,
that if Trustor shall pay (or cause to be paid) and perform and discharge (or
cause to be performed and discharged) all of the Obligations on or before the
date on which the same are to be paid, performed and discharged, then the Liens
estates and rights granted by this Deed of Trust shall cease and terminate.

            SECTION 2.02 Grant of Security Interest. This Deed of Trust shall
also constitute and serve as a "security agreement" within the meaning of, and
shall constitute a first and prior security interest under, the Applicable UCC
with respect to the Personalty and the Fixtures. To this end, Trustor by these
presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto
Beneficiary, as Administrative Agent for the Lenders pursuant to the Credit
Agreement, a security interest in all of Trustor's right, title and interest in,
to and under the Personalty and the Fixtures, to secure the full and timely
payment, performance

                                       6
<PAGE>

and discharge of the Obligations. Trustor hereby consents to Beneficiary filing
and recording financing statements (and continuations thereof) with the
appropriate filing and recording offices in order to perfect (and maintain the
perfection of) the security interests granted herein.

            SECTION 2.03 No Obligation of Beneficiary. The assignment and
security interest herein granted to Beneficiary shall not be deemed or construed
to constitute Beneficiary as a mortgagee-in-possession of the Trust Property,
obligate Beneficiary to lease the Trust Property or attempt to do the same, or
to take any action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever.

            SECTION 2.04 Fixture Filing. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (a) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the Land described or to which reference is made herein or
on Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is to be
filed of record in the real estate records as a financing statement and shall
constitute a "fixture filing" for purposes of the Applicable UCC; and (c)
Trustor is the record owner of the real estate or interests in the real estate
constituting the Trust Property hereunder. Information concerning the security
interest herein granted may be obtained at the addresses set forth on the first
page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor
(Trustor) are set forth on the first page hereof. In that regard, the following
information is provided:

            Name of Debtor: LAKES SHINGLE SPRINGS, INC.

            Type of Organization: corporation

            State: Minnesota

            FEIN: 41-1977762

            Organizational ID Number: 10V-698

            SECTION 2.05 Future Advances. It is the intention of Trustor and
Beneficiary that this Deed of Trust shall secure future advances and
readavances, and the lien and security interest created by this Deed of Trust
shall attach upon execution and have priority from the time of recording as to
all advances, whether obligatory or discretionary, until this Deed of Trust is
released of record.

            SECTION 2.06 Intentionally Omitted

                                  ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

            SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Credit
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Trustor has presently, absolutely and irrevocably GRANTED, ASSIGNED,
TRANSFERRED and CONVEYED, and by these presents does presently, absolutely and
irrevocably GRANT, ASSIGN, TRANSFER

                                       7
<PAGE>

and CONVEY, unto Beneficiary, as Administrative Agent for the Lenders pursuant
to the Credit Agreement, as security for the payment, performance and discharge
of the Obligations, all of the Leases and Rents (if any), subject only to the
Permitted Liens applicable thereto and the License (as hereinafter defined);
provided, however, that if Trustor shall pay (or cause to be paid) and perform
and discharge (or cause to be performed and discharged) all of the Obligations
on or before the date on which the same are to be paid, performed and
discharged, then this assignment shall terminate, and all rights, titles and
interests conveyed pursuant to this assignment shall become vested in Trustor.

            SECTION 3.02 Revocable License.

            (a) Beneficiary hereby grants to Trustor a revocable license (the
"License"), nonexclusive with the rights of Beneficiary reserved in Sections
3.02(b), 3.04, and 3.05 hereof, to exercise and enjoy all incidences of the
status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor. Trustor hereby agrees to receive all Rents and hold the same as a
trust fund to be applied, and to apply the Rents so collected, except to the
extent otherwise provided in the Credit Agreement, first to the payment,
performance and discharge of the Obligations and then to the payment of the
Impositions. Thereafter, Trustor may use the balance of the Rents collected in
any manner not inconsistent with the Loan Documents.

            (b) If an Event of Default shall occur and be continuing, the
License shall immediately and automatically terminate without the necessity of
any action by Beneficiary or any other Person, and Beneficiary shall have the
right in such event to exercise the rights and remedies provided under this Deed
of Trust or otherwise available to Beneficiary under applicable law. Upon demand
by Beneficiary at any time that an Event of Default shall have occurred, Trustor
shall promptly pay to Beneficiary all security deposits under the Leases and all
Rents allocable to any period commencing from and after the occurrence of such
Event of Default. Any Rents received hereunder by Beneficiary shall be applied
and disbursed to the payment, performance and discharge of the Obligations,
subject to the terms of the Credit Agreement; provided, however, that, subject
to any applicable requirement of law, any security deposits actually received by
Beneficiary shall be held, applied and disbursed as provided in the applicable
Leases.

            SECTION 3.03 Enforcement of Leases. Trustor shall (a) submit any and
all proposed Leases (including subleases provided to Trustor for approval) to
Beneficiary for approval prior to the execution thereof or consent thereto, as
applicable; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) maintain each Lease in full force and effect
during the term thereof; (d) provide Beneficiary with prompt notice of each
notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of default received from (or relating to) a tenant
under a Lease, and otherwise promptly reasonably indicate that a material
default or termination of a Lease may occur (other than by reason of the
expiration of the term of such Lease); (e) appear in and defend any action or
proceeding in any manner connected with any of the Leases; (f) deliver to
Beneficiary true and complete copies of all Leases; and (g) deliver to
Beneficiary all such further information, and execute and deliver to

                                       8
<PAGE>

Beneficiary such further assurances and assignments, with respect to the Leases
as Beneficiary may from time to time reasonably request. Without Beneficiary's
prior written consent, Trustor shall not (i) do or knowingly permit to be done
anything to materially impair the value of any of the Leases; (ii) except for
security or similar deposits, collect any of the Rent more than one (1) month in
advance of the time when the same becomes due under the terms of any Lease;
(iii) discount any future accruing Rents; (iv) amend, modify, accept the
surrender of or terminate any of the Leases; or (v) assign or grant a security
interest in or to any of the Leases or Rents.

            SECTION 3.04 Direction to Tenants. Upon the occurrence and during
the continuance of an Event of Default, Trustor hereby authorizes and directs,
and shall, at the direction of Beneficiary, further authorize and direct, in
writing, the tenant under each Lease to pay directly to, or as directed by,
Beneficiary all Rents accruing or due under its Lease without proof to the
tenant of the occurrence and continuance of such Event of Default. Trustor
hereby authorizes the tenant under each Lease to rely upon and comply with any
notice or demand from Beneficiary for payment of Rents to Beneficiary, and
Trustor shall have no claim against any tenant for Rents paid by such tenant to
Beneficiary pursuant to such notice or demand. All Rents actually collected by
Beneficiary pursuant to this Section 3.04 shall be applied in accordance with
the Credit Agreement.

            SECTION 3.05 Appointment of Attorney-in-Fact.

            (a) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to,
upon the occurrence and during the continuance of an Event of Default, demand,
sue for, attach, levy, recover and receive any of the Rents and any premium or
penalty payable upon the exercise by any third Person under any Lease of a
privilege of cancellation originally provided in such Lease and to give proper
receipts, releases and acquittances therefor and, after deducting expenses of
collection, to apply the net proceeds as provided in the Credit Agreement.
Trustor hereby authorizes and directs any such third Person to deliver such
payment to Beneficiary in accordance with this Article III, and Trustor hereby
ratifies and confirms all that its said attorney-in-fact, the Beneficiary, shall
do or cause to be done in accordance with this Deed of Trust and by virtue of
the powers granted hereby. The foregoing appointment is irrevocable and
continuing, and such rights, powers and privileges shall be exclusive in
Beneficiary, and its successors and assigns, so long as any part of the
Obligations remains unpaid or unperformed and undischarged.

            (b) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid

                                       9
<PAGE>

or unperformed and undischarged. Trustor hereby represents and warrants that it
has not at any time prior to the date hereof exercised (or appointed any Person
as attorney-in-fact to exercise) any of the rights described in this Section
3.05(b), and Trustor hereby covenants not to exercise (or appoint any other
Person as attorney-in-fact to exercise) any such right, nor (except at
Beneficiary's written request) to subordinate any such Lease to the lien of this
Deed of Trust or to any other mortgage, deed of trust, assignment or security
agreement or to any ground lease or surface lease.

            SECTION 3.06 No Liability of Beneficiary. Neither the acceptance
hereof nor the exercise of the rights and remedies hereunder nor any other
action on the part of Beneficiary or any Person exercising the rights of
Beneficiary or any Lender hereunder shall be construed to: (a) be an assumption
by Beneficiary or any such Person or to otherwise make Beneficiary or such
Person liable or responsible for the performance of any of the obligations of
Trustor under or with respect to the Leases or for any Rent, security deposit or
other amount delivered to Trustor, provided that Beneficiary or any such Person
exercising the rights of Beneficiary shall be accountable for any Rents,
security deposits or other amounts actually received by Beneficiary or such
Person, as the case may be; or (b) obligate Beneficiary or any such Person to
take any action under or with respect to the Leases or with respect to the Trust
Property, to incur any expense or perform or discharge any duty or obligation
under or with respect to the Leases or with respect to the Trust Property, to
appear in or defend any action or proceeding relating to the Leases or the Trust
Property, to constitute Beneficiary as a mortgagee-in-possession (unless
Beneficiary actually enters and takes possession of the Trust Property), or to
be liable in any way for any injury or damage to Persons or property sustained
by any Person in or about the Trust Property, other than to the extent caused by
the willful misconduct or gross negligence of Beneficiary or any Person
exercising the rights of Beneficiary hereunder.

            SECTION 3.07 Trustor's Indemnities. Trustor hereby agrees to
protect, indemnify and hold harmless Beneficiary and each of the other
Indemnitees and each Indemnified Party related to Beneficiary or such other
Indemnitees from and against any and all Losses which Beneficiary or any such
other Indemnitees or Indemnified Party may incur under or by reason of this
Article III, or for any action taken by Beneficiary or any such other Lender or
Indemnified Party hereunder, or by reason or in defense of any and all claims
and demands whatsoever which may be asserted against Beneficiary or any such
other Indemnitees or Indemnified Party arising out of the Leases, including,
without limitation, any claim by any third Person for credit on account of Rents
paid to and received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Beneficiary
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Beneficiary or any such
other Indemnitees or Indemnified Party. In the event that Beneficiary or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys' fees, with interest thereon at the Default Rate, shall be
payable by Trustor to Beneficiary within ten (10) days after demand therefor,
and shall be secured hereby and by all other security for the payment and
performance of the Obligations, including, without limitation, the lien and
security interest of this Deed of Trust. The liabilities of Trustor as set forth
in this Section 3.07 shall survive the termination of this Deed of Trust and the
repayment of the Obligations.

                                       10
<PAGE>

            SECTION 3.08 No Modification of Trustor's Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Trustor to
make prompt payment of all Obligations as and when the same become due,
regardless of whether the Rents described in this Article III are sufficient to
pay the Obligations, and the security provided to Beneficiary pursuant to this
Article III shall be cumulative of all other security of any and every character
now or hereafter existing to secure payment of the Obligations.

            SECTION 3.09 Rights in Bankruptcy. Upon execution of this Deed of
Trust, Beneficiary, and not Trustor, shall be the creditor of any Tenant in
respect of assignments for the benefit of creditors and bankruptcy,
reorganization, insolvency, dissolution or receivership proceedings affecting
any such Tenant; provided, however, that Trustor shall be the party obligated to
make timely filings of claims in such proceedings or to otherwise pursue
creditor's rights therein. Notwithstanding the foregoing, Beneficiary shall have
the right, but not the obligation, to file such claims instead of Trustor and if
Beneficiary does file a claim, Trustor agrees that Beneficiary (a) is entitled
to all distributions on such claim to the exclusion of Trustor and (b) has the
exclusive right to vote such claim and otherwise to participate in the
administration of the estate in connection with such claim. Beneficiary shall
have the option to apply any monies received by it as such creditor to any of
the obligations of Trustor under the Loan Documents the order set forth in the
Loan Documents. If a petition is filed under the Bankruptcy Code by or against
Trustor, and Trustor, as landlord under any Lease, decides to reject such Lease
pursuant to Section 365(a) of the Bankruptcy Code, then Trustor shall give
Beneficiary at least ten (10) days' prior written notice of the date when
Trustor shall apply to the bankruptcy court for authority to reject the Lease.
Beneficiary may, but shall not be obligated to, send Trustor within such ten-day
period a written notice stating that (a) Beneficiary demands that Trustor assume
and assign the Lease to Beneficiary pursuant to Section 365 of the Bankruptcy
Code, and (b) Beneficiary covenants to cure or provide adequate assurance of
future performance under the Lease. If Beneficiary sends such notice, Trustor
shall not reject the Lease provided Beneficiary complies with clause (b) of the
preceding sentence.

            SECTION 3.10 Right to Enforce Under California Civil Code Section
2938. Without limiting any other rights or remedies of Beneficiary set forth in
this Deed of Trust or under any of the other Loan Documents to which Trustor is
a party, or available at law or in equity, at any time upon or following the
occurrence of any Event of Default, Beneficiary shall have the right to enforce
all of the rights and remedies of an Beneficiary under Section 2938 of the
California Civil Code ("Section 2938"). In the event that Beneficiary shall
elect to enforce this Deed of Trust in accordance with Section 2938, the
following procedures shall apply, as applicable:

                  (i) Beneficiary may send a demand notice in the form
      prescribed by Section 2938 to, in the case of enforcement under Section
      2938(c)(3), one or more of the tenants of the Trust Property, with a copy
      to Trustor and any other Beneficiary under a recorded assignment of
      leases, rents, issues and profits with respect to the Trust Property, or,
      in the case of enforcement under Section 2938(c)(4), to Trustor with a
      copy to any such other Beneficiarys in accordance with the procedures set
      forth therein. Without limiting Beneficiary's rights to any amounts
      received by Trustor after an Event of Default, Trustor shall immediately
      turn over to Beneficiary any Rents received by Trustor from any tenant of
      the Trust Property from and after Beneficiary's enforcement of this

                                       11
<PAGE>

      assignment under either of such Sections 2938(c)(3) or (4), it being
      understood that Trustor shall be deemed to hold such amounts as trustee
      for Beneficiary until such amounts have been paid to Beneficiary. In
      addition, Trustor shall also cause any collection agent for Trustor or any
      other person who has collected for Trustor's benefit relating to the
      period from and after Beneficiary's enforcement of this assignment under
      either of such Sections 2938(c)(3) or (4), to turn such Rents over to
      Beneficiary.

                  (ii) Notwithstanding anything to the contrary contained in
      this Deed of Trust or any other Loan Document, if Beneficiary shall
      proceed to enforce this assignment by means other than the appointment of
      a receiver and consequently receives Rents as a result thereof, and
      Beneficiary receives written demand from Trustor (or any other party
      entitled under law to make demand on Beneficiary) to pay the reasonable
      costs of protecting and preserving the Trust Property, Beneficiary may
      elect either to pay (either directly to the party to whom owed, or by
      joint check payable to Trustor and such party) or authorize Trustor to
      pay, such costs (such payments being referred to herein as "Protective
      Payments"), conditioned upon Trustor furnishing to Beneficiary all
      information (such as invoices, bills, contracts, or purchase orders)
      necessary in order for Beneficiary to identify the party to whom payment
      is owed or the work, service or item for which payment is requested and to
      establish that such Protective Payments are required to be paid or
      authorized under this Section. If Trustor is authorized to pay any
      Protective Payments under this Section, Beneficiary reserves the right to
      deposit the amounts necessary to pay such Protective Payments into a
      non-interest bearing checking account, in which Trustor shall have granted
      to Beneficiary a perfected, first priority security interest, from which
      Trustor shall be obligated to draw the funds necessary to pay such
      Protective Payments. In the event that Beneficiary agrees or is required
      under any circumstances to pay or authorize the payment of any Protective
      Payments consisting of costs of improvement of the Trust Property or any
      portion thereof (or any other costs the non-payment of which would entitle
      the payee to enforce mechanic's or materialman's liens or similar rights),
      Beneficiary shall be authorized, before paying or authorizing the payment
      of any such payments, to require compliance with standard construction
      loan disbursement conditions with respect to such costs, including,
      without limitation, the receipt of unconditional mechanics' lien waivers
      with respect to the work for which such costs are to be paid. (iii) In no
      event shall Beneficiary be obligated to pay or authorize the payment of
      Protective Payments in excess of any Rents actually received by
      Beneficiary as a result of the enforcement of Section (i) of this Section.

                  (iv) Nothing contained in this Section shall limit the rights
      of Beneficiary under any other provision of Deed of Trust.

                  (v) Nothing contained in this Section shall limit either (x)
      Beneficiary's right to cease at any time any further enforcement of this
      Assignment under Section 2938 by sending written notice of the
      cancellation thereof to each party to whom a demand notice was sent, or
      (y) Beneficiary's right to seek the appointment of a receiver, either of
      which if enforced by Beneficiary, shall terminate Beneficiary's
      obligations under Section (i) of this Section.

                                       12
<PAGE>

                  (vi) In no event shall any enforcement of Beneficiary's rights
      under this Section, including, without limitation, the payment or
      authorization of payment of any Protective Payments, make Beneficiary a
      "mortgagee-in-possession" or limit, waive, or otherwise derogate any of
      Beneficiary's other rights and remedies available to it under the Loan
      Documents to which Trustor is a party or at law. In no event shall any
      exercise of lights by the Beneficiary under this Section, including,
      without limitation, the payment or authorization of payment of any
      Protective Payments, be construed to require the Beneficiary to operate or
      manage the Trust Property or be construed as an assumption by Beneficiary
      of any obligation to operate or manage the Trust Property, and all
      liabilities and obligations in relation to the operation and management of
      the Trust Property shall remain exclusively that of the Trustor.

            (b)   Any Rents received by Beneficiary as a result of any such
enforcement measures shall be applied as provided in this Deed of Trust.

            (c)   Without in any way limiting Trustor's other indemnification
obligations set forth in this Assignment and in any of the Loan Documents to
which Trustor is a party, Trustor shall indemnify, defend, protect, and hold
harmless Beneficiary, and its successors and assigns, from and against any and
all losses, costs, expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses), damages, liabilities, or claims asserted
against or suffered by Beneficiary (i) arising from any Protective Payments
made, or authorized to be made, by Beneficiary in good faith, and (ii) arising
from any work performed or goods or services furnished in connection with the
ownership or operation of the Trust Property at any time during which
Beneficiary shall be enforcing its rights under this Section.

            (d)   Without limiting the restrictions on assignment set forth in
this Assignment and any of the other Loan Documents to which Trustor is a party,
each Beneficiary of any interest in the Rents shall acquire its interest in the
Rents subject to the rights of the Beneficiary set forth in this Assignment, and
shall acquire no greater rights with respect to the payment of Protective
Payments than the rights of Trustor as set forth in this Section.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary (but to
the extent any representation or warranty in this Article IV is substantively
the same as a representation or warranty contained in Article V of the Credit
Agreement and such representation or warranty is qualified by a materiality or
other qualifier in the Credit Agreement, such representation or warranty herein
shall be subject to the same materiality or other qualifier as in Article V of
the Credit Agreement) as follows:

            SECTION 4.01 Title to Trust Property and Lien of this Deed of Trust.
Trustor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good, marketable and indefeasible title to the Fixtures,
the Personalty and the other Trust Property.

                                       13
<PAGE>

The Trust Property is free and clear of any and all Liens, charges,
encumbrances, security interests and adverse claims whatsoever, except for (i)
all Liens, charges, encumbrances, security interests and adverse claims
specifically identified as exceptions on Schedule B of the policy of title
insurance accepted by Beneficiary in connection herewith or (ii) those Liens set
forth in Section 5.08 of the Credit Agreement.

            SECTION 4.02 Taxes and Other Payments. Trustor has filed all
federal, state, commonwealth, county, municipal and city income and other
material tax returns required to have been filed by it and has paid all taxes
and other Impositions which have become due pursuant to such returns or pursuant
to any assessments or charges received by it, and Trustor does not know of any
basis for any additional assessment or charge in respect of any such taxes or
other Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Trust Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

            SECTION 4.03 Power to Create Lien and Security. Trustor has full
power and lawful authority to grant, bargain, sell, assign, transfer, mortgage
and convey a Lien and security interest in all of the Trust Property in the
manner and form herein provided and without obtaining the authorization,
approval, consent or waiver of any grantor, lessor, sublessor, Governmental
Authority or other Person whomsoever.

            SECTION 4.04 Loan and Credit Agreements. Trustor has received a copy
of and is fully familiar with the terms and provisions of the Credit Agreement
and the other Loan Documents. All representations and warranties made by Trustor
in the Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby made by Trustor as to itself and the Trust Property as
though such representations and warranties were set forth at length herein as
the representations and warranties of Trustor.

            SECTION 4.05 Compliance with Laws. All of the improvements on the
Land (i) comply with all material requirements of all applicable laws and
ordinances with respect to zoning, subdivision, construction, building and land
use, including, without limitation, requirements with respect to parking, access
and certificates of occupancy (and similar certificates), and (ii) comply with,
and shall remain in compliance with, applicable health, fire and building codes.
All of the Buildings lie wholly within the boundaries and building restriction
lines of the Land. No improvements on adjoining properties encroach upon the
Land, and no easements or other encumbrances upon the Land encroach upon or
under any of the Buildings or any portion of the Trust Property. All of the
Buildings and the use of the Trust Property materially comply with, and shall
remain in material compliance with, all applicable statutes, rules, regulations
and private covenants now or hereafter relating to the ownership, construction,
use or operation of the Trust Property, including all applicable statutes, rules
and regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use. All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Trust Property have been obtained and

                                       14
<PAGE>

are in full force and effect. Trustor has not received any notice of, or other
communication with respect to, an alleged violation with respect to any of the
foregoing.

            SECTION 4.06 No Condemnation. No part of any property subject to
this Deed of Trust has been taken in condemnation or other like proceeding nor
is any proceeding pending, threatened or known to be contemplated for the
partial or total condemnation or taking of the Trust Property.

            SECTION 4.07 Flood Zone. The Trust Property is not located in an
area identified by the Federal Emergency Management Agency ("FEMA") as having
special flood hazards or if the Land or any part thereof is identified by the
Federal Emergency Management Agency as an area having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone V),
then Trustor has obtained the insurance required under Section 5.04(a)(v) of
this Deed of Trust.

            SECTION 4.08 Additional Environmental Representation. The Trust
Property has not been designated as a "hazardous waste property" and to Tenant's
knowledge, the Trust Property has not been designated as a "border zone
property" pursuant to Section 25220, et. seq. of the California Health and
Safety Code.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

            Trustor hereby unconditionally covenants and agrees with Beneficiary
as follows:

            SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Credit Agreement, Trustor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Trust Property, or any portion
thereof or interest therein, with any other Lien or security interest of any
nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Deed of Trust, and,
if any such Lien or security interest is asserted against the Trust Property,
Trustor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Trustor in
good faith and in accordance with the terms of the Credit Agreement) or take
such other action as may be necessary to cause the same to be released of record
and otherwise, and (b) within ten (10) days after the date on which Mortgagor
receives notice of such Lien or security interest. Such notice shall specify who
is asserting such Lien or security interest and shall detail the origin and
nature of the underlying claim giving rise to such asserted Lien or security
interest.

            SECTION 5.02 Payment of Impositions. Trustor shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however, that Trustor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Trust Property, pay the Impositions in
installments. Notwithstanding the foregoing, Trustor may in

                                       15
<PAGE>

good faith, by appropriate proceedings and upon notice to Beneficiary, contest
the validity, applicability or amount of any asserted tax or assessment, subject
to any more restrictive provisions applicable to any such contest contained in
the Credit Agreement and (without limiting the foregoing) so long as (a) such
contest is diligently pursued, (b) Beneficiary determines, in its opinion
reasonably exercised, that such contest suspends the obligation to pay the tax
and that nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Trust Property or any part thereof or any
interest of Beneficiary therein, and (c) unless expressly provided to the
contrary in the Credit Agreement, prior to the earlier of the commencement of
such contest or the delinquency date of the asserted tax or assessment, Trustor
deposits with Beneficiary an amount determined by Beneficiary to be adequate to
cover the payment of such tax or assessment and a reasonable additional sum to
cover possible interest, costs and penalties; provided, however, that Trustor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment becomes final (and, subject to Beneficiary's rights and
remedies during an Event of Default, Beneficiary shall make any sum deposited
pursuant to clause (c) above available for such payment); and provided, further,
that in any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order
is issued under which the Trust Property may be sold, lost or forfeited.

            SECTION 5.03 Repair. Trustor shall keep the Trust Property in good
order and condition (reasonable wear and tear excepted) and shall make all
repairs, replacements and improvements thereof and thereto, interior and
exterior, structural and non-structural, ordinary and extraordinary, which are
necessary to keep the same in such order and condition. Trustor shall also use
reasonable efforts to prevent any act or occurrence which might impair the value
or usefulness of the Trust Property for its intended usage.

            SECTION 5.04 Insurance and Application of Insurance Proceeds.

            (a)   During the term of this Deed of Trust, Trustor, at its sole
cost and expense, shall maintain, or cause to be maintained the following
policies of insurance, with respect to the Trust Property:

                  (i) If applicable or appropriate, Casualty (property)
      insurance against loss or damage by fire, lightning and such other perils
      as are included in a standard "special form" policy (formerly known as an
      "all-risk" endorsement policy), and against loss or damage by all other
      risks and hazards covered by a standard extended coverage insurance policy
      including, without limitation, riot and civil commotion, terrorist
      actions, vandalism, malicious mischief, burglary and theft, in an amount
      equal to the greater of (A) the then full replacement cost of the
      improvements, without deduction for physical depreciation and (B) such
      amount that the insurer would not deem Trustor a co-insurer under said
      policies. The policies of insurance required under this Section 5.04 shall
      contain a "Replacement Cost" endorsement with a waiver of depreciation and
      an "Agreed Amount" or "No Coinsurance" endorsement and shall otherwise
      comply with the Credit Agreement.

                                       16
<PAGE>

                  (ii) Commercial General Liability insurance to the extent
      required under the Credit Agreement, including a broad form comprehensive
      general liability endorsement and coverages for broad form property
      damage, contractual damages and personal injuries (including death
      resulting therefrom) and containing minimum limits per occurrence of
      $1,000,000.00 and $2,000,000.00 in the aggregate for any policy year with
      no deductible.

                  (iii) Rental loss and/or business interruption insurance in an
      amount equal to the estimated gross revenues from the operations of the
      Trust Property for a period of twelve (12) months, if applicable or
      appropriate.

                  (iv) Insurance against loss or damage from (A) leakage of
      sprinkler systems and (B) explosion of steam boilers, air conditioning
      equipment, high pressure piping, machinery and equipment, pressure vessels
      or similar apparatus now or hereafter installed on the improvements
      (without exclusion for explosions), if applicable or appropriate.

                  (v) Flood insurance if all or any portion of the Trust
      Property is located in an area now or hereafter designated by the Federal
      Emergency Management Agency as an area having special flood hazards
      (including, without limitation, those areas designated as Zone A or Zone
      V), and in which flood insurance has been made available under the U.S.
      National Flood Insurance Program, in an amount equal to the full
      replacement cost of the Buildings, Fixtures and Personalty now or
      hereafter located on the Trust Property or such other amount as may be
      agreed to by Beneficiary in writing, if applicable or appropriate.

                  (vi) If the Trust Property is or ever becomes non-conforming
      with respect to zoning, ordinance or law coverage to compensate for loss
      of value or property resulting from operation of law and the cost of
      demolition and the increased cost of construction in such amounts as may
      be requested by Beneficiary.

                  (vii) Any other insurance with respect to the Trust Property
      that may be required under the Credit Agreement.

                  (viii) Such other insurance as may from time to time be
      reasonably required by Beneficiary in order to protect its interests.

            All such insurance policies with respect to the Trust Property shall
contain a standard, non-contributory mortgagee clause naming Beneficiary, and
its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Trustor shall not take out separate insurance
with respect to the Trust Property concurrent in form or contributing in the
event of loss with that required to be maintained hereunder or under the Credit
Agreement unless Beneficiary is named as an additional insured thereon under a
standard mortgagee clause acceptable to Beneficiary and each such policy is
otherwise in form and substance acceptable to Beneficiary.

                                       17
<PAGE>

            (b) In the event of the foreclosure of this Deed of Trust, or in the
event of any transfer of title to the Trust Property, or any part thereof, by
foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Trust Property, or such part thereof, shall succeed to all of
Trustor's rights with respect to the Trust Property, including any rights to
unexpired, unearned or returnable insurance premiums, subject to limitations on
the assignment of blanket policies, but limited to such rights as relate to the
Trust Property or such part thereof. If Beneficiary acquires title to the Trust
Property, or any part thereof, in any manner, Beneficiary shall thereupon (as
between Trustor and Beneficiary) become the sole and absolute owner of the
insurance policies with respect to the Trust Property, and all insurance
proceeds payable thereunder with respect to the Trust Property, with the sole
right to collect and retain all unearned or returnable premiums thereon with
respect to the Trust Property, or such part thereof, if any.

            (c) If any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property shall occur, Trustor shall file and
prosecute its claim or claims for any insurance proceeds in good faith and with
due diligence and cause the same to be collected and paid over to Beneficiary,
and Trustor hereby irrevocably authorizes and empowers Beneficiary, in the name
of Trustor or otherwise, to collect and receipt for any such insurance proceeds
and to adjust any insurance claims and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Trustor shall, upon demand of Beneficiary, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such insurance proceeds to Beneficiary, free and clear
of any Liens whatsoever. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact for each such purpose (which appointment is coupled
with an interest) and authorizes any Person to act upon the foregoing
appointment.

            (d) Following any damage to, destruction or loss of or other
casualty with respect to any of the Trust Property, Beneficiary shall apply the
entire amount of any insurance proceeds in accordance with the provisions of the
Credit Agreement or, if there is no provision contained in the Credit Agreement
governing how the same are to be applied, then Beneficiary shall apply the
entire amount thereof to the payment of the Obligations, whether or not then due
and payable, in such manner and order as Beneficiary may elect. In all events,
unless expressly provided to the contrary in the Credit Agreement, Trustor
hereby covenants and agrees to promptly commence and to diligently prosecute the
restoration of the Trust Property upon the occurrence of any casualty loss
affecting the Trust Property, without regard to the availability or adequacy of
insurance proceeds, but in all events in a manner approved by Beneficiary.
Notwithstanding any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Credit Agreement
and the other Loan Documents until the Obligations have been paid in full. If
the Trust Property is sold, through foreclosure or otherwise, prior to the
receipt by Beneficiary of such insurance proceeds, Beneficiary shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such insurance proceeds, or a portion
thereof sufficient to pay the then unpaid Obligations, whichever is less.

            SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

                                       18
<PAGE>

            (a) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Trust Property, or any portion thereof or interest therein, Trustor shall
notify Beneficiary of such proceeding. Trustor shall then, if requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the Credit
Agreement, cause any awards or settlements to be paid over to Beneficiary for
disposition pursuant to the terms of this Deed of Trust. Beneficiary shall be
entitled to participate in any such proceeding, at Trustor's sole cost and
expense, and Trustor shall deliver or cause to be delivered to Beneficiary such
instruments as may be requested by Beneficiary from time to time to permit such
participation.

            (b) If the Trust Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement payable to Trustor by virtue of its interest
in the Trust Property shall be, and by these presents is, assigned, transferred
and set over unto Beneficiary to be held by Beneficiary, subject to the Lien and
security interest of this Deed of Trust, and disbursed in accordance with the
provisions of the Credit Agreement or, if there is no provision contained in the
Credit Agreement governing how the same is to be disbursed, then Beneficiary
shall apply the entire amount thereof to the payment of the Obligations, whether
or not then due and payable, in such manner and order as Beneficiary may elect.
In all events, unless otherwise expressly provided to the contrary in the Credit
Agreement, Trustor hereby covenants and agrees to commence and diligently to
prosecute the restoration of the Trust Property upon the occurrence of any
condemnation or other taking affecting the Trust Property, without regard to the
availability or adequacy of any award or settlement. Notwithstanding any
condemnation or other taking of any of the Trust Property, Trustor shall
continue to pay the Obligations at the time and in the manner provided for in
the Credit Agreement and the other Loan Documents, and the Obligations shall not
be reduced until, and then only to the extent that, any condemnation award or
settlement shall have been actually received and applied by Beneficiary to the
discharge of the Obligations. If the Trust Property is sold, through foreclosure
or otherwise, prior to the receipt by Beneficiary of such condemnation award or
settlement, Beneficiary shall have the right, whether or not a deficiency
judgment on any Loan Document shall have been sought, recovered or denied, to
receive such condemnation award or settlement, or a portion thereof sufficient
to pay the Obligations, whichever is less.

            (c) Any implied covenant in this Deed of Trust restricting the right
of Beneficiary to apply the proceeds of condemnation as described above is
waived by Trustor. Trustor hereby waives the provisions of any law prohibiting
Beneficiary from making elections regarding the application of condemnation
proceeds, including, without limitation, the provisions of California Code of
Civil Procedure Sections 1265.210 et seq.

            SECTION 5.06 Maintenance of Rights of Way, Easements, Licenses and
Other Rights. Trustor shall maintain, preserve and renew all rights of way,
easements, tenements, hereditaments, development rights and credits, zoning
rights, grants, privileges, appurtenances, licenses, franchises and other rights
reasonably necessary for the use or operation of the Trust Property from time to
time, or otherwise relevant to the value thereof, and Trustor shall not, without
the prior written consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the
present or future use or operation of the Trust Property. Trustor shall,
however, comply with all restrictive covenants

                                       19
<PAGE>

which may at any time affect the Trust Property, all applicable zoning
ordinances and all other public or private restrictions relating to the use of
the Trust Property.

            SECTION 5.07 Payment and Performance of Obligations. Trustor shall
duly and punctually pay and perform all of the Obligations.

            SECTION 5.08 Compliance with Permitted Liens and Other Obligations.
Trustor shall comply in all material respects with any and all obligations,
restrictions and requirements that may be set forth in each and every document
constituting a Permitted Lien. In addition, Trustor shall comply in all material
respects each and every obligation legally imposed upon it and/or relating to
the Trust Property pursuant to applicable law (including, without limitation,
all matters described in Section 4.05 hereof), contract or other agreement. It
is hereby acknowledged that Beneficiary's consent to a Permitted Lien as of the
date hereof shall in no way be deemed to constitute approval of any future Lien
which may be imposed upon any portion of the Trust Property, or any other
enforcement action affecting Trustor or the Trust Property, as a result of
Trustor's failure to perform or comply with its obligations under any document
constituting a Permitted Lien as of the date hereof.

            SECTION 5.09 Additional Affirmative Covenants. All affirmative
covenants made by the Borrowers or Guarantors or any of them in the Credit
Agreement are incorporated herein by reference and are hereby also made by
Trustor as to itself and the Trust Property as though such covenants were set
forth at length herein as the covenants of Trustor.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

            Trustor hereby covenants and agrees with Beneficiary that, until all
of the Obligations shall have been paid or performed in full and discharged:

            SECTION 6.01 Use Violations. Trustor shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Trust Property in any manner which (a) violates in any material respect any
Governmental Requirement, (b) may be dangerous unless safeguarded as required by
applicable law, (c) constitutes a public or private nuisance, or (d) makes void,
voidable or cancelable, or increases, substantially in excess of commercially
reasonably rates, the premium of, any insurance then in force with respect
thereto.

            SECTION 6.02 Waste. Trustor shall not commit or permit any material
waste with respect to the Trust Property.

            SECTION 6.03 Alterations. Trustor shall notify Beneficiary, in
writing and in advance, with respect to all proposed alterations, improvements
or additions to the Trust Property which are of a material nature, and, unless
and to the extent otherwise expressly provided in the Credit Agreement, Trustor
shall not effect any material alteration, improvement or addition to the Trust
Property without the prior written consent of Beneficiary.

            SECTION 6.04 No Further Encumbrances. Trustor shall not, without the
prior written consent of Beneficiary, create, place or permit to be created or
placed, or through any act

                                       20
<PAGE>

or failure to act, acquiesce in the placing of, or allow to remain, any
mortgage, pledge, Lien (statutory, constitutional or contractual), security
interest, encumbrance or charge on, or conditional sale or other title retention
agreement with respect to, the Trust Property, or any portion thereof or
interest therein, other than the Permitted Liens, regardless of whether the same
are subordinate to the Lien(s) and security interest(s) created by this Deed of
Trust.

            SECTION 6.05 Transfer Restrictions. Trustor shall not sell, lease,
assign, transfer or otherwise dispose of or abandon all or any part of the Trust
Property (or any interest therein), except as expressly permitted by, and in
accordance with the terms of, the Credit Agreement.

            SECTION 6.06 Loan and Credit Agreements; Additional Negative
Covenants. Trustor has received a copy of and is fully familiar with the terms
and provisions of the Credit Agreement and the other Loan Documents. All
negative covenants made by the Borrowers or Guarantors or any of them in the
Credit Agreement and the other Loan Documents are incorporated herein by
reference and are hereby also made by Trustor as to itself and the Trust
Property as though such negative covenants were set forth at length herein as
the negative covenants of Trustor.

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Credit Agreement are hereby incorporated herein as if fully
set forth herein, and, without limiting the generality of the foregoing, the
occurrence of an "Event of Default" under the Credit Agreement or any other Loan
Document shall constitute an "Event of Default" hereunder. All notices and cure
periods described herein or in the Credit Agreement or any other Loan Document
shall not be applicable to any "Potential Event of Default" (as hereinafter
defined) if such Potential Event of Default has occurred as of the date on which
Beneficiary commences a nonjudicial foreclosure proceeding with respect to
another Potential Event of Default or Event of Default. Such event shall
constitute an independent Event of Default hereunder. For purposes hereof,
"Potential Event of Default" shall mean any event, but for the passage of time
or giving of notice, would be an Event of Default.

            SECTION 7.02 Acceleration. Upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights, powers or
remedies conferred herein or by operation of law, Beneficiary, in its sole
judgment and discretion, may declare the then unpaid principal balance of the
Loan (the "Principal Balance"), the accrued interest thereon and any other
accrued but unpaid portion of the Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
Trustor.

            SECTION 7.03 Foreclosure and Sale. If an Event of Default shall
occur and be continuing, Beneficiary shall have the right and option to with
foreclosure by power of sale in accordance with California Civil Code Section
2924 or other applicable law by notice to Trustee and shall, if required,
deposit with Trustee the Note, the original or a certified copy of this Deed

                                       21
<PAGE>

of Trust, and such other documents, receipts and evidences of expenditures made
and secured hereby as Trustee may require.

                  Upon receipt of such notice from Beneficiary, Trustee shall
cause to be recorded and delivered to Trustor such notice of default as may then
be required by law and by this Deed of Trust. Trustee shall, without demand on
Trustor, after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been given as
required by law, sell the Trust Property or any portion thereof at the time and
place of sale fixed by it in said notice of sale, either as a whole or in
separate lots or parcels or items as Trustee shall deem expedient, and in such
order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United State (or other cash equivalent as is acceptable to
Trustee and Beneficiary) payable at the time of sale. Trustee shall deliver to
the purchaser or purchasers at such sale its good and sufficient deed or deeds
conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including, without limitation,
Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby
covenants to warrant and defend the title of such purchaser or purchasers.

            Trustee may postpone the sale of all or any portion of the Trust
Property from time to time in accordance with the laws of the State of
California.

            To the fullest extent allowed by law, Borrower hereby expressly
waives any right which it may have to direct the order in which any of the Trust
Property shall be sold in the event of any sale or sales pursuant to this Deed
of Trust.

            Upon any foreclosure sale, Beneficiary may bid for and purchase the
Trust Property and shall be entitled to apply all or any part of the unpaid
Obligations as a credit to the purchase price.

            Beneficiary may from time to time rescind any notice of default or
notice of sale before any Trustee's sale as provided above in accordance with
the laws of the State of California. The exercise by Beneficiary of such right
of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations or notices
of default to satisfy the obligations of this Deed of Trust, or otherwise affect
any provision, covenant or condition of the Credit Agreement or any Loan
Document or any of the rights, obligations or remedies of Trustee or Beneficiary
hereunder or thereunder.

            Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

            SECTION 7.04 Trustee's Successors, Substitutes and Agents. Trustee
or any successor to or substitute for Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Beneficiary. If Trustee or any successor to or
substitute for Trustee shall have given notice of sale hereunder, any successor

                                       22
<PAGE>

or substitute trustee thereafter appointed may complete the sale and the
conveyance of the Trust Property pursuant thereto as if such notice had been
given by the successor to or substitute for Trustee conducting the sale.

            SECTION 7.05 Receivership. If any of the Obligations shall become
due and payable and shall not be promptly paid, Beneficiary shall have the right
and power to proceed by a suit or suits in equity or at law, whether for the
specific performance of Beneficiary which Trustee may apply for and obtain as a
matter of right and without notice to Trustor, which notice is hereby expressly
waived by Trustor, the appointment of a receiver to collect the Rents of the
Trust Property and to preserve the security hereof in accordance with California
Code of Civil Procedure Section 564 (including, without limitation, in order to
enforce Beneficiary's rights under California Civil Code Section 2929.5), either
before or after any foreclosure sale or the sale of the Trust Property under the
order of a court or courts of competent jurisdiction or under executory or other
legal process, without regard to the value of the Trust Property as security for
the amount then due to Beneficiary, or the solvency of any entity or entities,
person or persons primarily or secondarily liable for the payment of such
amounts; the Rents of the Trust Property, in any such event, having heretofore
been assigned to Beneficiary pursuant to Section 3.01 hereof as additional
security for the payment of the Obligations secured hereby.

            Without limiting the foregoing, the receiver shall have the right to
apply Rents to cleanup, remediation or other response action concerning the
release or threatened release of Hazardous Materials, whether or not such
actions are pursuant to an order of any federal, state or local governmental
agency. Trustor hereby confirms the right of Beneficiary (or a receiver
appointed by Beneficiary) to enter upon and inspect all or any portion of the
Trust Property for the purpose of determining the existence, location, nature
and magnitude of any past or present release or threatened release of any
hazardous substance into, onto, beneath, or from the Trust Property in
accordance with the California Civil Code Section 2929.5. All reasonable costs
and expenses incurred by Beneficiary pursuant to this provision or pursuant to
California Civil Code Section 2929.5, including, without limitation, costs of
consultants and contractors, costs of repair of any physical injury to the Trust
Property normal and customary to the tests and studies, court costs and
attorneys' fees, costs and expenses, whether incurred in litigation or not and
whether before or after judgment, shall be payable by Trustor and, to the extent
advanced or incurred by Beneficiary, shall be reimbursed to Beneficiary by
Trustor upon demand. This provision is separate and several, and shall survive
merger into any judgment.

            SECTION 7.06 Judicial Foreclosure. If an Event of Default shall
occur and be continuing, Trustee or Beneficiary shall have the right and power
to proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Trust Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Trust Property under the order of a
court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by Trustee and/or Beneficiary in connection with any
such receivership shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear

                                       23
<PAGE>

interest from the date of such advance by Trustee and/or Beneficiary until paid
at the Default Rate.

            SECTION 7.07 Separate Sales. To the extent allowed by applicable
law, the Trust Property may be sold in one or more parcels and in such manner
and order as Beneficiary, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

            SECTION 7.08 Possession of Trust Property. Trustor agrees to the
full extent that it lawfully may, that, in case one or more of the Events of
Default shall have occurred and be continuing, then, and in every such case,
Trustee or Beneficiary shall have the right and power to enter into and upon and
take possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of expenditure until paid at the Default Rate,
all of which shall constitute a portion of the Obligations and shall be secured
by this Deed of Trust and all of the other Loan Documents. Trustor hereby
irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact
(coupled with an interest) to perform such acts and execute such documents as
Beneficiary, in its sole discretion, shall deem appropriate, including
endorsement of Trustor's name on any instruments. Regardless of any provision of
this Deed of Trust, the Credit Agreement or any other Loan Document, Beneficiary
shall not be considered to have accepted any property other than cash or
immediately available funds in satisfaction of any obligation of Trustor to
Beneficiary, unless Beneficiary shall have given express written notice of
Beneficiary's election to the contrary.

            SECTION 7.09 Occupancy After Foreclosure. In the event that there is
a foreclosure sale hereunder and at the time of such sale Trustor or Trustor's
representatives, successors or assigns or any other person claiming any interest
in the Trust Property by, through or under Trustor, are occupying or using the
Trust Property or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of either the landlord or tenant, at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser. To the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event that the
tenant fails to surrender possession of said property upon demand, the purchaser
shall be entitled to institute and maintain a summary action for possession of
the Trust Property (such as an action for forcible entry and detainer) in any
court having appropriate jurisdiction.

                                       24
<PAGE>

            SECTION 7.10 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Trustee or Beneficiary shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute
(including specifically those granted by the Applicable UCC). Each such right,
power and remedy, whether specifically herein given or otherwise existing, may
be exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right, power or
remedy. Beneficiary shall be entitled to collect all costs and expenses incurred
in pursuing such remedies. No delay or omission by Trustee or Beneficiary in the
exercise of any such right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

            SECTION 7.11 No Release of Obligations. Neither Trustor, any other
Borrower, nor any other Person now or hereafter obligated for the payment or
performance of all or any part of the Obligations shall be relieved of any such
obligation by reason of (a) the failure of Trustee or Beneficiary to comply with
any request of Trustor, any other Borrower or any other Person so obligated to
foreclose the Lien of this Deed of Trust to enforce any provision hereunder or
under the Credit Agreement; (b) the release, regardless of consideration, of the
Trust Property or any portion thereof or interest therein or the addition of any
other property to the Trust Property; (c) any agreement or stipulation between
any subsequent owner of the Trust Property and Beneficiary extending, renewing,
rearranging or in any other way modifying the terms of this Deed of Trust
without first having obtained the consent of, given notice to or paid any
consideration to Trustor , any other Borrower or any other Person, and in any
such event Trustor, all other Borrowers and all such other Persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Beneficiary; or (d) any other act or occurrence save and except the
complete payment and performance of all of the Obligations.

            SECTION 7.12 Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration, any part of the Trust Property without, as
to the remainder, in any way impairing, affecting, subordinating or releasing
the Lien or security interest created in or evidenced by this Deed of Trust or
its stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect.

            SECTION 7.13 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Trustor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) except for notices expressly
provided for herein or in the Credit Agreement, all notices of any Event of
Default or of Beneficiary's intention to accelerate maturity of the Obligations
or of Trustee's or Beneficiary's election to exercise or actual exercise of any
right, remedy or recourse provided for hereunder or under the

                                       25
<PAGE>

Credit Agreement; and (c) any right to a marshalling of assets, a sale in
inverse order of alienation or to direct the application of proceeds, including
any rights under California Civil Code Sections 2899 and 3433, and all rights of
Trustor under California Civil Code Section 2822; (d) all rights and remedies
which Borrower may have or be able to assert by reason of the Laws of the State
of California pertaining to the rights and remedies of sureties and (e) any and
all conflicts with any provisions of any of the Loan Documents. If any law
referred to in this Deed of Trust and now in force, of which Trustor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to
preclude the operation or application of the provisions hereof. Beneficiary
shall have the right to determine the order in which any or all of the Trust
Property shall be subjected to the remedies provided herein. Beneficiary shall
have the right to determine the order in which any or all portions of the
Obligations are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.

            SECTION 7.14 Discontinuance of Proceedings. In case Beneficiary
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the Credit Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Trustor and Beneficiary shall be restored to their
former positions with respect to the Obligations, this Deed of Trust, the Credit
Agreement, the Trust Property and otherwise, and the rights, remedies, recourses
and powers of Beneficiary shall continue as if same had never been invoked.

            SECTION 7.15 Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of and
any other amounts generated by the holding, leasing, operating or other use of
the Trust Property shall be applied by Beneficiary (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Credit Agreement or if not so provided, then in the
following order of priority, except to the extent otherwise required by
applicable law:

            (a) first, to the payment of the reasonable and necessary costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving the same, including reasonable (i) receivers'
fees, (ii) court costs, (iii) attorneys' and accountants' fees, (iv) costs of
advertisement and title search fees, and (v) the payment of any and all
Impositions, Liens, security interests or other rights, titles or interests
equal or superior to the Lien and security interest of this Deed of Trust
(except those to which the Trust Property has been sold subject to and without
in any way implying Beneficiary's prior consent to the creation thereof);

            (b) second, to the payment of all amounts other than the Principal
Balance and accrued but unpaid interest which may be due to Beneficiary
hereunder or under the other Loan Documents, together with interest thereon as
provided herein;

            (c) third, to the payment of the Obligations in such order and
manner as Beneficiary determines in its sole discretion; and

                                       26
<PAGE>

            (d) fourth, to Trustor or as otherwise required by any Governmental
Requirement.

Trustor shall be liable for any deficiency remaining.

            SECTION 7.16 Uniform Commercial Code Remedies. Beneficiary shall
have all of the rights, remedies and recourses with respect to the Personalty
and the Fixtures afforded to it by the Applicable UCC, including, without
limitation, (i) the right to conduct a unified sale of such Personalty and
Fixtures in connection with a judicial or power of sale foreclosure of any
portion of the Trust Property that constitutes real property, (ii) any the right
to take possession of the Personalty and the Fixtures or any part thereof, and
(iii) to take such other measures as Beneficiary may deem necessary for the
care, protection and preservation of the Personalty and the Fixtures, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded by this Deed of Trust and the other Loan Documents.

            SECTION 7.17 Indemnity. In connection with any action taken by
Trustee, Beneficiary and/or any Indemnitee pursuant to this Deed of Trust,
Trustee, Beneficiary, and/or any such Indemnitee and their respective
Indemnified Parties shall not be liable for any Loss sustained by Trustor
resulting from (a) an assertion that Beneficiary, or any such Indemnitee or an
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Persons, or (b) any act or omission of Trustee, Beneficiary, or
any such Indemnitee or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary and/or
such other Lender or such Indemnified Party, nor shall Trustee, Beneficiary
and/or any other Lender or an Indemnified Party be obligated to perform or
discharge any obligation, duty or liability of Trustor. Trustor shall and does
hereby agree to indemnify Trustee and/or Beneficiary and each of the other
Lenders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Lender and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Lenders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or remedies hereunder, including such Losses
as may result from the ordinary negligence of Trustee, Beneficiary or any other
Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary or
such other Lender or such Indemnified Party. Should Trustee, Beneficiary and/or
any other Lender or an Indemnified Party make any expenditure on account of any
such Losses, the amount thereof, including costs, expenses and reasonable
attorneys' fees, shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date expended until paid at the Default Rate, shall
be a part of the Obligations and shall be secured by this Deed of Trust and the
other Loan Documents. Trustor hereby assents to, ratifies and confirms any and
all actions of Trustee and/or Beneficiary with respect to the Trust Property
taken under this Deed of Trust. The liabilities of Trustor, as set forth in this
Section 7.17, shall survive the termination of this Deed of Trust and the
payment and performance of the Obligations.

                                       27
<PAGE>

            SECTION 7.18 Waiver of Lien. In accordance with California Code of
Civil Procedure Section 726.5, Beneficiary may waive its lien against the Trust
Property constituting real property or any portion thereof, together with
fixtures or personal property constituting real property thereon, to the extent
such Trust Property constituting real property is found to be environmentally
impaired, and may exercise any and all rights and remedies of an unsecured
creditor against Trustor and all of Trustor's assets and Trust Property
constituting real property for the recovery of any deficiency, including without
limitation seeking an attachment order under California Code of Civil Procedure
Section 483.010. No such waiver shall be final or binding on Beneficiary unless
and until a final money judgment is obtained against Trustor. As between
Beneficiary and Trustor, for purposes of California Code of Civil Procedure
Section 726.5, Trustor shall have the burden of proving that the release or
threatened release was not knowingly or negligently caused or contributed to, or
knowingly or willfully permitted or acquiesced to by Trustor or any related
party (or any affiliate or agent of Trustor or any related party) and that
Trustor made written disclosure of the release to Beneficiary or that
Beneficiary otherwise obtained actual knowledge thereof prior to the making of
the loan evidenced by the Credit Agreement. Notwithstanding anything to the
contrary contained in this Deed of Trust, the Credit Agreement or the other Loan
Documents, Trustor shall be fully and personally liable for all judgments and
awards entered against Trustor pursuant to California Code of Civil Procedure
726.5 and such liability shall be an exception to any non-recourse or
exculpatory provision in this Deed of Trust or the other Loan Documents, if any,
and shall not be limited to the original principal amount of the obligations
secured by this Deed of Trust. Trustor's obligations hereunder shall survive the
foreclosure, deed in lieu of foreclosure, release, reconveyance or any other
transfer of the Trust Property constituting real property or this Deed of Trust.
For the purpose of any action brought under this Section, Trustor hereby waives
the defense of laches and any applicable statute of limitations. For purposes of
California Code of Civil Procedure 726.5, the acts, knowledge and notice of each
"726.5 Party" shall be attributed to and be deemed to have been performed by the
party or parties then obligated on and liable for payment of the Obligations. As
used herein, "726.5 Party" shall mean Trustor, any successor owner to Trustor of
all or any portion of the Trust Property constituting real property, any related
party of Trustor or any such successor and any affiliate or agent of Trustor,
any such successor or any such related party.

            SECTION 7.19 Action for Environmental Claims. In accordance with,
and subject to limitations of, California Code of Civil Procedure Section 736,
Beneficiary may seek a judgment that the Trustor has breached its covenants,
representations and/or warranties with respect to the environmental matters
contained in the Credit Agreement (the "Environmental Provisions"), and may
commence and maintain an action or actions in any court of competent
jurisdiction for enforcement of the Environmental Provisions and/or recovery of
any and all costs, damages, expenses, fees, penalties, fines, judgments,
indemnification payments to third parties, and other out-of-pocket costs or
expenses (including, without limitation, court costs, consultants' fees and
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment), incurred or advanced by Beneficiary pursuant to the
Environmental Provisions (collectively, the "Environmental Costs"), excluding,
however, any Environmental Costs not permitted to be recovered pursuant to
Section 736 of the California Code of Civil Procedure. Environmental Costs that
are not permitted to be recovered pursuant to Section 736 may be referred to
hereinafter as the "Unsecured Environmental Costs," and Environmental Costs
other than the Unsecured Environmental Costs may be referred to hereinafter as
the "Secured

                                       28
<PAGE>

Environmental Costs." Any Unsecured Environmental Costs shall not be secured by
this Deed of Trust; however, nothing herein shall prevent Beneficiary from
recovering any Unsecured Environmental Costs pursuant to the Indemnity Agreement
of even date herewith among Trustor, Beneficiary and certain other parties, to
the extent they are recoverable in accordance with said Indemnity Agreement. All
Secured Environmental Costs incurred by Beneficiary shall bear interest at the
default rate provided under the Note. All Secured Environmental Costs together
with interest thereon at the rate then in effect under the Credit Agreement
shall be secured by this Deed of Trust and shall enjoy the same priority as the
Obligations. Trustor acknowledges and agrees that notwithstanding any term or
provision contained in this Deed of Trust, the Credit Agreement or in the other
Loan Documents, Environmental Costs shall be exceptions to any nonrecourse or
exculpatory provision, if any, and Trustor shall be fully and personally liable
for Environmental Costs. Such liability shall not be limited to the original
principal amount of the obligations secured by this Deed of Trust. Trustor's
obligations hereunder shall survive foreclosure, deed in lieu of foreclosure,
release, reconveyance or any other transfer of the Trust Property constituting
real property or this Deed of Trust. For the purposes of any action brought
under this subparagraph Trustor hereby waives the defense of laches and any
applicable statute of limitations.

                                  ARTICLE VIII

                                     TRUSTEE

            SECTION 8.01 Duties, Rights, and Powers of Trustee. It shall be no
part of the duty of Trustee to see to any recording, filing or registration of
this Deed of Trust or any other instrument in addition or supplemental thereto,
or to give any notice thereof, or to see to the payment of or be under any duty
in respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Trust Property, or any part thereof, or against
Trustee, or to see to the performance or observance by Trustee of any of the
covenants and agreements contained herein. Trustee shall not be responsible for
the execution, acknowledgment or validity of this Deed of Trust or of any
instrument in addition or supplemental hereto or for the sufficiency of the
security purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Beneficiary. Trustee shall have the right
to confer with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee's own gross
negligence or willful misconduct, and Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by Trustee hereunder, believed by Trustee in good faith
to be genuine.

            SECTION 8.02 Successor Trustee. From time to time, by a writing
signed and acknowledged by Beneficiary and filed for record in the office of the
recorder of the County in which the Land is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date, book and page
of its recordation. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee
hereunder with the same effect as if originally named Trustee herein. A writing
recorded pursuant to the

                                       29
<PAGE>

provisions of this Section 8.02 shall be conclusive proof of the proper
substitution of such new trustee.

            SECTION 8.03 Retention of Moneys. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

            SECTION 8.04 Reconveyance. Upon written request of Beneficiary
stating all of the Obligations have been paid, performed and discharged, and the
Credit Agreement is terminated, and payment of its fees, Trustee shall reconvey,
without warranty, the Trust Property. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in such reconveyance may be described as "the person or persons legally
entitled hereto" or such other description as required by law in the State of
California.

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01 Instrument Construed as Deed of Trust, Etc. This Deed
of Trust may be construed as a deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

            SECTION 9.02 Performance at Trustor's Expense. The cost and expense
of performing or complying with any and all of the Obligations shall be borne
solely by Trustor, and no portion of such cost and expense shall be, in any way
or to any extent, credited against any installment on or portion of the
Obligations.

            SECTION 9.03 Survival of Obligations. Each and all of the
Obligations shall survive the execution and delivery of this Deed of Trust and
shall continue in full force and effect until all of the Obligations shall have
been fully satisfied.

            SECTION 9.04 Further Assurances. Trustor, upon the request of
Beneficiary, shall execute, acknowledge, deliver and record and/or file such
further instruments, including financing statements, and do such further acts as
may be reasonably necessary, desirable or proper to carry out more effectively
the purpose of this Deed of Trust and to subject to the Liens and security
interests hereof any property intended by the terms hereof to be covered hereby,
including any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Trust Property.

            SECTION 9.05 Notices. All notices or other communications required
or permitted to be given pursuant to this Deed of Trust shall be in writing and
shall be considered properly given if given in the manner and to the addresses
prescribed by Section 11.02 of the Credit Agreement to the parties and at the
addresses set forth in the first paragraph hereof, and to

                                       30
<PAGE>

the parties and at the addresses set forth in Section 11.02 of the Credit
Agreement; provided, however, that (a) service of notice as required by the laws
of any State or Commonwealth in which portions of the Trust Property may be
situated shall for all purposes be deemed appropriate and sufficient with the
giving of such notice thereunder, and (b) any party shall have the right to
change its address for notice hereunder to any other location within the
continental United States by the giving of ten (10) days' notice to the other
party in the manner set forth above.

            SECTION 9.06 No Waiver. Any failure by Beneficiary to insist, or any
election by Beneficiary not to insist, upon strict performance by Trustor of any
of the terms, provisions or conditions of this Deed of Trust shall not be deemed
to be a waiver of the same or of any other terms, provision or condition hereof,
and Beneficiary shall have the right, at any time or times thereafter, to insist
upon strict performance by Trustor of any and all of such terms, provisions and
conditions. Beneficiary may, in Beneficiary's sole and absolute discretion, (i)
in the case of a Default, determine whether such Default has been cured, and
(ii) in the case of an Event of Default, accept or reject any proposed cure of
an Event of Default. In no event shall any provision of this Deed of Trust or
any other Loan Document which provides that Beneficiary shall have certain
rights and/or remedies only during the continuance of an Event of Default be
construed so as to require Beneficiary to accept a cure of any such Event of
Default. Unless and until Beneficiary accepts any proposed cure of an Event of
Default, such Event of Default shall be deemed to be continuing for purposes of
this Deed of Trust and the other Loan Documents.

            SECTION 9.07 Beneficiary's Right to Perform; Beneficiary's
Expenditures

            (A) Trustor agrees that if Trustor fails to perform any act or take
any action which Trustor is required to perform or take hereunder or under the
Credit Agreement or to pay any money which Trustor is required to pay hereunder
or under the Credit Agreement, Beneficiary may, but shall not be obligated to,
perform or cause to be performed such act or take such action or pay such money,
to the extent and only to the extent permitted under the Credit Agreement.

            (B) All costs and expenses incurred by Beneficiary (or any
Indemnified Party), including, without limitation, attorneys fees, costs and
expenses, all monies paid by (or on behalf of) Beneficiary and the monetary
value of all services performed by (or on behalf of Beneficiary) in connection
with a Default or Event of Default hereunder or under any other Loan Document,
including, without limitation, the (i) the enforcement of any term or provision
of this Deed of Trust or any other Loan Document, (ii) the performance by
Beneficiary of any obligation of Trustor under this Deed of Trust or any other
Loan Document if Beneficiary elects to so perform, in its sole and absolute
discretion, and (iii) any action Beneficiary elects to take, in its sole and
absolute discretion, to protect its interest in or the value of the Trust
Property, shall be a demand obligation owing by Trustor to Beneficiary, as the
case may be, and to the extent any payment is made to a third Person,
Beneficiary, upon making such payment, shall be subrogated to all of the rights
of the Person receiving such payment. All such costs and expenses, monies and
the monetary value of such services performed shall (x) bear interest at the
Default Rate from the date of such incurrence, payment or performance, as
applicable, until paid, and (y) constitute (together with such interest) a
portion of the Obligations and shall be secured by this Deed of Trust and all of
the other Loan Documents. If Beneficiary shall elect to pay any

                                       31
<PAGE>

Imposition or other sums due with reference to the Trust Property, Beneficiary
may do so in reliance on any bill, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof. Attorneys' fees,
costs and expenses as used herein shall include, without limitation, such fees,
costs and expenses incurred in litigation or not, whether before or after
judgment and and consultants, court costs, expert witness fees, document
reproduction expenses, costs of exhibit preparation, courier charges, postage
and communication expenses. This provision is separate and several, and shall
survive merger into any judgment.

            Trustor shall and does hereby agree that, if all or a portion of the
Obligations has prior to the maturity date fixed in the Credit Agreement, become
due or been declared due by reason of an Event of Default the entire amount then
due under the terms of this Deed of Trust and the Credit Agreement shall include
all attorneys' fees and costs and expenses which are actually incurred as stated
above, notwithstanding the provisions of Section 2924c(d) and Section 2924d of
the California Civil Code.

            SECTION 9.08 Successors and Assigns. All of the terms hereof shall
apply to, be binding upon and inure to the benefit of the parties hereto, their
successors, assigns, heirs and legal representatives, and all other Persons
claiming by, through or under them; provided, however, that nothing herein shall
be deemed to imply any right on behalf of Trustor to assign its interest in any
of the Trust Property except as may be expressly set forth in the Credit
Agreement.

            SECTION 9.09 Severability. This Deed of Trust is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws and regulations of applicable Governmental Authorities and the
provisions hereof are intended to be limited to the extent necessary that they
will not render this Deed of Trust invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
provision hereof or the application thereof to any Person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Deed of Trust nor the application of such provision to other
Persons or circumstances shall be affected thereby, but rather shall be enforced
to the greatest extent permitted by applicable law.

            SECTION 9.10 Subrogation of Trustee. This Deed of Trust is made with
full substitution and subrogation of Trustee and successors in this trust to
Trustee and Trustee and such successors assigns in and to all covenants and
warranties by others heretofore given or made in respect of the Trust Property
or any part thereof.

            SECTION 9.11 Entire Agreement and Modification. This Deed of Trust
may not be amended, revised, waived, discharged, released or terminated orally,
but only by a written instrument or instruments executed by the party against
which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

            SECTION 9.12 Applicable Law. THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW YORK.
TRUSTOR AND BENEFICIARY FURTHER AGREE AND

                                       32
<PAGE>

STIPULATE THAT THIS DEED OF TRUST, THE CREDIT AGREEMENT AND THE LOAN DOCUMENTS
HAVE BEEN DELIVERED IN THE STATE OF NEW YORK WERE NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK, AND THAT THE STATE OF NEW YORK HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION. IT IS
THEREFORE THE INTENT OF TRUSTOR AND BENEFICIARY THAT THIS DEED OF TRUST SHALL BE
CONSTRUED AND INTERPRETED WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO NEW YORK CHOICE OF LAW PRINCIPLES);
PROVIDED, HOWEVER, THAT THE LAWS OF THE STATE OF CALIFORNIA SHALL APPLY TO THE
CREATION, PERFECTION AND PROCEDURES GOVERNING ENFORCEMENT OF ANY LIENS, SECURITY
INTERESTS AND ENCUMBRANCES GRANTED OR CREATED BY THIS DEED OF TRUST IN THE REAL
OR PERSONAL PROPERTY LOCATED IN (OR IN THE CASE OF INTANGIBLE PERSONAL PROPERTY,
HAVING A SITUS IN) THE STATE OF CALIFORNIA, AND THE MANAGEMENT, OPERATION,
DISPOSITION AND REALIZATION OF THE SECURITY PROVIDED THEREBY. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE LAWS OF THE STATE OF NEW YORK SHALL APPLY
TO (I) ALL MATTERS RELATING TO THE CHARGING AND COLLECTION OF INTEREST UNDER
THIS DEED OF TRUST AND WITH RESPECT TO THE OBLIGATIONS, (II) THE ENFORCEMENT OF
ALL RIGHTS UNDER THE CREDIT AGREEMENT, AND THE LOAN DOCUMENTS OTHER THAN THIS
DEED OF TRUST AND (III) THE RIGHT TO SUE TRUSTOR OR ANY OTHER PERSON OBLIGATED
UNDER THE LOAN AGREEMENT AND THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING
OBLIGATIONS OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE
UNDER ANY ONE ACTION AND ANTIDEFICIENCY RULES. TRUSTOR HEREBY AGREES THAT
BENEFICIARY MAY ENFORCE ITS RIGHTS UNDER THIS DEED OF TRUST AND ANY OF THE OTHER
LOAN DOCUMENTS, INCLUDING THE RIGHT TO SUE TRUSTOR OR ANY PERSON OBLIGATED UNDER
THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A
JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE, IN ACCORDANCE WITH NEW YORK
LAW, AND TRUSTOR HEREBY ACKNOWLEDGES THAT THE CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 580A, 580D AND 726 DO NOT APPLY TO THIS DEED OF TRUST, THE CREDIT
AGREEMENT AND THE LOAN DOCUMENTS AND, TO THE EXTENT THEY APPLY WAIVES TO THE
MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHTS WHICH IT MAY HAVE UNDER THE SUCH
SECTIONS.

            SECTION 9.13 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Credit Agreement are used to pay indebtedness
secured by any outstanding Lien, security interest, charge or prior encumbrance
against the Trust Property, such proceeds shall be deemed to have been advanced
by Beneficiary at Trustor's request, and Beneficiary shall be subrogated to any
and all rights, security interests and Liens owned by any owner or holder of
such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by

                                       33
<PAGE>

Beneficiary, Trustor hereby waives and releases all demands and causes of action
for offsets and payments to, upon and in connection with the said indebtedness.

            SECTION 9.14 No Partnership. Nothing contained in this Deed of Trust
is intended to, or shall be construed to, create to any extent and in any manner
whatsoever any partnership, joint venture, or association between Trustor and
Beneficiary, or in any way make Beneficiary a co-principal with Trustor with
reference to the Trust Property, and any inferences to the contrary are hereby
expressly negated.

            SECTION 9.15 Headings. The Article, Section and Subsection headings
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

            SECTION 9.16 Release of Deed of Trust. If all of the Obligations
shall be paid, performed and discharged and the Credit Agreement is terminated,
Beneficiary shall forthwith cause satisfaction and discharge of this Deed of
Trust to be entered upon the record, at the sole cost and expense of Trustor,
and shall execute and deliver (or cause to be executed and delivered) such
instruments of satisfaction and discharge as may be appropriate, such
instruments to be duly acknowledged and in form for recording, at the sole cost
and expense of Trustor.

            SECTION 9.17 Limitation of Obligations with Respect to Trust
Property.

            (a) Neither Trustee nor Beneficiary or any Lender shall have any
duty to protect or preserve, or any liability with respect to the protection or
preservation of, any Trust Property or to preserve rights pertaining thereto
other than the duty to use reasonable care in the custody and preservation of
any Trust Property in its actual possession. Beneficiary shall be deemed to have
exercised reasonable care in the custody and preservation of any Trust Property
in its possession if such Trust Property is accorded treatment substantially
equal to that which Beneficiary accords its own like property. Beneficiary shall
be relieved of all responsibility for any Trust Property in its possession upon
surrendering it, or tendering surrender of it, to Trustor or to such other
Person entitled thereto by applicable law.

            (b) Nothing contained in this Deed of Trust shall be construed as
requiring or obligating Trustee, Beneficiary or any Lender, and neither Trustee
nor Beneficiary or any Lender shall be required or obligated, to (i) make any
demand or inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim or notice or take any action with respect to any
Trust Property or the monies due or to become due thereunder in connection
therewith, (ii) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders, offers or other matters relating to any Trust
Property, whether or not Beneficiary or any of the other Lenders has or is
deemed to have knowledge or notice thereof, (iii) take any necessary steps to
preserve rights against any prior parties with respect to any Trust Property, or
(iv) notify Trustor or any other Person of any decline in the value of any Trust
Property.

            SECTION 9.18 Inconsistency with Credit Agreement. To the fullest
extent possible, the terms and provisions of the Credit Agreement shall be read
together with the terms and provisions of this Deed of Trust such that the terms
and provisions of this Deed of Trust

                                       34
<PAGE>

shall supplement, rather than conflict with, the terms and provisions of the
Credit Agreement; provided, however, that, notwithstanding the foregoing, in the
event any of the terms or provisions of this Deed of Trust conflict with any of
the terms or provisions of the Credit Agreement, such that it is impractical for
such terms or provisions to coexist, the terms or provisions of the Credit
Agreement shall govern and control for all purposes; and, provided further, that
the inclusion in this Deed of Trust of terms and provisions, supplemental rights
or remedies in favor of a secured party but which are not addressed in the
Credit Agreement shall not be deemed to be a conflict with the Credit Agreement
and all such additional terms, provisions, supplemental rights or remedies
contained herein shall be given full force and effect.

            SECTION 9.19 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between Trustor and Beneficiary, or any Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Trustor for the use, forbearance or detention of the money
to be loaned under the Credit Agreement or any other Loan Document, or for the
payment or performance of any covenant or obligation contained herein or in the
Credit Agreement or any other Loan Document, exceed the maximum amount
permissible under applicable federal or state usury laws. If, under any
circumstances, fulfillment of any such provision, at the time performance of
such provision shall be due, shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall be
reduced to the limit of such validity. If, under any circumstances, Trustor
shall have paid an amount of money which is deemed to be interest and such
interest would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction
of the principal amount owing in respect of the Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
Trustor. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by Beneficiary (or
Lender) shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by applicable
law, be amortized, prorated, allocated and spread from the date of this Deed of
Trust until payment in full of the Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.

            SECTION 9.20 Covenants To Run With the Land. All of the grants,
representations, warranties, undertakings, covenants, terms, provisions and
conditions in this Deed of Trust shall run with the Land and shall apply to and
bind the successors and assigns of Trustor. If there shall be more than one
trustor, the covenants, representations and warranties made herein shall be
deemed to be joint and several.

            SECTION 9.21 Amount Secured; Last Dollar. So long as the balance of
the Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the Obligations secured by this Deed of
Trust, but shall, instead, be deemed to be applied against only such portions of
the Obligations that are not secured by this Deed of Trust.

                                       35
<PAGE>

            SECTION 9.22 Defense of Claims. Trustor shall promptly notify
Beneficiary in writing of the commencement of any legal proceedings affecting
Trustor's title to the Trust Property or Beneficiary's Lien on or security
interest in the Trust Property, or any part thereof, and shall take all such
action, employing attorneys agreeable to Beneficiary, as may be necessary to
preserve Trustor's and Beneficiary's rights affected thereby. If Trustor fails
or refuses to adequately or vigorously, in the sole judgment of Beneficiary,
defend Trustor's or Beneficiary's rights to the Trust Property, Beneficiary may
take such action on behalf of and in the name of Trustor and at Trustor's
expense. Moreover, Beneficiary may take (or cause its agents to take) such
independent action in connection therewith as they may in their discretion deem
proper, including, without limitation, the right to employ independent counsel
and to intervene in any suit affecting the Trust Property. All costs, expenses
and attorneys' fees incurred by Beneficiary (or its agents) pursuant to this
Section 9.22 or in connection with the defense by Beneficiary of any claims,
demands or litigation relating to Trustor, the Trust Property or the
transactions contemplated in this Deed of Trust shall be paid by Trustor on
demand, plus interest thereon from the date of the advance by Beneficiary until
reimbursement of Beneficiary at the Default Rate.

            SECTION 9.23 Exculpation Provisions. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES
THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST;
THAT IT HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST;
THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND
THAT IT RECOGNIZES THAT CERTAIN TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."

            SECTION 9.24 No Merger of Estates. So long as any part of the
Obligations remain unpaid, unperformed or undischarged, the fee, easement and
leasehold estates to the Trust Property shall not merge but rather shall remain
separate and distinct, notwithstanding the union of such estates either in
Trustor, Beneficiary, any lessee, any third-party purchaser or otherwise.

            SECTION 9.25 Suretyship Waivers. As used in this Section 9.25, the
term "Obligor" shall mean each any Obligor, other than the Trustor, obligated
for any of the Obligations secured by this Deed of Trust.

            (a) Representations and Warranties. Trustor represents and warrants
to Beneficiary that: (A) this Deed of Trust is executed, in part, at the request
of the Obligors; (B)

                                       36
<PAGE>

this Deed of Trust complies with all agreements between each Obligor regarding
Trustor's execution hereof; (C) Beneficiary has made no representation to any
Trustor as to the creditworthiness of any Obligor; and (D) Trustor has
established adequate means of obtaining from each Obligor on a continuing basis
financial and other information pertaining to such Obligor's financial
condition. Trustor agrees to keep adequately informed from such means of any
facts, events or circumstances which might in any way affect such Trustor's
risks hereunder. Trustor further agrees that Beneficiary shall have no
obligation to disclose to Trustor any information or material about any Obligor
which is acquired by Beneficiary in any manner. The liability of Trustor
hereunder shall be reinstated and revived, and the rights of Beneficiary shall
continue if and to the extent that for any reason any amount at any time paid on
account of any Obligation is rescinded or must otherwise be restored by
Beneficiary, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not been paid. The
determination as to whether any amount so paid must be rescinded or restored
shall be made by Beneficiary in its sole discretion; provided however, that if
Beneficiary chooses to contest any such matter at the request of Trustor,
Trustor agrees to indemnify and hold Beneficiary harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by Beneficiary in connection therewith, including without limitation, any
litigation with respect thereto.

            (b)   General Suretyship Waivers.

                  (i)   Trustor waives any right to require Beneficiary to: (i)
      proceed against any Obligor or any other person; (ii) marshal assets or
      proceed against or exhaust any security held from any Obligor or any other
      person; (iii) take any action or pursue any other remedy in Beneficiary's
      power; or (iv) make any presentment or demand for performance, or give any
      notice of nonperformance, protest, notice of protest or notice of dishonor
      hereunder or in connection with any obligations or evidences of
      indebtedness held by Beneficiary as security for or which constitute in
      whole or in part the Obligations, or in connection with the creation of
      new or additional obligations.

                  (ii)  Trustor waives any defense to its obligations hereunder
      based upon or arising by reason of: (i) any disability or other defense of
      any Obligor or any other person; (ii) the cessation or limitation from any
      cause whatsoever, other than payment in full, of any Obligation; (iii) any
      lack of authority of any officer, director, partner, agent or any other
      person acting or purporting to act on behalf of any Obligor which is a
      corporation, partnership or other type of entity, or any defect in the
      formation of any such Obligor; (iv) the application by any Obligor of the
      proceeds of any Obligation for purposes other than the purposes
      represented by any Obligor to, or intended or understood by, Beneficiary
      or any Trustor; (v) any act or omission by Beneficiary which directly or
      indirectly results in or aids the discharge of any Obligor of any portion
      of the Obligations by operation of law or otherwise, or which in any way
      impairs or suspends any rights or remedies of Beneficiary against any
      Obligor; (vi) any impairment of the value of any interest in any security
      for the Obligations or any portion thereof, including without limitation,
      the failure to obtain or maintain perfection or recordation of any
      interest in any such security, the release of any such security without
      substitution, and/or the failure to preserve the value of, or to comply
      with applicable law in disposing of, any such security; or (vii) any
      modification of the Obligations, in any form whatsoever,

                                       37
<PAGE>

      including without limitation the renewal, extension, acceleration or other
      change in time for payment of, or other change in the terms of, the
      Obligations or any portion thereof, including increase or decrease of the
      rate of interest thereon. Until all Obligations shall have been paid in
      full, no Trustor shall have any right of subrogation, and Trustor waives
      any right to enforce any remedy which Beneficiary now has or may hereafter
      have against any Obligor or any other person, and waives any benefit of,
      or any right to participate in, any security now or hereafter held by
      Beneficiary. Trustor further waives all rights and defenses it may have
      arising out of: (1) any election of remedies by Beneficiary, even though
      that election of remedies, such as a non-judicial foreclosure with respect
      to any security for any portion of the Obligations, destroys Trustor's
      rights of subrogation or Trustor's rights to proceed against any Obligor
      for reimbursement; or (2) any loss of rights Trustor may suffer by reason
      of any rights, powers or remedies of any Obligor in connection with any
      anti-deficiency laws or any other laws limiting, qualifying or discharging
      any Obligor's obligations, whether by operation of Sections 726, 580a and
      580d of the Code of Civil Procedure as from time to time amended (to the
      extent California law applies or may be determined to apply), or
      otherwise, including any rights Trustor may have to a Section 580a fair
      market value hearing to determine the size of a deficiency following any
      trustee's foreclosure sale or other disposition of any security for any
      portion of the Obligations (to the extent California law applies or may be
      determined to apply).

                  (iii) If any of said waivers is determined to be contrary to
      any applicable law or public policy, such waiver shall be effective to the
      extent permitted by applicable law or public policy.

            (C)   Additional Suretyship Waivers.

                  (i)   Trustor hereby expressly waives and agrees not to assert
      or take advantage of any defense based upon:

                        (1) The incapacity, lack of authority, death or
            disability of any Obligor or any other person or entity;

                        (2) The failure of Beneficiary to commence an action
            against any Obligor or to proceed against or exhaust any security
            held by Beneficiary at any time, or to pursue any other remedy
            whatsoever at anytime;

                        (3) Any duty on the part of Beneficiary to disclose to
            Trustor any facts Beneficiary may now or hereafter know regarding
            any Obligor, regardless of whether Beneficiary has reason to believe
            (i) that any such facts materially increase the risk beyond that
            which Trustor intends to assume, or (ii) that such facts are unknown
            to Trustor, Trustor acknowledging that he, she or it is fully
            responsible for being and keeping informed of the financial
            condition and affairs of any Obligor;

                                       38
<PAGE>

                        (4) Lack of notice of default, demand of performance or
            notice of acceleration to any Obligor or any other party with
            respect to the Loans or any Obligor's obligations guarantied by
            Trustor;

                        (5) The consideration for the Loan Documents;

                        (6) The revocation or repudiation hereof by Trustor or
            the revocation or repudiation of any of the Loan Documents by any
            Obligor or any other person;

                        (7) The unenforceability in whole or in part of the Loan
            Documents against any Obligor;

                        (8) Any acts or omissions of Beneficiary which vary,
            increase or decrease the risk on Trustor;

                        (9) Any rights or defenses based upon an offset by
            Trustor against any obligation now or hereafter owed to Trustor by
            any Obligor;

                        (10) Any statute of limitations affecting the liability
            of Trustor hereunder, the liability of any Obligor or any other
            guarantor under the Loan Documents or the enforcement hereof, to the
            extent permitted by law;

                        (11) The application by any Obligor of the proceeds of
            the Loans or other financial accommodations under the Credit
            Agreement for purposes other than the purposes represented by any
            Obligor to Beneficiary and Trustor or intended or understood by
            Beneficiary or Trustor;

                        (12) An election of remedies by Beneficiary, including
            any election to proceed against any collateral by judicial or
            nonjudicial foreclosure, whether real property or personal property
            that is security for the any Obligor's obligations under the Loan
            Documents, or by deed in lieu thereof, and whether or not every
            aspect of any foreclosure sale is commercially reasonable, and
            whether or not any such election of remedies destroys or otherwise
            impairs the subrogation rights of Trustor or the rights of Trustor
            to proceed against any Obligor or any other guarantor by way of
            subrogation or for reimbursement or contribution, or all such
            rights;

                        (13) Any statute or rule of law which provides that the
            obligation of a surety must be neither larger in amount nor in any
            other aspects more burdensome than that of the principal obligor;

                        (14) Beneficiary's election, in any proceeding
            instituted under Title 11 of the Bankruptcy Code, of the application
            of Bankruptcy Code Section 1111(b)(2) or any successor statute;

                        (15) Any borrowing or any grant of a security interest
            under Bankruptcy Code Section 364; and

                                       39
<PAGE>

                        (16) Any other suretyship defense that may be available
            to Trustor. Without limiting the generality of the foregoing (to the
            extent California law applies or may be determined to apply),
            Trustor also waives (y) any defense based upon Beneficiary's
            election to waive its lien as to all or any security for the Loans
            or for the guarantor of any other person pursuant to California Code
            of Civil Procedure ("CCP ") Section 726.5, under any similar law in
            any other state that may be applicable because any Obligor's
            obligations are secured by a lien on real property in such state, or
            otherwise, and (z) any and all benefits which might otherwise be
            available to Trustor under California Civil Code ("Civil Code")
            Sections 2809, 2810, 2815, 2819, 2839, 2845 through 2850, 2899 and
            3433.

                  (ii)  Trustor understands and acknowledges that if Beneficiary
      forecloses judicially or nonjudicially against any real property that is
      security for any Obligor's obligations under the Loan Documents (other
      than this Deed of Trust), that foreclosure could impair or destroy any
      ability that Trustor may have to seek reimbursement, contribution or
      indemnification from any such Obligor based on any right Trustor may have
      of subrogation, reimbursement, contribution or indemnification for any
      amounts paid by Trustor under the Loan Documents or realized by
      Beneficiary by way of foreclosure of this Deed of Trust. Trustor further
      understands and acknowledges that in the absence of this provision, the
      potential impairment or destruction of Trustor's rights, if any, may (to
      the extent California law applies or may be determined to apply) entitle
      Trustor to assert a defense to its obligations under this Deed of Trust
      and the Loan Documents based on CCP Section 580d as interpreted in Union
      Bank vs. Gradsky. By executing this Deed of Trust, Trustor freely,
      irrevocably and unconditionally:

                        (1) waives and relinquishes that defense, and agrees
            that Trustor will be fully liable for its obligations under the Loan
            Documents and the Trust Property will continue to be security for
            the Obligations, even though Beneficiary may foreclose judicially or
            nonjudicially against any real property that is security for the any
            Obligor's obligations under the Loan Documents;

                        (2) agrees that Trustor will not assert that defense in
            any action or proceeding that Beneficiary may commence to enforce
            the obligations of Trustor under this Deed of Trust and the Loan
            Documents;

                        (3) acknowledges and agrees that the rights and defenses
            waived by Trustor under the Loan Documents include any right or
            defense that Trustor may have or be entitled to assert based upon or
            arising out of any one or more of the following: (i) CCP Sections
            580a (which if Trustor had not given this waiver, would otherwise
            limit Trustor's liability (and the extent of the Obligations to
            which the Trust Property would be exposed) after any nonjudicial
            foreclosure sale to the difference between the amount of the
            Obligations and the fair market value of the property or interests
            sold at such nonjudicial foreclosure sale against any real property
            that is security for the an Obligor's obligations under the Loan
            Documents rather than the actual proceeds of such sale), 580b and
            580d (which if Trustor had not given this waiver, would otherwise
            limit Beneficiary's right to recover a deficiency judgment (or to
            foreclose this Deed of Trust and otherwise

                                       40
<PAGE>

            pursue the Trust Property) with respect to purchase money
            obligations and after any nonjudicial foreclosure sale against any
            real property that is security for the an Obligor's obligations
            under the Loan Documents, respectively), or 726 (which, if Trustor
            had not given this waiver, among other things, would otherwise
            require Beneficiary to exhaust all of its security against an
            Obligor or Obligors before Beneficiary would be entitled to exercise
            its remedies under this Deed of Trust or pursue a personal judgment
            for a deficiency against the any Obligor); or (ii) Civil Code
            Section 2848; and

                        (4)   acknowledges and agrees that Beneficiary is
            relying on this waiver in making the Loan or other financial
            accommodations under the Credit Agreement, and that this waiver is a
            material part of the consideration that Beneficiary is receiving for
            making the Loans or other financial accommodations under the Credit
            Agreement. WITHOUT LIMITING THE FOREGOING, TRUSTOR WAIVES ALL RIGHTS
            AND DEFENSES THAT TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS
            UNDER THE LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THIS MEANS,
            AMONG OTHER THINGS:

                              a.    BENEFICIARY MAY COLLECT FROM TRUSTOR OR
                  EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST WITHOUT FIRST
                  FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL
                  PLEDGED BY ANY OBLIGOR; AND

                              b.    IF BENEFICIARY FORECLOSES ON ANY REAL
                  PROPERTY COLLATERAL PLEDGED BY ANY OBLIGOR:

                                    (i) THE AMOUNT OF THE OBLIGATIONS MAY BE
                              REDUCED ONLY BY THE PRICE FOR WHICH THAT
                              COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN
                              IF THE COLLATERAL IS WORTH MORE THAN THE SALE
                              PRICE; AND

                                    (ii) BENEFICIARY MAY COLLECT FROM TRUSTOR
                              AND EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST
                              EVEN IF BENEFICIARY, BY FORECLOSING ON THE REAL
                              PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT
                              TRUSTOR MAY HAVE TO COLLECT FROM ANY OBLIGOR.

            THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND
            DEFENSES TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE
            LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THESE RIGHTS AND
            DEFENSES INCLUDE, BUT ARE

                                       41
<PAGE>

            NOT LIMITED TO, ANY RIGHTS OR DEFENSES BASED UPON CCP SECTIONS 580a,
            580b, 580d OR 726.

            SECTION 9.26 Beneficiary Statement. Beneficiary may collect a fee
not to exceed the maximum allowed by applicable law for furnishing the statement
of obligation as provided in Section 2943 of the Civil Code of California.

            SECTION 9.27 Request for Notice. Pursuant to Section 2924b(d) of the
California Civil Code, Trustor and Beneficiary request that a copy of any notice
of default and a copy of any notice of sale be mailed to Trustor and
Beneficiary, respectively, at the address for such party set forth herein

            SECTION 9.28 Release and Reconveyance(A) . Lender will release and
reconvey its interest under this Deed of Trust to the Trust Property as required
by Section 7.04 of the Credit Agreement.

             [NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

                                       42
<PAGE>

      IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date
first above written.

                                   TRUSTOR:

                                   LAKES SHINGLE SPRINGS, INC., a
                                   Minnesota corporation

                                   By: /s/ Timothy J. Cope
                                       ----------------------------------------
                                   Name:  Timothy J. Cope
                                         --------------------------------------
                                     its: President and Chief Financial Officer
                                          -------------------------------------


                                       43
<PAGE>


                                 ACKNOWLEDGEMENT

STATE OF NEW YORK                )
                                 ) ss:
county of New York               )

On June 21, 2006 before me, Linda Yonha Kim (here insert name and title of the
officer), personally appeared Timothy J. Cope, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                      /s/ Linda Yonha Kim
                                      -----------------------------------------
                                                      Notary Public

                                       44


<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE UNINCORPORATED AREA, COUNTY
OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL A:

PARCEL 2, AS SHOWN ON THE PARCEL MAP FILED APRIL 4, 1978 IN BOOK 19 OF PARCEL
MAPS, AT PAGE 81, EL DORADO COUNTY RECORDS.

APN:  319-110-180-100

PARCEL B:

PARCEL 3, AS SHOWN ON THE PARCEL MAP FILED APRIL 4, 1978 IN BOOK 19 OF PARCEL
MAPS, AT PAGE 81, EL DORADO COUNTY RECORDS.

ANT 319-110-190-100

                                   Exhibit A-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>11
<FILENAME>c06339exv10w10.txt
<DESCRIPTION>PURCHASE AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.10

                                                                  EXECUTION COPY

                            POKAGON GAMING AUTHORITY

                                 $305.0 Million

                          10-3/8% Senior Notes due 2014

                               PURCHASE AGREEMENT

                               dated June 15, 2006

                         BANC OF AMERICA SECURITIES LLC

<PAGE>

                               PURCHASE AGREEMENT

June 15, 2006

BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019
   As Initial Purchaser

Ladies and Gentlemen:

      Introductory. Pokagon Gaming Authority (the "Authority"), a wholly owned,
unincorporated instrumentality of the Pokagon Band of Potawatomi Indians, an
Indian tribe recognized by the Secretary of the Interior pursuant to 25 U.S.C.
Sections 1300j et seq. (the "Tribe"), proposes to issue and sell to Banc of
America Securities LLC (the "Initial Purchaser") $305.0 million in aggregate
principal amount of the Authority's 10-3/8% Senior Notes due 2014 (the "Notes").
Banc of America Securities LLC has agreed to act as the Initial Purchaser in
connection with the offering and sale of the Securities (as defined below).

      The Securities will be issued pursuant to an indenture, to be dated as of
June 22, 2006 (the "Indenture"), among the Authority, the Tribe, the Guarantors
(as defined below) and U.S. Bank National Association, as trustee (the
"Trustee"). The Securities will be issued only in book-entry form in the name of
Cede & Co., as nominee of The Depository Trust Company (the "Depositary")
pursuant to a letter of representations, to be dated on or before the Closing
Date (as defined in Section 2 hereof) (the "DTC Agreement"), between the
Authority and the Depositary.

      The payment of principal of, premium and interest on the Notes will be
fully and unconditionally guaranteed on a senior basis, jointly and severally,
by (i) Pokagon Properties, LLC, a Delaware limited liability company (the
"Delaware Guarantor"), and (ii) Filbert Land Development, LLC, an Indiana
limited liability company (together, the "Guarantors"), pursuant to their
guarantees (the "Guarantees"). The Notes and the Guarantees attached thereto are
herein collectively referred to as the "Securities." The obligations of the
Authority under the Notes and the Guarantors under the Guarantees will be
secured by security interests in or pledges of (the "Security Interests")
certain assets of the Authority and the Guarantors (the "Collateral").

      The net proceeds from the issuance of the Securities will be deposited by
the Authority into certain collateral and disbursement accounts pursuant to the
Cash Collateral and Disbursement Agreement (defined below) and will be used to
finance and develop, construct, equip and open the gaming facility and related
amenities to be built on Indian lands of the Tribe (the "Four Winds Casino and
Resort") and for certain other costs.

      The Securities will be secured obligations and the Authority will enter
into certain documents and agreements that will provide for the grant of the
Security Interests in the Collateral to the Trustee for the benefit of the
holders of the Notes (collectively, the "Security

<PAGE>

Documents"). The Security Interests will secure the payment and performance when
due of all the obligations of the Authority under the Notes, the Indenture and
the Security Documents.

      Each of the Tribe, the Authority and the Manager (as defined below)
understands that the Initial Purchaser proposes to make an offering of the
Securities on the terms and in the manner set forth herein and in the Pricing
Disclosure Package (as defined below) and agrees that the Initial Purchaser may
resell, subject to the conditions set forth herein, all or a portion of the
Securities to purchasers (the "Subsequent Purchasers") at any time after the
time this Agreement is executed by the parties hereto (the "Time of Execution").
The Securities are to be offered and sold to or through the Initial Purchaser
without being registered with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (as amended, the "Securities
Act," which term, as used herein, includes the rules and regulations of the
Commission promulgated thereunder), in reliance upon exemptions therefrom.
Pursuant to the terms of the Securities and the Indenture, investors who acquire
Securities shall be deemed to have agreed that Securities may only be resold or
otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemptions
afforded by Rule 144A under the Securities Act ("Rule 144A") or Regulation S
under the Securities Act ("Regulation S")).

      The Authority and Great Lakes Gaming of Michigan, LLC, a Minnesota limited
liability company (f/k/a Great Lakes of Michigan, LLC) (the "Manager"), have
prepared and delivered to the Initial Purchaser copies of a Preliminary Offering
Memorandum, dated June 6, 2006 (the "Preliminary Offering Memorandum"), and have
prepared and delivered to the Initial Purchaser copies of a Pricing Supplement,
dated June 15, 2006 (the "Pricing Supplement"), describing the terms of the
Securities, each for use by the Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. The Preliminary Offering
Memorandum and the Pricing Supplement are herein referred to as the "Pricing
Disclosure Package." Promptly after the Time of Execution, the Authority will
prepare and deliver to the Initial Purchaser a final offering memorandum dated
the date hereof (the "Final Offering Memorandum").

      The following documents are hereinafter collectively referred to as the
"Transaction Documents":

      (a) this Agreement;

      (b) the Indenture;

      (c) the Notes;

      (d) the Guarantees;

      (e) the Security Agreement, to be dated as of the Closing Date, from the
Authority and the Guarantors in favor of the Trustee for the benefit of the
holders of the Notes (the "Security Agreement");

                                      -2-
<PAGE>

      (f) the Cash Collateral and Disbursement Agreement (the "Collateral and
Disbursement Agreement"), to be dated as of the Closing Date, among the
Authority, the Guarantors and U.S. Bank National Association, as Trustee and
Disbursement Agent;

      (g) the Lakes Dominion Account Agreement (the "Lakes Dominion Agreement"),
to be dated as of the Closing Date, among the Authority, the Collateral Agent
and the Manager;

      (h) the Notes Dominion Account Agreement (the "Notes Dominion Agreement"),
to be dated as of the Closing Date, among the Authority, the Collateral Agent,
the other financial institution that is a party thereto and the Manager;

      (i) the Release and Waiver Agreements (collectively, the "Release and
Waiver Agreements"), dated as of the date hereof, executed by the Authority and
the Tribe, in one case, and by the Manager, in another case; and

      (j) the Intercreditor and Subordination Agreement, to be dated as of the
Closing Date, among the Trustee, the Manager the Collateral Agent.

      The following documents are hereinafter collectively referred to as the
"Material Agreements":

      (a) the Tribal-State Gaming Compact (the "Compact"), effective February
18, 1999, by and between the Tribe and the State of Michigan;

      (b) the Local Agreement with the City of New Buffalo, dated as of March
13, 2000, among the Tribe, the City of New Buffalo and the Township of New
Buffalo;

      (c) the Third Amended and Restated Development Agreement ("Development
Agreement"), dated January 25, 2006, as amended, between the Tribe and the
Manager;

      (d) the Third Amended and Restated Management Agreement ("Management
Agreement"), dated January 25, 2006, between the Tribe and the Manager;

      (e) the Architect Agreement, as amended, between the Tribe and Urban
Design Group, Inc.;

      (f) the Construction Agreement ("Construction Agreement"), between the
Tribe and Christman/Krauss-Anderson;

      (g) the Water Service Agreement, dated November 19, 2001, among the Tribe,
the City of New Buffalo and the Township of New Buffalo;

      (h) the County Road Agreement, dated June 1, 2006, among the Tribe, the
Manager, Lakes Entertainment, Inc. ("Lakes") and the Berrien County Road
Commissioners;

      (i) the Third Amended and Restated Lakes Development Note (the
"Development Note"), dated January 25, 2006, between the Tribe and Lakes;

                                      -3-
<PAGE>

      (j) the Third Amended and Restated Non-Gaming Land Acquisition Line of
Credit Agreement (the "Non-Gaming Note"), dated January 25, 2006, between the
Tribe and Lakes;

      (k) the Third Amended and Restated Transition Loan Note, dated January 25,
2006, between the Tribe and Lakes (and, together with the Development Note, the
"Lakes Notes"); and

      (l) the definitive documents relating to the furniture and equipment
financing (the "FF&E Documents"), to be dated as of the Closing Date, between
the Authority and the Banc of America Leasing & Capital, LLC.

      The Authority, the Manager and the Guarantors hereby confirm their
agreements with the Initial Purchaser as follows:

      SECTION 1. Representations and Warranties.

      1.1 The Tribe, the Authority and the Guarantors (collectively, the
"Pokagon Parties"), jointly and severally, hereby represent, warrant and
covenant to the Initial Purchaser that, as of the date hereof and as of the
Closing Date (references in this Section 1.1 to the "Offering Memorandum" are to
(x) the Pricing Disclosure Package in the case of representations and warranties
made as of the date hereof and (y) the Final Offering Memorandum in the case of
representations and warranties made as of the Closing Date):

      (a) No Registration Required. Subject to compliance by the Initial
Purchaser with the representations and warranties set forth in Section 2 hereof
and with the procedures set forth in Section 7 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser and to each Subsequent Purchaser in the manner contemplated by this
Agreement and the Offering Memorandum to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939
(the "Trust Indenture Act," which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder).

      (b) No Integration of Offerings or General Solicitation. Subject to
compliance with the representations and warranties set forth in Sections 1.2 and
2 hereof by the Manager and the Initial Purchaser, respectively, none of the
Pokagon Parties or their affiliates (as such term is defined in Rule 501 under
the Securities Act) (each, an "Affiliate"), or any person acting on its or any
of their behalf (other than the Manager and the Initial Purchaser, as to whom
the Pokagon Parties make no representation or warranty) has, directly or
indirectly, solicited any offer to buy or offered to sell, or will, directly or
indirectly, solicit any offer to buy or offer to sell, in the United States or
to any United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would require the
Securities to be registered under the Securities Act. None of the Pokagon
Parties or their Affiliates or any person acting on its or any of their behalf
(other than the Manager and the Initial Purchaser, as to whom the Pokagon
Parties make no representation or warranty) has engaged or will engage, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502 under the
Securities Act. With respect to those Securities sold in reliance upon
Regulation S, (i) none of the Pokagon Parties or their Affiliates or

                                      -4-
<PAGE>

any person acting on its or their behalf (other than the Manager and the Initial
Purchaser, as to whom the Pokagon Parties make no representation or warranty)
has engaged or will engage in any directed selling efforts within the meaning of
Regulation S and (ii) each of the Pokagon Parties and their Affiliates and any
person acting on its or their behalf (other than the Manager and the Initial
Purchaser, as to whom the Pokagon Parties make no representation or warranty)
has complied and will comply with the offering restrictions set forth in
Regulation S.

      (c) Eligibility for Resale under Rule 144A. The Securities are eligible
for resale pursuant to Rule 144A and will not be, at the Closing Date, of the
same class as securities listed on a national securities exchange registered
under Section 6 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or quoted in a U.S. automated interdealer quotation system.

      (d) The Offering Memorandum. Neither the Pricing Disclosure Package, as of
the Time of Execution, nor the Final Offering Memorandum, as of its date or (as
amended or supplemented in accordance with Section 3(a), is applicable) as of
the Closing Date, contains or represents an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Pricing Disclosure Package, the
Final Offering Memorandum or any amendment or supplement thereto made in
reliance upon and in conformity with information furnished to the Authority in
writing by the Initial Purchaser expressly for use in the Pricing Disclosure
Package, the Final Offering Memorandum or amendment or supplement thereto, as
the case may be. The Pricing Disclosure Package contains, and the Final Offering
Memorandum will contain, all the information specified in, and meeting the
requirements of, Rule 144A. None of the Pokagon Parties has distributed or will
distribute, prior to the later of the Closing Date and the completion of the
Initial Purchaser's distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than the Pricing
Disclosure Package and the Final Offering Memorandum.

      (e) The Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, each of the
Pokagon Parties, enforceable in accordance with its terms, except as (i) rights
to indemnification hereunder may be limited by applicable law, (ii) the
enforcement hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and (iii) the ability to waive exhaustion of tribal court remedies
may be limited by applicable law.

      (f) Authorization of the Securities. The Notes to be purchased by the
Initial Purchaser from the Authority are in the form contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant to this
Agreement and the Indenture and, at the Closing Date, will have been duly
executed by the Authority and, when authenticated in the manner provided for in
the Indenture and delivered against payment of the purchase price therefor, will
constitute valid and binding agreements of the Authority, enforceable in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting the rights

                                      -5-
<PAGE>

and remedies of creditors or by general equitable principles and except as the
ability to waive exhaustion of tribal court remedies may be limited by
applicable law, and will be entitled to the benefits of the Indenture. The
Guarantees of the Notes are in the form contemplated by the Indenture, have been
duly authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, will have been duly executed by each of the
Guarantors and, when the Notes have been authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor, will constitute valid and binding agreements of the Guarantors,
enforceable in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles and except as the ability to waive exhaustion of
tribal court remedies may be limited by applicable law, and will be entitled to
the benefits of the Indenture.

      (g) Authorization of the Indenture. At the Closing Date, the Indenture
will have been duly authorized, executed and delivered by the Pokagon Parties
and will constitute a valid and binding agreement of the Pokagon Parties,
enforceable against them in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and except
as the ability to waive exhaustion of tribal court remedies may be limited by
applicable law.

      (h) Description of the Securities and the Indenture. The Securities and
the Indenture will conform in all material respects to the respective statements
relating thereto contained in the Offering Memorandum.

      (i) Authorization of the Transaction Documents. At the Closing Date, each
of the Transaction Documents to which any of the Pokagon Parties are a party
(other than those described in clauses (e) through (g) above) will have been
duly authorized, executed and delivered by such Pokagon Parties and will
(assuming the due authorization, execution and delivery thereof by or on behalf
of each of the other parties thereto) constitute a valid and binding agreement
of such Pokagon Parties, enforceable against them in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles and except as (i) the ability to waive
exhaustion of tribal court remedies may be limited by applicable law and (ii)
recourse against interests in real property may be limited by the Tribe's
Constitution.

      (j) Material Agreements. At the Closing Date, each of the Material
Agreements (other than the Compact) to which any of the Pokagon Parties are a
party (assuming the due authorization, execution and delivery thereof by or on
behalf of each of the other parties thereto) will constitute a valid and binding
agreement of such Pokagon Parties, enforceable against them in accordance with
their respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles and except as the ability to waive exhaustion of tribal
court remedies may be limited by applicable law. As of the date hereof, there
are no defaults or events of default, that with notice, the passage of time or

                                      -6-
<PAGE>

otherwise could be a default, under any material provisions of such Material
Agreements by any party thereto.

      (k) No Material Adverse Change. Except as otherwise disclosed in the
Offering Memorandum, subsequent to the respective dates as of which information
is given in the Offering Memorandum: (i) there has been no material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Pokagon Parties,
considered as one entity (any such change is called a "Pokagon Parties Material
Adverse Change"); and (ii) the Pokagon Parties have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not in
the ordinary course of business.

      (l) Accountants. McGladrey & Pullen, LLP, which expressed its opinion with
respect to the financial statements (which term as used in this Agreement
includes the related schedules and notes thereto) included in the Offering
Memorandum, are independent public or certified public accountants within the
meaning of Regulation S-X under the Securities Act and the Exchange Act, and any
non-audit services provided by McGladrey & Pullen, LLP to the Pokagon Parties
have been duly approved.

      (m) Preparation of the Financial Statements. The financial statements
included in the Offering Memorandum present fairly the consolidated financial
position of the Authority as of and at the dates indicated. Such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. The financial data set forth in the Offering Memorandum under the
caption "Selected Historical Financial and Other Data" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Offering Memorandum.

      (n) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. None of the Pokagon Parties is in violation of any of its
organizational documents or is in default (or, with the giving of notice or
lapse of time, would be in default) ("Default") under any indenture, mortgage,
loan or credit agreement, note, contract, franchise, lease or other instrument
to which any of the Pokagon Parties is a party or by which it or any of them may
be bound, or to which any of the property or assets of any of the Pokagon
Parties is subject (each, an "Existing Instrument"), except for such Defaults as
would not, individually or in the aggregate, result in a Pokagon Parties
Material Adverse Change. The execution, delivery and performance by the Pokagon
Parties of the Material Agreements and the Transaction Documents to which it is
a party, and consummation of the transactions contemplated hereby and thereby
and by the Offering Memorandum (i) have been duly authorized by all necessary
company action and will not result in any violation of the provisions of the
organizational documents of any of the Pokagon Parties, (ii) will not conflict
with or constitute a breach of, or Default or a Debt Repayment Triggering Event
(as defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of any of the Pokagon Parties
pursuant to, or require the consent of any other party to, any Existing

                                      -7-
<PAGE>

Instrument, except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a Pokagon
Parties Material Adverse Change and (iii) will not result in any violation of
any law, administrative regulation or administrative or court decree applicable
to any of the Pokagon Parties except for such violations that will not result in
a Pokagon Parties Material Adverse Change. No consent, approval, authorization
or other order of, or registration or filing with, any court or other
governmental or regulatory authority or agency is required for the execution,
delivery and performance by the Pokagon Parties of the Material Agreements and
the Transaction Documents, or consummation of the transactions contemplated
hereby and thereby and by the Offering Memorandum, to which it is a party,
except (i) as have been obtained or made by the Pokagon Parties and are in full
force and effect; (ii) may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Initial Purchaser in the manner contemplated herein and in the Offering
Memorandum and (iii) such as will not result in a Pokagon Parties Material
Adverse Change or have a material adverse effect on the offering and sale of the
Securities and the transactions contemplated herein. As used herein, a "Debt
Repayment Triggering Event" means any event or condition which gives, or with
the giving of notice or lapse of time would give, the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by any of the Pokagon Parties.

      (o) No Material Actions or Proceedings. Except as otherwise disclosed in
the Offering Memorandum, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Authority's knowledge, threatened (i)
against or affecting any of the Pokagon Parties or (ii) which has as the subject
thereof any property owned or leased by any of the Pokagon Parties and any such
action, suit or proceeding, if determined adversely to the Pokagon Parties,
would result in a Pokagon Parties Material Adverse Change or adversely affect
the consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Authority exists or, to the best of the
Authority's knowledge, is threatened or imminent.

      (p) Intellectual Property Rights. None of the Pokagon Parties has received
any notice of infringement or conflict with asserted trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other similar
rights of others, which infringement or conflict, if the subject of an
unfavorable decision, would result in a Material Adverse Change.

      (q) Permits. Except as otherwise disclosed in the Offering Memorandum, the
Pokagon Parties possess such valid and current certificates, licenses,
authorizations or permits issued by the appropriate state, federal, tribal or
foreign regulatory agencies or bodies necessary to conduct their respective
businesses, other than those certificates, licenses, authorization or permits
which in the aggregate would not result in a Pokagon Party Material Adverse
Change, and none of the Pokagon Parties has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a Pokagon
Parties Material Adverse Change.

                                      -8-
<PAGE>

      (r) Tax. None of the Pokagon Parties are required to pay any U.S. federal
or Michigan state income taxes.

      (s) Authority Not an "Investment Company". The Authority has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act," which term, as used herein, includes the
rules and regulations of the Commission promulgated thereunder). The Authority
is not, and after receipt of payment for the Securities will not be, an
"investment company" within the meaning of Investment Company Act and will
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

      (t) Insurance. On the Closing Date, the Authority will be insured by
recognized and financially sound institutions with policies covering its
properties, operations, personnel and businesses, in such amounts and with such
deductibles and covering such losses and risks as are consistent with industry
practice to protect the Authority and its business as in effect on the Closing
Date ("Insurance").

      (u) No Price Stabilization or Manipulation. None of the Authority or any
of the Guarantors has taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of any security of the Authority to
facilitate the sale or resale of the Securities.

      (v) Compliance with Environmental Laws. Except as would not, individually
or in the aggregate, result in a Pokagon Parties Material Adverse Change: (i)
neither the Authority nor any of the Guarantors is in violation of any federal,
state, local or foreign law or regulation relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern
(collectively, "Environmental Laws"), which violation includes, without
limitation, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Authority or any of the Guarantors received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Authority or any of the Guarantors
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Authority has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased or operated
by the Authority or any of the Guarantors, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Authority's knowledge,
threatened

                                      -9-
<PAGE>

against the Authority or any of the Guarantors or any person or entity whose
liability for any Environmental Claim the Authority or any of the Guarantors has
retained or assumed either contractually or by operation of law; and (iii) to
the best of the Authority's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that would result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Authority or any of the Guarantors or against any person or entity whose
liability for any Environmental Claim the Authority or any of the Guarantors has
retained or assumed either contractually or by operation of law.

      (w) IGRA. The Tribe is an Indian tribe within the meaning of Indian Gaming
Regulatory Act of 1988, as amended ("IGRA"), with the authority to enter into
and perform its obligations under each of the Transaction Documents and Material
Agreements to which it is a party.

      (x) Constitution. The Constitution of the Tribe (the "Constitution"),
approved November 1, 2005, was duly and validly adopted by the Tribe, is the
only constitution of the Tribe and is the valid and governing law of the Tribe.

      (y) Tribal Council. The tribal council referred to in the Constitution
(the "Tribal Council") is the governing body of the Tribe, and all members of
the Tribal Council are validly serving.

      (z) Compact. The Compact has been duly and validly authorized, executed
and delivered by the Tribe, has been deemed approved by the Secretary of the
Interior of the United States, and such approval has been duly published in the
Federal Register. As of the date hereof, the Pokagon Parties are in compliance
with all material terms and conditions of the Compact.

      (aa) Gaming Ordinance. The Tribal Council has duly and validly adopted the
Tribal Gaming Regulatory Act on May 10, 2003, and subsequently amended that act
on October 13, 2003 (as amended, the "Gaming Ordinance"). As required by IGRA,
the Gaming Ordinance was duly approved by the National Indian Gaming Commission
(the "NIGC"). The Gaming Ordinance (i) has not been amended or repealed and is
in full force and effect as the law of the Tribe, (ii) authorizes the class II
and class III gaming within the meaning of IGRA that is proposed to be conducted
at the Four Winds Casino and Resort, (iii) satisfies the requirements under IGRA
that the Tribe adopt a gaming ordinance prior to engaging in class II or class
III gaming and (iv) complies in all material respects with the requirements of
the Compact and IGRA.

      (bb) Authority Ordinance. The Tribal Council has the requisite power and
authority to adopt the Ordinance dated May 25, 2006 entitled "Ordinance of the
Pokagon Band of Potawatomi Indians Establishing and Governing the Pokagon Gaming
Authority" (the "Authority Ordinance") as the law of the Tribe. The Authority
Ordinance (i) was duly and validly adopted by the Tribal Council, (ii) is in
full force and effect, (iii) has not been further amended or repealed in any
manner and (iv) is the governing law of the Tribe.

                                      -10-
<PAGE>

      (cc) The Authority. The Authority (i) is a wholly owned, unincorporated
instrumentality of the Tribe and is not a separate entity from the Tribe for
federal or state income tax purposes, (ii) is governed by a board of directors
("Board of Directors") which has the requisite power and authority to authorize
the Authority to (A) enter into the Transaction Documents to which the Authority
is a party and (B) pledge the revenue and assets of the Authority in accordance
with the Transaction Documents and (iii) has the requisite power and authority
to own and operate its properties, including the "Gaming Assets" as defined in
the Authority Ordinance, to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Transaction
Documents to which it is a party. The Board of Directors has duly adopted the
resolution referred to in clause (ii) above and the Resolution is in full force
and effect and has not been amended or repealed in any manner. The Authority
does not have any subsidiaries other than the Guarantors.

      (dd) Requisite Power. The Pokagon Parties have all requisite power and
authority necessary to enter into, execute, deliver and perform their
obligations, if any, under each of the Transaction Documents and Material
Agreements to which any of them is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the power and
authority necessary to issue, sell and deliver the Securities in accordance with
and upon the terms and conditions set forth in this Agreement, the Indenture and
the Offering Memorandum.

      (ee) Referendum Rights. No initiative or referendum rights exist for
members of the Tribe permitting any member or any number of members of the Tribe
to call for or conduct, in any manner, a review of any action taken by the
Authority or the Tribal Council, whether by way of an initiative, referendum or
otherwise, with respect to any authorization, execution, delivery or performance
of its obligations under this Agreement or the Transaction Documents or the
Material Agreements to which it is a party, by the Authority or the Tribal
Council or any actions contemplated to be taken by the Authority or the Tribal
Council in connection therewith.

      (ff) Description. Each of the Transaction Documents and the Material
Agreements described in the Offering Memorandum conform as to legal matters to
the description thereof contained in the Offering Memorandum.

      (gg) Notes. When issued, the Notes will rank pari passu in right of
payment with all of the Authority's other unsubordinated indebtedness.

      (hh) Restrictions. No law of the Tribe imposes any restrictions on the
rate, yield or return payable by or on behalf of the Tribe or the Authority on
its indebtedness.

      (ii) Casino Site. At Closing, each parcel of land on which the Four Winds
Casino and Resort is proposed to be located, together with all improvements
related thereto included within the meaning of "Class III gaming facility"
within the Compact (collectively, the "Casino Site"), will constitute Indian
land, within the meaning of IGRA, over which the Tribe has jurisdiction and on
which class II and class III gaming is permitted to be conducted by the
Authority under IGRA. At Closing, the Casino Site will be held by the United
States in trust for the benefit of the

                                      -11-
<PAGE>

Tribe, subject to no mortgage, lien, easement, interest, estate or other
encumbrance that would reasonably be expected to result in a Pokagon Parties
Material Adverse Change.

      (jj) Exclusive Right. The Authority has the exclusive right to develop and
operate, collect the revenues, and pledge the revenues and assets of the Four
Winds Casino and Resort, subject to the ownership rights of the Tribe in and to
the real property and the buildings and fixtures located thereon and related
thereto held in trust for the Tribe by the United States and the rights of the
Manager pursuant to the Management Agreement. The Authority has all necessary
and desirable access and right to enter onto the lands held in trust for the
Tribe for the purpose of operating the Four Winds Casino and Resort and
conducting the business of the Authority.

      (kk) Security Interest. Upon the (i) execution and delivery to the Trustee
or the Collateral Agent, as applicable, of each of the Security Agreement, the
Collateral and Disbursement Agreement, the Notes Dominion Account Agreement and
the Lakes Dominion Account Agreement and (ii) the filing of the UCC-1 financing
statements as contemplated by the Indenture and the other Security Documents,
the Trustee or the Collateral Agent, as applicable, will have a valid, duly
perfected, first priority security interest in all of the rights and property in
which a security interest is granted under the Security Documents, subject to
any liens permitted by the Security Documents, as security for the payment of
obligations of the Authority under the Indenture and the Notes. The actions,
recordings and filings described in the immediately preceding sentence are the
only actions, recordings and filings necessary to publish notice of and perfect
the rights of the Trustee under the Security Documents, except for such
additional actions, recordings and filings as the Authority, Initial Purchaser
and the Trustee may determine prior to the Closing Date.

      (ll) Section 9310. Other than as provided in Section 9310 of the Uniform
Commercial Code as adopted by the Tribe (the "UCC"), no filing, recording or
other act is required under any law, rule or ordinance of the Tribe to perfect
and maintain the perfection of the security interests in the Collateral.

      (mm) Use. Except as set forth in the Offering Memorandum, the contemplated
operation and use and construction of the Four Winds Casino and Resort in the
manner set forth in the Offering Memorandum will be, at the time of operation
and use and construction, as applicable, in compliance with all applicable
municipal, county, state, tribal and federal laws, regulations, ordinances,
standards, order and other regulations, where the failure to comply therewith
would not, individually or in the aggregate, have a Pokagon Parties Material
Adverse Change. Except as set forth in the Offering Memorandum, under current
applicable Gaming Laws, the Four Winds Casino and Resort may be used for the
purposes contemplated in the Offering Memorandum, the Indenture, the Notes and
the Security Documents.

      (nn) Construction Plans. The anticipated schedule of construction of the
Four Winds Casino and Resort is as set forth in the Offering Memorandum. The
anticipated cost of construction of the Four Winds Casino and Resort (including
interest, legal, architectural, engineering, planning, zoning and other similar
costs) does not exceed the amounts for such costs set forth under the caption
"Use of Proceeds" in the Offering Memorandum. In addition, each of the other
amounts set forth in the section entitled "Sources and Uses of Funds" under the

                                      -12-
<PAGE>

caption "Use of Proceeds" in the Offering Memorandum are based upon reasonable
assumptions as to all matters material to the estimates set forth therein and
are not expected to exceed the amounts set forth for such items.

      (oo) Relationships. Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among any of the Pokagon
Parties, on the one hand, and the directors, officers, employees,
representatives, members or council persons or Affiliates, of any of the Pokagon
Parties, on the other hand, which would be required by the Securities Act to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.

      (pp) Data. The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the Authority
believes to be reliable and accurate in all material respects.

      (qq) Tribal UCC. The UCC was duly and validly adopted by the Tribal
Council, and is a valid law of the Tribe. No applicable law, ordinance, rule,
regulation or resolution of the Tribe, or any agency, subdivision, department,
commission or enterprise (each, a "Governmental Component") thereof conflicts
with or contravenes the UCC of the Tribe.

      (rr) Arbitration Code. The Arbitration Code of the Tribe (the "Tribal
Arbitration Code") was duly and validly adopted by the Tribal Council, and is
the valid law of the Tribe. No applicable law, ordinance, rule, regulation or
resolution of the Tribe, any Governmental Component thereof or any court of the
Tribe conflicts with or contravenes the Tribal Arbitration Code.

      (ss) Sovereign Immunity. The waivers of sovereign immunity (including the
related agreements to submit claims to binding arbitration) by each of the
Pokagon Parties contained in this Agreement and each of the Transaction
Documents to which any Pokagon Party is a party are in compliance with all
applicable federal and Tribal laws and, upon execution of such documents, will
effectively waive the sovereign immunity of each respective Pokagon Party, will
be irrevocable, validly and legally binding on each Pokagon Party, enforceable
against each in accordance with their respective terms and no further action
will be required to make each such waiver effective.

      (tt) Regulation T, U and X. None of the execution, delivery and
performance of this Agreement, the issuance and sale of the Notes, the
application of the proceeds from the issuance of the Notes and the consummation
of the transactions contemplated thereby as set forth in the Offering
Memorandum, will violate Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) promulgated by the Board
of Governors of the Federal Reserve System or analogous foreign law and
regulations.

      (uu) No Contracts. Except pursuant to this Agreement and the engagement
letter relating to the offering of the Securities and except as disclosed in the
Offering Memorandum, there are no contracts, agreements or understandings
between the Pokagon Parties and any other

                                      -13-
<PAGE>

person that would give rise to a valid claim against the Pokagon Parties for a
brokerage commission, finder's fee or like payment in connection with this
Offering, the issuance of Notes.

      (vv) Registration Rights. There are no holders of securities of the
Authority who, by reason of the Authority's execution of this Agreement or any
other Transaction Document to which it is a party or the consummation by the
Authority of the transactions contemplated hereby and thereby, have the right to
request or demand that the Authority register under the Securities Act or
analogous foreign laws and regulations securities held by them.

      (ww) Default. There exist no conditions that would constitute a default
(or an event of which with notice or lapse of time, or both, would constitute a
default) under any of the Transaction Documents to which the Pokagon Parties are
a party.

      (xx) Licensing Requirements. It is not necessary under federal, state,
Tribal or local laws that any of the holders of the Securities be licensed,
qualified or entitled to carry on business in any such jurisdiction by reason of
the execution, delivery, performance or enforcement of any of the Transaction
Documents or the Securities.

      (yy) No Management Contract. None of the Transaction Documents to which
any Pokagon Party is a party, taken individually or as a whole, constitutes a
"management contract" or a "management agreement" within the meaning of 25
U.S.C. Section 2711, or deprives the Authority of the sole proprietary interest
and responsibility of the conduct of gaming. No consent, approval, authorization
or order of, and notice to or filing with, any governmental agency or body or
any court, including specifically the Secretary of the Interior of the United
States or the Chairman of the National Indian Gaming Commission, is required to
be obtained in connection with the execution, delivery and performance of the
Transaction Documents or as a condition of their validity or enforceability.

      (zz) Certificates. Each certificate signed by any officer of the Pokagon
Parties and delivered to the Initial Purchaser, or counsel for the Initial
Purchaser, shall be deemed a representation and warranty by such Pokagon Party
to the Initial Purchaser as to the matters covered thereby.

      The Pokagon Parties acknowledge that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 5 hereof, counsel for the Initial Purchaser and counsel for the Manager
will rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.

      1.2 The Manager represents and warrants to the Pokagon Parties and to the
Initial Purchaser that, as of the date hereof and as of the Closing Date
(references in this Section 1 to the "Offering Memorandum" are to (x) the
Pricing Disclosure Package in the case of representations and warranties made as
of the date hereof and (y) the Final Offering Memorandum in the case of
representations and warranties made as of the Closing Date):

      (a) No General Solicitation. None of the Manager or its Affiliates or any
person acting on its or any of their behalf (other than the Initial Purchaser
and the Pokagon Parties, as to

                                      -14-
<PAGE>

whom the Manager makes no representation or warranty) has engaged or will
engage, in connection with the offering of the Securities, in any form of
general solicitation or general advertising within the meaning of Rule 502 under
the Securities Act. With respect to those Securities sold in reliance upon
Regulation S, (i) none of the Manager or its Affiliates or any person acting on
its or their behalf (other than the Initial Purchaser and the Pokagon Parties,
as to whom the Manager makes no representation or warranty) has engaged or will
engage in any directed selling efforts within the meaning of Regulation S and
(ii) each of the Manager and its Affiliates and any person acting on its or
their behalf (other than the Initial Purchaser and the Pokagon Parties, as to
whom the Manager makes no representation or warranty) has complied and will
comply with the offering restrictions set forth in Regulation S.

      (b) The Offering Memorandum. Neither (i) the information furnished by the
Manager for use in either the Pricing Disclosure Package, as of the Time of
Execution, or the Offering Memorandum, as of its date or (as amended or
supplemented in accordance with Section 3(a), as applicable) as of the Closing
Date; nor (ii) to the knowledge of the Manager, any other information contained
in the Pricing Disclosure Package, as of the Time of Execution, or the Offering
Memorandum, as of its date or (as amended or supplemented in accordance with
Section 3(a), as applicable) contains or represents an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that this representation, warranty and agreement
shall not apply to statements in or omissions from the Pricing Disclosure
Package, the Offering Memorandum or any amendment or supplement thereto made in
reliance upon and in conformity with information furnished to the Authority or
the Manager in writing by the Initial Purchaser expressly for use in the Pricing
Disclosure Package, the Offering Memorandum or amendment or supplement thereto,
as the case may be. Neither the Manager nor its Affiliates has distributed or
will distribute, prior to the later of the Closing Date and the completion of
the Initial Purchaser's distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than the Pricing
Disclosure Package and the Final Offering Memorandum.

      (c) Duly Organized. The Manager has been duly formed and is validly
existing as a Minnesota limited liability company, in good standing under the
laws of the jurisdiction of its formation and has power and authority to own,
hold, lease and operate its properties and to conduct its business as described
in the Offering Memorandum and to enter into and perform its obligations under
each of the Transaction Documents and Material Agreements to which the Manager
is a party. The Manager is duly qualified as a foreign corporation to transact
business and is in good standing or equivalent status in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such jurisdictions
where the failure to so qualify or to be in good standing would not be expected
to (i) individually or in the aggregate, have a material adverse effect on the
business, condition (financial or otherwise), results of operations, properties,
affairs or prospects of the Manager, taken as a whole, (ii) prevent the issuance
of the Notes or (iii) invalidate this Agreement or any other Transaction
Document or Material Agreements to which it is a party, the transactions
described in the Offering Memorandum (any of the event set forth in clauses (i),
(ii) or (iii), a "Manager Material Adverse Change"). The Manager has no
subsidiaries.

                                      -15-
<PAGE>

      (d) Requisite Power. The Manager has all requisite power and authority
necessary to enter into, execute, deliver and perform its material obligations,
if any, under each of the Transaction Documents and Material Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby, including, without limitation in accordance with and upon the terms and
conditions set forth in this Agreement, the Management Agreement and the
Offering Memorandum.

      (e) Authority. This Agreement and each of the Transaction Documents to
which the Manager is a party has been duly and validly authorized, executed and
delivered by the Manager and (assuming due authorization, execution and delivery
thereof by or on behalf of each of the other parties thereto) is the valid and
legally binding obligation of the Manager, enforceable against it in accordance
with its terms, except as rights to indemnification, if any, hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.

      (f) Full Force. The Material Agreements to which the Manager is a party
are in full force and effect as of the date hereof, enforceable against them, as
applicable, in accordance with their respective terms, except as rights to
indemnification, if any, hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles. As of the
date hereof, there are no defaults or events of default, that with notice, the
passage of time or otherwise could be a default, under any provisions of such
Material Agreements by the Manager or, to the Manager's knowledge, any other
party thereto.

      (g) Conflicts. The Manager is not in violation of its governing documents
or limited liability company agreement and is not in default (or, with the
giving of notice or lapse of time, would be in default) under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Manager is a party or by which it may be bound, or to
which any of the property or assets of the Manager is subject (each, a "Manager
Existing Instrument"), except for such defaults as would not, individually or in
the aggregate, result in a Manager Material Adverse Change. The Manager's
execution, delivery and performance of this Agreement or any other Transaction
Documents to which it is a party will not (i) except as described in the Release
and Waiver Agreements, conflict with or constitute a breach of, or Default or a
Manager Debt Repayment Triggering Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Manager, or require the consent of any other party to, any
Manager Existing Instrument and (ii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Manager. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Manager's delivery and performance of
this Agreement or any Transaction Document to which it is a party. As used
herein, a "Manager Debt Repayment Triggering Event" means any event or condition
which gives, or with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness (or any person

                                      -16-
<PAGE>

acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Manager.

      (h) Proceedings. Except as otherwise disclosed in the Offering Memorandum,
there are no legal or governmental actions, suits or proceedings pending or, to
the best of the Manager's knowledge, threatened (i) against or affecting the
Manager or (ii) which has as the subject thereof any property owned or leased by
the Manager and any such action, suit or proceeding that is reasonably likely to
result in a Manager Material Adverse Change or adversely affect the consummation
of the transactions contemplated by this Agreement.

      (i) Permits. The Manager possesses such valid and current certificates,
licenses, authorizations or permits issued by the appropriate state, federal,
tribal or foreign regulatory agencies or bodies necessary to conduct its
business as currently contemplated, and the Manager has not received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Manager Material Adverse Change.

      (j) NIGC. No other person other than the Manager and those disclosed in
writing to the NIGC has an interest in the Material Agreements to which the
Manager is a party which is required to be disclosed to the NIGC.

      (k) Other Management Contracts. There are no management contracts or
collateral agreements within the meaning of IGRA relating to the Four Winds
Casino and Resort to which the Manager is a party except for the Material
Agreements and the Transaction Documents.

      (l) Tax. Except for taxes which are currently being disputed in good faith
and with respect to which appropriate reserves have been made, the Manager has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid all taxes required to be paid by it and, if due and payable, any
related or similar assessment, fine or penalty levied against it.

      (m) Material Adverse Change. Except as otherwise disclosed in the Offering
Memorandum, subsequent to the respective dates as of which information is given
in the Offering Memorandum: (i) there has been no Manager Material Adverse
Change, or any development that could reasonably be expected to result in a
Manager Material Adverse Change; (ii) the Manager has not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not in
the ordinary course of business.

      (n) No Contracts. Other than the Engagement Letter, there are no
contracts, agreements or understandings between the Manager and any other person
that would give rise to a valid claim against the Manager for a brokerage
commission, finder's fee or like payment in connection with this Offering or the
issuance of the Notes.

                                      -17-
<PAGE>

      (o) Default. There exist no conditions that would constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) by the Manager under any of the Transaction Documents or Material
Agreements to which the Manager is a party.

      (p) Construction Plans. The Initial Purchaser has been furnished with a
copy of the plans and specifications for the construction of the Four Winds
Casino and Resort and other necessary expenditures. The anticipated schedule of
construction of the Four Winds Casino and Resort is as set forth in the Offering
Memorandum. The anticipated cost of construction of the Four Winds Casino and
Resort (including interest, legal, architectural, engineering, planning, zoning
and other similar costs) does not exceed the amounts for such costs set forth
under the caption "Use of Proceeds" in the Offering Memorandum. In addition,
each of the other amounts set forth in the section entitled "Sources and Uses of
Funds" under the caption "Use of Proceeds" in the Offering Memorandum are based
upon reasonable assumptions as to all matters material to the estimates set
forth therein and are not expected to exceed the amounts set forth for such
items.

      (q) Data. The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources which the Manager believes to be
reliable and accurate in all material respects.

      (r) Certificates. Each certificate signed by any officer of the Manager
and delivered to the Initial Purchaser, or counsel for the Initial Purchaser,
shall be deemed a representation and warranty by the Manager to the Initial
Purchaser as to the matters covered thereby.

      The Manager acknowledges that the Initial Purchaser and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 5
hereof, counsel for the Tribe and the Authority, will rely upon the accuracy and
truth of the foregoing representations and hereby consents to such reliance.

      SECTION 2. Purchase, Sale and Delivery of the Securities.

      (a) The Securities. Each of the Authority and the Guarantors agree to
issue and sell to the Initial Purchaser all of the Securities, and the Initial
Purchaser agrees to purchase from the Authority and the Guarantors all of the
Securities, at a purchase price of 100% of the principal amount thereof payable
on the Closing Date, in each case, on the basis of the representations,
warranties and agreements herein contained, and upon the terms, subject to the
conditions thereto, herein set forth. The Authority agrees to pay the Initial
Purchaser total discounts and commissions on the Securities of $7,618,750.

      (b) The Closing Date. Delivery of certificates for the Securities in
definitive form to be purchased by the Initial Purchaser and payment therefor
shall be made at the offices of White & Case LLP, 1155 Avenue of the Americas,
New York, New York 10036 (or such other place as may be agreed to by the
Authority, the Manager and Banc of America Securities LLC) at 9:00 a.m. New York
City time, on June 22, 2006, or such other time and date as Banc of America
Securities LLC, the Authority and the Manager shall agree (the time and date of
such closing are called the "Closing Date"). The Authority and the Manger hereby
acknowledge that

                                      -18-
<PAGE>

circumstances under which Banc of America Securities LLC may provide notice to
postpone the Closing Date as originally scheduled include, but are in no way
limited to, any determination by the Authority, the Manager or the Initial
Purchaser to recirculate to investors copies of an amended or supplemented
Offering Memorandum.

      (c) Delivery of the Securities. The Authority shall deliver, or cause to
be delivered, to Banc of America Securities LLC for the accounts of the Initial
Purchaser certificates for the Notes at the Closing Date against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Notes shall be in such
denominations and registered in the name of Cede & Co., as nominee of the
Depositary, pursuant to the DTC Agreement, and shall be made available for
inspection on the business day preceding the Closing Date at a location in New
York City, as Banc of America Securities LLC may designate. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Initial Purchaser.

      (d) Initial Purchaser as Qualified Institutional Buyer. The Initial
Purchaser represents and warrants to, and agrees with, the Authority and the
Manager that it is a "qualified institutional buyer" within the meaning of Rule
144A (a "Qualified Institutional Buyer").

      (e) Distribution of Offering Memorandum. The Initial Purchaser has not
distributed and will not distribute, prior to the later of the Closing Date and
the completion of the Initial Purchaser's distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than the Preliminary Offering Memorandum, the Pricing Supplement or the
Final Offering Memorandum.

      SECTION 3. Additional Covenants. Each of the Authority, the Manager and
the Guarantors, as noted below, further covenants and agrees with the Initial
Purchaser as follows:

      (a) Preparation of Final Offering Memorandum; Initial Purchaser's Review
of Proposed Amendments and Supplements. As promptly as practicable following the
Time of Execution and in any event not later than the second business day
following the date hereof, the Authority will prepare and deliver to the Initial
Purchaser the Final Offering Memorandum. The Authority will not amend or
supplement the Preliminary Offering Memorandum, the Pricing Supplement or, prior
the Closing Date, the Final Offering Memorandum unless the Initial Purchaser
shall previously have been furnished a copy of the proposed amendment or
supplement at least one business day prior to the proposed use or filing, and
shall not have objected to such amendment or supplement.

      (b) Amendments and Supplements to the Final Offering Memorandum and Other
Securities Act Matters. If, prior to the later of (x) the Closing Date and (y)
the completion of the placement of the Securities by the Initial Purchaser with
the Subsequent Purchasers, any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Final Offering Memorandum,
as then amended or supplemented, in order to make the statements therein, in the
light of the circumstances when the Final Offering Memorandum is delivered to a
Subsequent Purchaser, not misleading, or if it is otherwise necessary to amend
or supplement the Final Offering Memorandum to comply with law, the Authority
agrees to promptly prepare

                                      -19-
<PAGE>

(subject to Section 3 hereof), and furnish at its own expense to the Initial
Purchaser, amendments or supplements to the Final Offering Memorandum so that
the statements in the Final Offering Memorandum as so amended or supplemented
will not, in the light of the circumstances at the Closing Date and at the time
of sale of Securities, be misleading or so that the Final Offering Memorandum,
as amended or supplemented, will comply with all applicable law.

      (c) Indemnity. Each of the Authority and the Manager hereby expressly
acknowledges that the indemnification and contribution provisions of Sections 8
and 9 hereof are specifically applicable and relate to each offering memorandum,
amendment or supplement referred to in this Section 3.

      (d) Copies of the Offering Memorandum. The Authority agrees to furnish the
Initial Purchaser, without charge, as many copies of the Pricing Disclosure
Package and the Final Offering Memorandum and any amendments and supplements
thereto as it shall have reasonably requested.

      (e) Blue Sky Compliance. Each of the Authority and the Guarantors shall
cooperate with the Initial Purchaser and counsel for the Initial Purchaser to
qualify (or to obtain exemptions from qualifying) all or any part of the
Securities for offer and sale under the securities laws of the several states of
the United States, the provinces of Canada or any other jurisdictions designated
by the Initial Purchaser, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as reasonably
required for the distribution of the Securities. Neither the Authority nor any
of the Guarantors shall be required to qualify as a foreign corporation or to
take any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Authority will advise the Initial
Purchaser promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Securities for offering, sale or trading in
any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, each of the Authority and the
Guarantors shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.

      (f) Use of Proceeds. The Authority shall apply the net proceeds from the
sale of the Securities sold by it in the manner described under the caption "Use
of Proceeds" in the Pricing Disclosure Package, except as otherwise permitted by
the Collateral and Disbursement Agreement.

      (g) The Depositary. The Authority will cooperate with the Initial
Purchaser and use its best efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of the Depositary.

      (h) Agreement Not To Offer or Sell Additional Securities. During the
period of 180 days following the date hereof, the Authority will not, without
the prior written consent of Banc of America Securities LLC (which consent may
be withheld at the sole discretion of Banc of America Securities LLC), directly
or indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the meaning of
Rule 16a-1

                                      -20-
<PAGE>

under the Exchange Act, or otherwise dispose of or transfer, or announce the
offering of, or file any registration statement under the Securities Act in
respect of, any debt securities of the Authority or securities exchangeable for
or convertible into debt securities of the Authority (other than as contemplated
by this Agreement).

      (i) Future Reports to the Initial Purchaser. At any time when any
Securities remain outstanding, the Authority will furnish to Banc of America
Securities LLC: (i) as soon as practicable after the end of each fiscal year,
copies of the balance sheet of the Authority as of the close of such fiscal year
and statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Authority's independent public or certified
public accountants; and (ii) as soon as available, copies of any report or
communication of the Authority mailed generally to holders of its debt
securities (including the holders of the Securities).

      (j) No Integration. The Authority agrees that it will not and will cause
its Affiliates not to make any offer or sale of securities of the Authority of
any class if, as a result of the doctrine of "integration" referred to in Rule
502 under the Securities Act, such offer or sale would render invalid (for the
purpose of the sale of the Securities by the Authority to the Initial Purchaser)
the exemption from the registration requirements of the Securities Act provided
by Section 4(2) thereof.

      (k) No Restricted Resales. During the period of two years after the
Closing Date, the Authority will not, and will not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to resell any of the Notes
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them.

      (l) Legended Securities. Each certificate for a Note will bear the legend
contained in "Notice to Investors" in the Preliminary Offering Memorandum for
the time period and upon the other terms stated in the Preliminary Offering
Memorandum.

      (m) PORTAL. The Authority will use its best efforts to cause such Notes to
be eligible for the PORTAL Market.

      (n) Banc of America Securities LLC may, in its sole discretion, waive in
writing the performance by the Authority, the Manager or any Guarantor of any
one or more of the foregoing covenants or extend the time for their performance.

      SECTION 4. Payment of Expenses. Each of the Authority and the Guarantors
agrees to pay all costs, fees and expenses incurred in connection with the
performance of its obligations hereunder and in connection with the transactions
contemplated hereby, including, without limitation, (i) all expenses incident to
the issuance and delivery of the Securities (including all printing and
engraving costs), (ii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Securities to the Initial
Purchaser, (iii) all fees and expenses of the Authority's and the Guarantors'
counsel, independent public or certified public accountants and other advisors,
(iv) any and all reasonable fees and expenses of the Initial Purchaser's counsel
(White & Case LLP and Latham & Watkins LLP) and Indian counsel that

                                      -21-
<PAGE>

exceed the lesser of (x) 60% of such fees and expenses and (y) $600,000, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Pricing Disclosure Package and the
Final Offering Memorandum (including financial statements and exhibits), and all
amendments and supplements thereto, and the Transaction Documents, (vi) all
filing fees, attorneys' fees and expenses incurred by the Authority, the
Guarantors or the Initial Purchaser in connection with qualifying (or obtaining
exemptions from the qualification of) all or any part of the Securities for
offer and sale under the securities laws of the several states of the United
States, the provinces of Canada or other jurisdictions designated by the Initial
Purchaser (including, without limitation, the cost of preparing, printing and
mailing preliminary and final blue sky or legal investment memoranda and any
related supplements to the Pricing Disclosure Package or the Final Offering
Memorandum), (vii) the fees and expenses of the Trustee, Collateral Agent and
Disbursement Agent, including the fees and disbursements of counsel for the
Trustee in connection with all of the Transaction Documents, (viii) the
reasonable fees and expenses of the Independent Construction Consultant, (ix)
any fees payable in connection with the rating of the Securities with the
ratings agencies and the listing of the Securities with the PORTAL Market, (x)
any filing fees incident to, and any reasonable fees and disbursements of
counsel to the Initial Purchaser in connection with the review by the NASD, if
any, of the terms of the sale of the Securities and (xi) all fees and expenses
(including reasonable fees and expenses of counsel) of the Authority and the
Guarantors in connection with approval of the Securities by the Depositary for
"book-entry" transfer, and the performance by the Authority and the Guarantors
of their respective other obligations under this Agreement. Except as provided
in this Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchaser shall
pay its own expenses and all expenses incident to the "road show" for the
offering of the Securities, including the cost of any chartered airplane or
other transportation.

      SECTION 5. Conditions of the Obligations of the Initial Purchaser. The
obligations of the Initial Purchaser to purchase and pay for the Securities as
provided herein on the Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Authority, the Manager and the
Guarantors set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and to the timely performance by the Authority,
the Guarantors and the Manager of their covenants and other obligations
hereunder, and to each of the following additional conditions:

      (a) Pokagon Parties Representations. All of the representations and
warranties of the Pokagon Parties shall be true and correct on the date hereof
and on the Closing Date with the same force and effect as if made on and as of
the date hereof and the Closing Date, respectively. The Pokagon Parties shall
have performed or complied with all of the agreements and covenants herein
contained and required to be performed or complied with by each of them at or
prior to the Closing Date.

      (b) Manager Representations. All of the representations and warranties of
the Manager shall be true and correct on the date hereof and on the Closing Date
with the same force and effect as if made on and as of the date hereof and the
Closing Date, respectively. The Manager shall have performed or complied with
all of the agreements and covenants herein contained and required to be
performed or complied with by each of them at or prior to the Closing Date.

                                      -22-
<PAGE>

      (c)   Offering Memorandum. The Final Offering Memorandum shall have been
printed and copies distributed to the Initial Purchaser not later than 10:00
a.m., New York City time, on the second day following the date of this Agreement
or at such later date and time as to which the Initial Purchaser may agree.

      (d)   No Action. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance of
the Notes; no action, suit or proceeding shall have been commenced and be
pending against or affecting or, to the knowledge of the Tribe, the Authority or
the Manager, threatened against the Tribe, Authority or the Manager before any
court or arbitrator or any governmental body, agency or official that if
adversely decided would reasonably be expected to have a Pokagon Parties
Material Adverse Change or a Manager Material Adverse Change, respectively.

      (e)   Accountants' Comfort Letter. On the date hereof, the Initial
Purchaser shall have received from McGladrey & Pullen LLP, independent public or
certified public accountants for the Authority, a "comfort letter" dated the
date hereof addressed to the Initial Purchaser, in form and substance
satisfactory to the Initial Purchaser, covering the financial information in the
Preliminary Offering Memorandum and any Pricing Supplement and other customary
matters. In addition, on the Closing Date, the Initial Purchaser shall have
received from such accountants, a "bring-down comfort letter" dated the Closing
Date addressed to the Initial Purchaser, in form and substance satisfactory to
the Initial Purchaser, in the form of the "comfort letter" delivered on the date
hereof, except that (i) it shall cover the financial information in the Final
Offering Memorandum and any amendment or supplement thereto and (ii) procedures
shall be brought down to a date no more than 5 days prior to the Closing Date.

      (f)   No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the Closing Date:

            (i) in the judgment of the Initial Purchaser there shall not have
      occurred any Pokagon Parties Material Adverse Change or a Manager Material
      Adverse Change; and

            (ii) there shall not have occurred any downgrading, nor shall any
      notice have been given of any intended or potential downgrading or of any
      review for a possible change that does not indicate the direction of the
      possible change, in the rating accorded any securities or indebtedness of
      the Authority or any of its subsidiaries by any "nationally recognized
      statistical rating organization" as such term is defined for purposes of
      Rule 436 under the Securities Act.

      (g)   Opinion of Counsel for the Pokagon Parties. On the Closing Date, the
Initial Purchaser shall have received the favorable opinion of Faegre & Benson
LLP, counsel for the Tribe, the Authority and the Guarantor dated as of such
Closing Date, the form of which is attached as Exhibit A-1.

      (h)   Opinion of Michigan Counsel for the Authority and the Tribe. On the
Closing Date, the Initial Purchaser shall have received the favorable opinion of
Varnum Riddering

                                      -23-
<PAGE>

Schmidt & Howlett LLP, Michigan counsel for the Authority, dated as of such
Closing Date, the form of which is attached as Exhibit A-2.

      (i)   Opinion of Indiana Counsel for the Authority and the Tribe. On the
Closing Date, the Initial Purchaser shall have received the favorable opinion of
Varnum Riddering Schmidt & Howlett LLP, Indiana counsel for the Authority, dated
as of such Closing Date, the form of which is attached as Exhibit A-3.

      (j)   Opinion of Counsel for the Manager. On the Closing Date, the Initial
Purchaser shall have received the favorable opinion of Gray, Plant, Mooty, Mooty
& Bennett, Minnesota counsel for the Manager, dated as of such Closing Date, the
form of which is attached as Exhibit A-4.

      (k)   Opinion of Special Counsel for the Manager. On the Closing Date, the
Initial Purchaser shall have received the favorable opinion of Hamilton Quigley
& Twait, PLC, special counsel for the Manager, dated as of such Closing Date,
the form of which is attached as Exhibit A-5

      (l)   Opinion of New York Counsel for the Manager. On the Closing Date,
the Initial Purchaser shall have received the favorable opinion of Duane Morris
LLP, New York counsel for the Manager, dated as of such Closing Date, the form
of which is attached as Exhibit A-6 .

      (m)   Opinion of Counsel for the Initial Purchaser. On the Closing Date,
the Initial Purchaser shall have received the favorable opinion of White & Case
LLP, counsel for the Initial Purchaser, dated as of such Closing Date, with
respect to such matters as may be reasonably requested by the Initial Purchaser.

      (n)   Officers' Certificates. On the Closing Date, the Initial Purchaser
shall have received:

            (i) a written certificate executed by the Chairperson or President,
      or the holder of an equivalent office, of the Tribe, the Authority and
      each Guarantor and the Chief Financial Officer or Treasurer, or the holder
      of an equivalent office, of the Tribe, the Authority and each Guarantor,
      dated as of the Closing Date, to the effect set forth in Section 5(n)(ii)
      hereof, and further to the effect that:

            (a) for the period from and after the date of this Agreement and
      prior to the Closing Date there has not occurred any Pokagon Parties
      Material Adverse Change;

            (b) the representations, warranties and covenants of the Tribe, the
      Authority and each Guarantor set forth in Section 1 hereof were true and
      correct as of the Time of Execution and are true and correct as of the
      Closing Date with the same force and effect as though expressly made on
      and as of the Closing Date; and

            (c) the Tribe, the Authority and each Guarantor has complied with
      all the respective agreements and satisfied all the conditions on its part
      to be performed or satisfied at or prior to the Closing Date.

                                      -24-
<PAGE>

      (o)   Officers' Certificates. On the Closing Date, the Initial Purchaser
shall have received:

            (i) a written certificate executed by the President and the Chief
      Financial Officer of the Manager, dated as of the Closing Date, to the
      effect set forth in Section 5(k)(ii) hereof, and further to the effect
      that:

            (a) for the period from and after the date of this Agreement and
      prior to the Closing Date there has not occurred any Manager Material
      Adverse Change;

            (b) the representations, warranties and covenants of the Manager set
      forth in Section 1 hereof were true and correct as of the Time of
      Execution and are true and correct as of the Closing Date with the same
      force and effect as though expressly made on and as of the Closing Date;
      and

            (c) the Manager has complied with all the agreements and satisfied
      all the conditions on its part to be performed or satisfied at or prior to
      the Closing Date.

      (p)   PORTAL Listing. At the Closing Date, the Notes shall have been
designated for trading on the PORTAL Market.

      (q)   Other Financings. On or before the Closing Date, each of the Lakes
Gaming Notes and the Lakes Non-Gaming Notes (as described in the Offering
Memorandum) shall be funded in the amounts to be funded upon the consummation of
the offering of the Notes as set forth in "Sources and Uses" in the Offering
Memorandum. The FF&E Documents shall have been executed.

      (r)   Documents and Agreements. With respect to any Transaction Document
to be executed on the Closing Date, the Authority and each of the other parties
thereto shall have entered into each such Transaction Document to which each is
a party. With respect to any Material Agreement entered into prior to the
Closing Date, such Material Agreement shall be in full force and effect, and as
of the date hereof, except as otherwise disclosed in the Offering Memorandum,
there shall not be any defaults or events of default, what with notice, the
passage of time or otherwise could be a default, under any provisions of such
Material Agreements by any party hereto. The Initial Purchaser shall have
received executed copies of each Transaction Document and Material Agreement.

      (s)   Approval. The Authority shall have received all governmental and
regulatory approval required to be obtained prior to the Closing Date pursuant
to the Transaction Documents.

      (t)   Disputes. There shall be no significant or material disputes between
the Manager, the Tribe, the Authority, on the one hand, and
Christman/Krauss-Anderson, on the other hand, with respect to or arising out of
the Construction Agreement.

                                      -25-
<PAGE>

      (u)   Authority UCC-1. The Trustee shall have received executed copies of
each UCC-1 financing statement authorized by the Authority naming the Trustee as
secured party and filed in such jurisdictions as the Initial Purchaser may
reasonably require.

      (v)   Authority Security. All documents and agreements shall have been
filed, and other actions shall have been taken, as may be required to perfect
the security interests of the Trustee and to accord the Trustee the priorities
over other creditors of the Authority as contemplated by the Offering Memorandum
and Transaction Documents. All consents to assignment of documents and
agreements required by the Transaction Documents shall have been executed by the
third parties named therein.

      (w)   Proof of Insurance. On the Closing Date, the Initial Purchaser shall
have received proof of insurance of the Authority that satisfies the insurance
covenant in the Indenture.

      (x)   Additional Documents. On or before the Closing Date, the Initial
Purchaser and counsel for the Initial Purchaser shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.

      If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Initial
Purchaser by notice to the Authority and the Manager at any time on or prior to
the Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Sections 4, 6, 8 and 9 hereof shall at
all times be effective and shall survive such termination.

      SECTION 6. Reimbursement of Initial Purchaser' Expenses.

      (a)   Pokagon Parties. If this Agreement is terminated by the Initial
Purchaser pursuant to Section 5 or 10 hereof, unless the sale to the Initial
Purchaser of the Securities on the Closing Date is not consummated because of
any refusal, inability or failure on the part of the Manager to perform any
agreement herein or to comply with any provision hereof, each of the Pokagon
Parties agrees to reimburse the Initial Purchaser upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the Initial
Purchaser in connection with the proposed purchase and the offering and sale of
the Securities, including, without limitation, fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.

      (b)   Manager. If this Agreement is terminated by the Initial Purchaser
pursuant to Section 5 or 10 hereof because of any refusal, inability or failure
on the part of the Manager to perform any agreement herein or to comply with any
provision hereof, the Manager agrees to reimburse the Initial Purchaser upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Initial Purchaser in connection with the proposed purchase and the
offering and sale of the Securities, including, without limitation, fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.

                                      -26-
<PAGE>

      SECTION 7. Offer, Sale and Resale Procedures. Each of the Initial
Purchaser, the Pokagon Parties and the Manager hereby agree to observe the
following procedures in connection with the offer and sale of the Securities:

            (A) Offers and sales of the Securities will be made only by the
      Initial Purchaser or Affiliates thereof qualified to do so in the
      jurisdictions in which such offers or sales are made. Each such offer or
      sale shall only be made to persons whom the offeror or seller reasonably
      believes to be (i) Qualified Institutional Buyers to whom notice is given
      that the offeror or seller is relying upon the exemption from Section 5 of
      the Securities Act provided by Rule 144A under the Securities Act or (ii)
      non-U.S. persons outside the United States to whom the offeror or seller
      reasonably believes offers and sales of the Securities may be made in
      reliance upon Regulation S upon the terms and conditions set forth in
      Annex I hereto, which Annex I is hereby expressly made a part hereof.

            (B) The Securities will be offered by approaching prospective
      Subsequent Purchasers on an individual basis. No general solicitation or
      general advertising (within the meaning of Rule 502 under the Securities
      Act) will be used in the United States in connection with the offering of
      the Securities.

            (C) Upon original issuance by the Authority, and until such time as
      the same is no longer required under the applicable requirements of the
      Securities Act, the Notes (and all securities issued in exchange therefor
      or in substitution thereof) shall bear the following legend:

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE ISSUER OR ANY AFFILIATE
THEREOF, (B) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) IN AN OFFSHORE TRANSACTION (AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH THE REGULATION S
UNDER THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE RIGHTS OF THE ISSUER AND THE WITHIN MENTIONED TRUSTEE PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY
OF AN OPINION OF

                                      -27-
<PAGE>

COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE."

      Following the sale of the Securities by the Initial Purchaser to
Subsequent Purchasers pursuant to the terms hereof, the Initial Purchaser shall
not be liable or responsible to the Authority for any losses, damages or
liabilities suffered or incurred by the Authority, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Security.

      SECTION 8. Indemnification.

      (a) Indemnification of the Initial Purchaser by the Authority and the
Guarantors. Each of the Authority and the Guarantors, jointly and severally,
agrees to indemnify and hold harmless the Initial Purchaser, its directors,
officers and employees, and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act and the Exchange Act against
any loss, claim, damage, liability or expense, as incurred, to which the Initial
Purchaser, director, officer, employee or controlling person may become subject,
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Authority), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Pricing Disclosure Package or the Final Offering Memorandum (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading and to
reimburse the Initial Purchaser and each such director, officer, employee or
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by Banc of America Securities LLC) as such
expenses are reasonably incurred by the Initial Purchaser or such director,
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Authority by the Initial Purchaser expressly for use in the Pricing Disclosure
Package or the Final Offering Memorandum (or any amendment or supplement
thereto). The indemnity agreement set forth in this Section 8(a) shall be in
addition to any liabilities that the Authority may otherwise have.

      (b) Indemnification of the Initial Purchaser and the Pokagon Parties by
the Manager. The Manager agrees to indemnify and hold harmless each of the
Initial Purchaser and the Pokagon Parties, their directors, officers and
employees, and each person, if any, who controls each of the Initial Purchaser
and the Pokagon Parties within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Initial Purchaser or Pokagon Party, director, officer, employee or

                                      -28-
<PAGE>

controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Manager), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Pricing Disclosure Package or the
Final Offering Memorandum (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and to reimburse each of the Initial Purchaser and
Pokagon Party and each such director, officer, employee or controlling person
for any and all expenses (including the reasonable fees and disbursements of
counsel chosen by Banc of America Securities LLC and such Pokagon Party) as such
expenses are reasonably incurred by the Initial Purchaser or Pokagon Party or
such director, officer, employee or controlling person, upon receipt of
reasonable documentation evidencing such expenses, in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Authority by the Initial Purchaser expressly for use in the Pricing
Disclosure Package or the Final Offering Memorandum (or any amendment or
supplement thereto). The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that the Manager may otherwise have.

      (c) Indemnification of the Authority, the Manager, the Tribal Council
Members and the Guarantors. The Initial Purchaser agrees to indemnify and hold
harmless the Authority, the Manager, the Tribal Council Members and each
Guarantor, each of their respective directors, officers, employees and each
person, if any, who controls the Authority, the Manager, the Tribal Council
Members or any Guarantor within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Authority, the Manager, the Tribal Council Members, any
Guarantor or any such director, officer, employee or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Initial Purchaser), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Pricing Disclosure Package or the Final
Offering Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Pricing Disclosure Package or the Final Offering
Memorandum (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Authority by the Initial
Purchaser expressly for use therein; and to reimburse the Authority, the
Manager, the Tribal Council Members and/or the Guarantors, as applicable, and
each such director, officer, employee or controlling person for any and all

                                      -29-
<PAGE>

expenses (including the fees and disbursements of counsel chosen by such party)
as such expenses are reasonably incurred by each such party or such director,
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. Each of the Authority, the Manager, the Tribal
Council Members and the Guarantors hereby acknowledges that the only information
that the Initial Purchaser has furnished to the Authority expressly for use in
the Pricing Disclosure Package or the Final Offering Memorandum (or any
amendment or supplement thereto) are the statements set forth in the eighth and
last paragraphs under the caption "Plan of Distribution" in the Preliminary
Offering Memorandum and the Final Offering Memorandum. The indemnity agreement
set forth in this Section 8(c) shall be in addition to any liabilities that the
Initial Purchaser may otherwise have.

      (d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party, representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.

                                      -30-
<PAGE>

      (e) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by this
Section 8, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request or disputed in
good faith the indemnified party's entitlement to such reimbursement prior to
the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent (i) includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does not
include any statements as to or any findings of fault, culpability or failure to
act by or on behalf of any indemnified party.

      SECTION 9. Contribution. If the indemnification provided for in Section 8
hereof is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by each of (A) the Pokagon Parties, (B) the Manager
and (C) the Initial Purchaser from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of (A) the Pokagon Parties, (B) the Manager and (C) the Initial
Purchaser in connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by each of (A) the Pokagon
Parties, (B) the Manager and (C) the Initial Purchaser in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Authority, and the total discount received by the Initial Purchaser bear
to the aggregate initial offering price of the Securities. The relative fault of
each of (A) the Pokagon Parties, (B) the Manager and (C) the Initial Purchaser
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by each of (A) the
Pokagon Parties, (B) the Manager and (C) the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or inaccuracy.

                                      -31-
<PAGE>

      The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8 hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8 hereof with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8 hereof for purposes of
indemnification.

      The Authority, the Manager, the Guarantors and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 9.

      Notwithstanding the provisions of this Section 9, the Initial Purchaser
shall be required to contribute any amount in excess of the discount received by
the Initial Purchaser in connection with the Securities distributed by it. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
of the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each director, officer and employee of the Initial Purchaser and each person, if
any, who controls the Initial Purchaser within the meaning of the Securities Act
and the Exchange Act shall have the same rights to contribution as the Initial
Purchaser, and each director, officer, employee or holder of an equivalent
office, of the Authority, the Manager or any Guarantor, and each Tribal Council
Member and each person, if any, who controls the Authority, the Manager or any
Guarantor with the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as the Authority, the Manager and the
Guarantors.

      SECTION 10. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Initial Purchaser by notice given to the
Authority or the Manager if at any time: (i) trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such quotation system or stock exchange by the Commission
or the NASD, (ii) a general banking moratorium shall have been declared by any
of federal, New York or Michigan authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States' or international political,
financial or economic conditions, as in the judgment of the Initial Purchaser is
material and adverse and makes it impracticable or inadvisable to proceed with
the offering sale or delivery of the Securities in the manner and on the terms
described in the Pricing Disclosure Package or to enforce contracts for the sale
of securities; (iv) in the judgment of the Initial Purchaser there shall have
occurred any Pokagon Parties Material Adverse Change or Manager Material Adverse
Change; or (v) the Authority shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of
the Initial Purchaser may interfere materially with the conduct of the business
and operations of the Authority regardless of whether or not such loss shall
have been insured. Any termination pursuant to this Section 10

                                      -32-
<PAGE>

shall be without liability on the part of (i) the Authority, the Manager or any
Guarantor to any Initial Purchaser, except that the Authority, the Manager and
the Guarantors shall be obligated to reimburse the expenses of the Initial
Purchaser pursuant to Sections 4 and 6 hereof, (ii) the Initial Purchaser to the
Authority and the Manager, or (iii) any party hereto to any other party except
that the provisions of Sections 8 and 9 hereof shall at all times be effective
and shall survive such termination.

      SECTION 11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Authority, the Manager, the Guarantors, their respective
officers and the Initial Purchaser set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Initial Purchaser, the Authority, the Manager, any
Guarantor or any of their partners, officers or directors or any controlling
person, as the case may be, and will survive delivery of and payment for the
Securities sold hereunder and any termination of this Agreement.

      SECTION 12. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered, couriered or facsimiled and confirmed to the
parties hereto as follows:

      If to the Initial Purchaser:

            Banc of America Securities LLC
            9 West 57th Street
            New York, New York 10019
            Attention: High Yield Capital Markets

      with a copy to:

            White & Case LLP
            1155 Avenue of the Americas
            New York, New York 10036
            of counsel for the Initial Purchaser
            Facsimile: 212-354-8113
            Attention: Gary Kashar

      If to the Tribe, the Authority or the Guarantors:

            Pokagon Band of Potawatomi Indians
            58620 Sink Road
            Dowagiac, Michigan 49047
            Phone: 269-782-6323
            Attention: Tribal Council Chairperson

      and:

                                      -33-
<PAGE>

            Pokagon Gaming Authority
            11111 Wilson Road
            New Buffalo, Michigan 49117
            Phone: 269-782-6323
            Attention: President and Chief Executive Officer

      with a copy to:

            General Counsel
            Pokagon Band of Potawatomi Indians
            P.O. Box 180
            Dowagiac, Michigan 49047
            Facsimile: 269-782-7988

      with a copy to:

            Drummond Woodsum & MacMahon
            P.O. Box 9781
            Portland, Maine 04104
            Facsimile: 207-772-3627
            Attention: Robert Gips

      with a copy to:

            Faegre & Benson LLP
            2200 Wells Fargo Center
            90 South Seventh Street
            Minneapolis, Minnesota 55402
            Facsimile: 612-766-1600
            Attention: Kent Richey

      If to the Manager:

            Great Lakes Gaming of Michigan, LLC
            Lakes Entertainment, Inc.
            130 Cheshire Lane
            Minnetonka, Minnesota 55305
            Facsimile: 952-449-9353
            Attention: Timothy J. Cope

      with a copy to:

            Lakes Entertainment, Inc.
            130 Cheshire Lane

                                      -34-
<PAGE>

            Minnetonka, Minnesota  55305
            Facsimile: 952-449-9353
            Attention: Damon Schramm

      with a copy to:

            Hamilton Quigley & Twait, PLC
            First National Bank Building, Suite W1450
            332 Minesota Street
            Saint Paul, Minnesota 55101
            Facsimile: 651-602-9976
            Attention: Kevin Quigley, Esq.

      with a copy to:

            Gray Plant Mooty
            80 South 8th Street
            500 I.D.S. Center
            Minneapolis, Minnesota 55402
            Facsimile: 612-632-4050
            Attention: Daniel R. Tenenbaum, Esq.

      Any party hereto may change the address or facsimile number for receipt of
communications by giving written notice to the others.

      SECTION 13. Successors: No Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and to the
benefit of the indemnified parties referred to in Sections 8 and 9 hereof, and
in each case their respective successors, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
Subsequent Purchaser or other purchaser of the Securities as such from the
Initial Purchaser merely by reason of such purchase. Except as set forth above,
no person (including, without limitation, the Subsequent Purchasers) shall be
deemed to be a third-party beneficiary to this Agreement or to have any rights
hereunder whatsoever.

      SECTION 14. Partial Unenforceability. The invalidity or unenforceability
of any section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph or provision hereof.
If any section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.

      SECTION 15. Governing Law Provisions. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state without regard
to conflicts of law principles thereof (other than Section 5-1401 of the New
York General Obligations Law).

                                      -35-
<PAGE>

      SECTION 16. Sovereign Immunity Waiver

      (a)   Waiver of Sovereign Immunity. None of the Authority, Guarantors or
the Tribe consents to any suit, arbitration, legal process, enforcement
proceeding or any dispute resolution method, except that each Pokagon Party
expressly and irrevocably waives each of its respective sovereign immunity (and
any defense based thereon) from unconsented suit, arbitration or other legal
proceedings as authorized herein, provided that:

            (i) the waiver is expressly limited to actions brought against a
      Pokagon Party in compliance with this Agreement by persons expressly
      stated to benefit from this Agreement;

            (ii) the action is commenced within three years after the occurrence
      of the facts that are the primary basis of the action, or if later, three
      years from the date those facts reasonably should have been discovered by
      the party bringing the action;

            (iii) the action is only to (A) interpret or enforce the provisions
      of this Agreement, (ii) enforce and execute any order, judgment or ruling
      resulting from such an action or arbitration award, or (iii) enforce any
      rights under the Indian Civil Rights Act, 28 U.S.C. Section 1301 et seq.;

            (iv) the action does not include a claim for punitive or
      consequential damages or any claim arising under federal or state
      securities laws; and

            (v) any order, judgment, ruling or other remedies related to an
      action shall be enforceable only as against those assets identified in the
      "Limited Recourse" provision of the Indenture.

      (b)   Jurisdiction. Subject to the foregoing limitations on each Pokagon
Party's waiver of sovereign immunity, each Pokagon Party, the Initial Purchaser
and the Manager agree to irrevocably and unconditionally submit, for itself and
its property, to the exclusive jurisdiction of the United States District Court,
Southern District of New York, and any appellate court from which any appeals
therefrom are available ("Federal Courts"), or if those courts lack jurisdiction
over the action, then the courts of the State of New York sitting in the City of
New York, County of New York, and any appellate court from which any appeals
therefrom are available ("New York State Courts"), or in the event that the
Federal Courts or the New York State Courts lack or decline jurisdiction, then
the courts of the State of Michigan and any appellate court from which any
appeals therefrom are available ("Michigan State Courts"), or in the event that
any of the foregoing courts lack or decline jurisdiction, then the tribal courts
of the Tribe, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each Pokagon
Party, the Initial Purchaser and the Manager irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
and determined in such court. Each of the parties to this Agreement have agreed
that a final judgment in any such action or proceeding may be enforced by any
court of competent jurisdiction.

                                      -36-
<PAGE>

      (c) Waiver of Exhaustion of Tribal Remedies. Each Pokagon Party expressly
waives, to the fullest extent it may legally and effectively do so, any right
either may otherwise have to require any suit, arbitration, legal process or
enforcement proceeding be considered or heard first in any tribal court of the
Tribe, now or hereafter existing, whether because of the doctrine of exhaustion
of tribal remedies or as a matter of comity or abstention.

      (d) Venue. Each of the parties to this Agreement hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Federal Court, New York State Court or Michigan State Courts. Each of the
parties to this Agreement agree to irrevocably waive, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

      (e) Service of Process. Each of the parties to this Agreement hereby
irrevocably consent to service of process in the manner provided for notices in
Section 12 hereof. Nothing in this Agreement will affect the right of any party
hereto to serve process in any other manner permitted by law.

      (f) Final Judgment. For the purposes of this Agreement, each of the
parties hereto agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

      (g) No Limit on Ability to Compel Arbitration. Notwithstanding any of this
Section 16, nothing in this Agreement limits the ability of any party hereto to
move to compel arbitration or move to stay or dismiss a lawsuit in favor of
arbitration, and each Pokagon Party's waiver of sovereign immunity expressly
extends to such actions.

      SECTION 17. Arbitration. Notwithstanding the irrevocable submission to the
jurisdiction of the courts described above by each of the parties hereto, each
such party irrevocably and unconditionally agrees that any party to any such
instrument may (i) submit any controversy, claim, suit or other action between
or among the parties thereto arising out of or relating to this Agreement, or
the enforcement of rights hereunder, to binding arbitration or (ii) remove any
such action brought by any other party in any forum other than an arbitration
contemplated hereby and submit such action to be determined by binding
arbitration. Any arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA").
Any controversy concerning whether an issue is arbitrable shall be determined by
the arbitrators in accordance with the AAA Commercial Arbitration Rules.
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy will not constitute a waiver of
the right of any party hereto to submit the controversy or claim to arbitration
if any other party contests such action for judicial relief. Any arbitration
undertaken pursuant this Agreement will take place in the City of New York,
County of New York.

                                      -37-
<PAGE>

      SECTION 18. No Advisory or Fiduciary Responsibility. The Authority
acknowledges and agrees that in connection with all aspects of each transaction
contemplated by this Agreement the Authority and the Initial Purchaser have an
arm's length business relationship that creates no fiduciary duty on the part of
the Initial Purchaser and each expressly disclaims any fiduciary relationship.

      SECTION 19. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.

                                      -38-
<PAGE>

      If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Authority the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.

                                Very truly yours,

                                POKAGON BAND OF POTAWATOMI INDIANS

                                By: /s/ John Miller
                                    --------------------------------------------
                                    Name: John Miller
                                    Title: Chairperson

                                POKAGON GAMING AUTHORITY,
                                as Issuer

                                By: /s/ John Miller
                                    --------------------------------------------
                                    Name: John Miller
                                    Title: President and Chief Executive Officer

                                POKAGON PROPERTIES, LLC and
                                FILBERT LAND DEVELOPMENT, LLC,
                                as Guarantors

                                By: Pokagon Gaming Authority,
                                      Sole Member

                                By: /s/ John Miller
                                    --------------------------------------------
                                    Name: John Miller
                                    Title: President and Chief Executive Officer

                                GREAT LAKES GAMING OF MICHIGAN, LLC,
                                as Manager

                                By: /s/ Timothy J. Cope
                                    --------------------------------------------
                                    Name: Timothy J. Cope
                                    Title: President and Chief Financial Officer

                                      -39-
<PAGE>

      The foregoing Purchase Agreement is hereby confirmed and accepted by the
Initial Purchaser as of the date first above written.

BANC OF AMERICA SECURITIES LLC

By: /s/ R. Sean Snipes
    --------------------------------
    Name:  R. Sean Snipes
    Title: Managing Director

                                      -40-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>12
<FILENAME>c06339exv10w11.txt
<DESCRIPTION>NOTES DOMINION ACCOUNT AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.11

                        NOTES DOMINION ACCOUNT AGREEMENT

      THIS DOMINION ACCOUNT AGREEMENT, (the "Agreement"), dated as of June 22,
2006 (the "Effective Date"), between the POKAGON GAMING AUTHORITY (the
"Authority"), GREAT LAKES GAMING OF MICHIGAN, LLC, a Minnesota limited liability
company ("Manager"), U.S. BANK NATIONAL ASSOCIATION, as collateral agent (in
such capacity, the "Collateral Agent") for the First Lien Secured Parties
(defined below) and trustee for the Senior Notes (defined below) under the
Indenture (defined below), and FIFTH THIRD BANK, in its capacity as a "bank" as
defined in Section 9-102 of the UCC (in such capacity, the "Bank").

                                   WITNESSETH:

      WHEREAS, the Authority is a wholly-owned unincorporated instrumentality of
the Pokagon Band of Potawatomi Indians ("Tribe"), a federally recognized Indian
tribe; and

      WHEREAS, the Tribe has the inherent power to conduct and regulate gaming
on its lands, subject only to the restrictions imposed by the Indian Gaming
Regulatory Act of 1988, Public Law 100-497 ("IGRA"); and

      WHEREAS, in accordance with IGRA, the Tribe has entered into a
Tribal-State Compact for the Conduct of Class III Gaming within the State of
Michigan; and

      WHEREAS, the Tribe, acting through the Authority, proposes to develop,
construct and operate, a full service gaming, hotel and entertainment resort and
certain related amenities located in New Buffalo Township, Michigan (the
"Facility") on lands the U.S. Department of the Interior has taken into trust;
and

      WHEREAS, the Tribe and Lakes Entertainment, Inc., f/k/a Lakes Gaming, Inc.
("Lakes") entered into a Development Agreement dated as of July 8, 1999, the
rights and obligations of Lakes under which were thereafter assumed by the
Manager pursuant to an Assignment and Assumption Agreement dated October 16,
2000 (as amended, the "Manager Assumption") among the Tribe, Lakes and the
Manager (such Development Agreement, as amended and restated on October 16,
2000, December 22, 2004 and January 25, 2006, as amended as of June 22, 2006, as
further amended from time to time, and as subject to the Assignment and
Assumption Agreement referred to below, the "Development Agreement"), pursuant
to which the Manager has made and agreed to, among other things, make certain
loans to the Tribe in connection with the development, construction and
equipping of the Facility and certain related amenities; and

      WHEREAS, the Tribe and Lakes entered into a Management Agreement dated as
of July 8, 1999, the rights and obligations of Lakes under which were thereafter
assumed by the Manager pursuant to the Manager Assumption (such Management
Agreement, as amended and restated on October 16, 2000, December 22, 2004 and
January 25, 2006, as amended on June 1, 2006, as further amended from time to
time, and as subject to the Assignment and Assumption Agreement referred to
below, the "Management Agreement"), pursuant to which the Tribe and

                                       1
<PAGE>

the Manager have agreed that the Manager shall manage the Facility and certain
related amenities as more specifically set forth therein; and

      WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of
May 25, 2006 (the "Assignment and Assumption Agreement"), the Tribe assigned,
and the Authority assumed, the rights and obligations of the Tribe under the
Management Agreement, the Development Agreement, and the other Transaction
Documents (as defined in the Development Agreement); and

      WHEREAS, concurrently herewith, the Authority is issuing $305,000,000
aggregate principal amount of its 10 3/8% Senior Notes due 2014 (together with
all other notes issued under the Indenture (as defined below), including all
notes issued in exchange or replacement thereof, the "Senior Notes"), pursuant
to that certain Indenture dated as of June 22, 2006, between the Authority, the
Trustee (as defined below) and the Guarantors (as in effect on the date hereof,
the "Indenture"), to finance costs to be incurred in connection with the
acquisition, financing, design, development, construction, equipping and opening
of the Facility; and

      WHEREAS, concurrently herewith, the trustee under the Indenture (the
"Trustee"), the Collateral Agent and the Manager entered into the Intercreditor
and Subordination Agreement to (a) appoint the Collateral Agent as the agent for
the Trustee for purposes of entering into the security documents and to receive,
maintain, administer, enforce and distribute certain collateral shared by the
Trustee and the Manager as provided in the Intercreditor and Subordination
Agreement, (b) set forth certain provisions relating to the respective rights in
such collateral, the exercise of remedies upon the occurrence of an event of
default, the application of proceeds of enforcement and certain other matters
and (c) set forth certain provisions relating to the subordination of the
Manager Obligations to the First Lien Secured Obligations, and certain other
matters with respect thereto; and

      WHEREAS, the Authority, the Manager and the Collateral Agent desire to
enter into this Agreement in order to (a) provide for the receipt, deposit and
disbursement of Gross Revenues, (b) grant the Collateral Agent, for the benefit
of the First Lien Secured Parties, a first priority security interest in such
Gross Revenues and certain related collateral and proceeds thereof, (c) grant
the Manager a second priority security interest in such Gross Revenues that
constitute Enterprise Revenues and certain related collateral and proceeds
thereof (subject to subordination as provided herein and subordination of the
Manager Obligations to the First Lien Secured Obligations pursuant to the
Intercreditor and Subordination Agreement), and (d) implement the terms of the
Intercreditor and Subordination Agreement, each for the purposes and in
accordance with the terms set forth herein.

      NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

                                       2
<PAGE>

      Section 1.1 Unless the context otherwise requires, capitalized terms which
are not defined herein shall have the meaning ascribed to them in the
Development Agreement or the Management Agreement as in effect on the date
hereof, as applicable.

      Section 1.2 Defined Terms. The following terms when used herein shall have
the following meanings:

      "Agreement" shall have the meaning set forth in the preamble.

      "Assignment and Assumption Agreement" shall have the meaning set forth in
the recitals.

      "Authority" shall have the meaning set forth in the preamble.

      "Bank" shall have the meaning set forth in the preamble.

      "Business Day" means a day other than (i) a Saturday or Sunday and (ii)
any day on which banks located in the State of Michigan are required or
authorized by law to remain closed.

      "Cash Collateral and Disbursement Agreement" shall mean the Cash
Collateral and Disbursement Agreement, dated as of June 22, 2006, between the
Authority, the Trustee, U.S. Bank National Association, as disbursement agent,
and the other parties thereto.

      "Cash Equivalents" shall have the meaning assigned to such term in the
Indenture.

      "Collateral" means the Gross Revenues and the Dominion Account and the
cash and/or cash equivalents and other investment property deposited or credited
thereto from time to time, each whether now or hereafter owned, existing,
arising or acquired, including but not limited to the Enterprise Collateral, and
including any proceeds of the foregoing.

      "Collateral Agent" shall have the meaning set forth in the preamble.

      "Collateral Agent Deposit Account" shall have the meaning set forth in
Section 3.4(a).

      "Collateral Agent Notice of Exclusive Control" shall have the meaning set
forth in Section 2.1(a).

      "Development Agreement" shall have the meaning set forth in the recitals.

      "Discharge" shall have the meaning assigned to such term in the
Intercreditor and Subordination Agreement.

      "Dominion Account" means, collectively, that certain Account No. 716128715
owned and maintained by the Authority with the Bank formed by and subject to the
terms of this Agreement, together with (i) any sub-accounts with the Bank
related thereto, (ii) any replacement accounts with the Bank related thereto and
(iii) any other account with the Bank in which investments made pursuant to this
Agreement or other documentation acceptable to the

                                       3
<PAGE>

Collateral Agent and the Manager are held; it being understood and agreed that
the Bank will designate any account referred to in clauses (i) through (iii) as
constituting part of the Dominion Account subject to the terms and provisions of
this Agreement.

      "Effective Date" shall have the meaning set forth in the preamble.

      "Enterprise" shall have the meaning assigned to such term in the
Management Agreement and which shall include, without limitation, the Facility.

      "Enterprise Collateral" means the Enterprise Revenues and the Dominion
Account and the cash and/or cash equivalents and other investment property
deposited or credited thereto with respect to the Enterprise Revenues from time
to time, each whether now or hereafter owned, existing, arising or acquired, and
including any proceeds of the foregoing.

      "Enterprise Revenues" shall mean the Gross Revenues of the Enterprise.

      "Facility" shall have the meaning set forth in the recitals.

      "FF&E Security Agreement" shall mean the Security Agreement, dated as of
June 22, 2006, between the Authority and Wells Fargo Bank Northwest, National
Association, as in effect on the date hereof.

      "Financing Statements" shall have the meaning set forth in Section 2.1(b).

      "First Lien Secured Obligations" shall have the meaning assigned to such
term in the Intercreditor and Subordination Agreement.

      "First Lien Secured Obligations Event of Default" shall have the meaning
set forth in Section 5.1(b).

      "First Lien Secured Obligations Event of Default Period" shall mean the
period commencing as soon as practicable upon physical receipt by the Bank of a
Collateral Agent Notice of Exclusive Control, but in no event later than the
second business day following such receipt, and ending on the date that the Bank
receives written instruction from the Collateral Agent that the First Lien
Secured Obligations Event of Default set forth in such the Collateral Agent
Notice of Exclusive Control has been cured or otherwise waived by the Collateral
Agent.

      "First Lien Secured Parties" shall have the meaning assigned to such term
in the Intercreditor and Subordination Agreement.

      "Gross Revenues" means all revenues of any nature of the Authority and the
Guarantors (as such term is defined in the Indenture) on a consolidated basis,
including, without limitation, the net win from gaming activities which is the
difference between gaming wins and losses before deducting costs and expenses,
food and beverage sales and other rental or other receipts from lessees,
sublessees, licensees and concessionaires (but not the gross receipts of such
lessees, sublessees, licensees and concessionaires provided that such lessees,
sublessees, licensees and concessionaires are not Affiliates or Insiders of the
Manager or Lakes), and revenue recorded

                                       4
<PAGE>

from Promotional Allowances, but excluding any Permitted Taxes, Net Proceeds and
Net Loss Proceeds (as the foregoing terms are defined in the Indenture). It is
understood and agreed that all net proceeds of asset sales and insurance and
condemnation events (comprising Net Proceeds and Net Loss Proceeds) shall be
deposited into an account pledged to the Collateral Agent for the benefit of the
First Lien Secured Parties.

      "Guarantors" shall mean Pokagon Properties, LLC, a Michigan limited
liability company, and Filbert Land Development, LLC, an Indiana limited
liability company.

      "IGRA" shall have the meaning set forth in the recitals.

      "Indenture" shall have the meaning set forth in the recitals.

      "Intercreditor and Subordination Agreement" means the Intercreditor and
Subordination Agreement between the Collateral Agent, the Trustee and the
Manager dated as of June 22, 2006.

      "Lakes" shall have the meaning set forth in the recitals.

      "Management Agreement" shall have the meaning set forth in the recitals.

      "Manager" shall have the meaning set forth in the preamble.

      "Manager Assumption" shall have the meaning set forth in the recitals.

      "Manager Event of Default" shall have the meaning set forth in Section
5.1(a).

      "Manager Notice of Exclusive Control" shall have the meaning set forth in
Section 3.3(a).

      "Manager Obligations" shall mean all amounts owing by the Authority or the
Tribe to the Manager with respect to the Lakes Development Note, the Lakes
Facility Note, the Non-Gaming Land Acquisition Line of Credit, the Transition
Loan Note, the Minimum Payments Note, the Lakes Working Capital Advance Note and
any other Transaction Documents (as each of such terms are defined in the
Development Agreement) and the Management Fee (as such term is defined in the
Management Agreement), together with any other Lakes Secured Obligations (as
defined in the Intercreditor and Subordination Agreement) and any costs,
expenses or other amounts hereafter owing by the Tribe or the Authority to the
Bank or the Manager pursuant to the terms of this Agreement, each of the
foregoing, whether now existing or hereafter incurred or arising.

      "Operating Expenses" shall have the meaning assigned to such term in the
Indenture.

      "Permitted Accounts" shall mean those security and deposit accounts of the
Authority permitted by the terms of the Indenture, the Cash Collateral and
Disbursement Agreement, the Security Agreement, and the "FF&E Proceeds Account"
established pursuant to the FF&E Security Agreement.

                                       5
<PAGE>

      "Security Agreement" shall mean the Security Agreement dated as of June
22, 2006, between the Authority, the Collateral Agent and the Guarantors.

      "Senior Notes" shall have the meaning set forth in the recitals.

      "Tribe" shall have the meaning set forth in the recitals.

      "Trustee" shall have the meaning set forth in the recitals.

                                    ARTICLE 2

                                GENERAL COVENANTS

      Section 2.1 Creation of Dominion Account/Control. (a) There is hereby
created with the Bank the Dominion Account in the name of the Authority, which
account is subject to the terms and conditions of this Agreement. The Bank shall
deposit into the Dominion Account, as received, each and every amount and item
delivered to the Bank. Subject to the following sentence herein regarding a
Collateral Agent Notice of Exclusive Control, only the Manager shall have the
right and authority to make withdrawals from or exercise any other rights with
respect to the Dominion Account, and the Bank shall comply with any instructions
of the Manager with respect to the disposition of the funds in the Dominion
Account, without further consent by the Authority, the Collateral Agent or any
other person (subject to any such Collateral Agent Notice of Exclusive Control).
Notwithstanding the foregoing, if at any time the Bank receives a notice
originated by the Collateral Agent of a First Lien Secured Obligations Event of
Default (a "Collateral Agent Notice of Exclusive Control"), which the Collateral
Agent agrees it may only give following the occurrence and during the
continuance of such a First Lien Secured Obligations Event of Default, then
during any First Lien Secured Obligations Event of Default Period, (A) the
Collateral Agent shall have the sole right and authority to make withdrawals
from or exercise any other rights with respect to the Dominion Account and, (B)
the Bank shall comply with any instructions of the Collateral Agent with respect
to disposition of the funds in the Dominion Account without further consent by
the Authority, the Manager or any other person. Prior to the delivery of a
Collateral Agent Notice of Exclusive Control, the Collateral Agent may not issue
instructions directing the disposition of funds in the Dominion Account.
Following the delivery of a Collateral Agent Notice of Exclusive Control, the
Manager may not issue instructions directing the disposition of funds in the
Dominion Account. Notwithstanding the foregoing, (i) if the Collateral Agent
issues instructions directing the disposition of funds in the Dominion Account
prior to the delivery of a Collateral Agent Notice of Exclusive Control and such
instructions conflict with any instructions issued by the Manager, if
applicable, the Bank shall follow the instructions issued by the Manager, and
(ii) if the Manager issues instructions directing the disposition of funds in
the Dominion Account following the delivery of a Collateral Agent Notice of
Exclusive Control and such instructions conflict with any instructions issued by
the Collateral Agent, if applicable, the Bank shall follow the instructions
issued by the Collateral Agent.

      (b) Agency for Control and Perfection. The Manager and the Collateral
Agent agree, pursuant to Section 5.5 of the Intercreditor and Subordination
Agreement, that, solely for

                                       6
<PAGE>

purposes of perfecting the security interests granted pursuant to this
Agreement, each shall act as agent for both the other and itself.

      (c) Financing Statements/Legal Opinion. The Bank hereby acknowledges the
security interests in the Collateral granted to the Collateral Agent by the
Authority and the security interest in the Enterprise Collateral granted to the
Manager by the Authority. The Authority authorizes, and in addition shall cause
to be delivered to the Collateral Agent and the Manager on the date of execution
of this Agreement or thereafter as the Collateral Agent or the Manager may
request, (a) such financing statements and similar documents necessary to
perfect the security interest granted to the Collateral Agent and the Manager
pursuant to Sections 3.1 and 3.2 hereof (the "Financing Statements") and (b) a
legal opinion in form and substance reasonably acceptable to Banc of America
Securities LLC and the Manager, opining as to the due authorization, execution,
and delivery of this Agreement and the Financing Statements by the Authority,
together with opinions as to the Authority's sovereign immunity waiver and
noncontravention with laws and agreements.

      Section 2.2 Deposit of Gross Revenues. The Authority agrees that it will
direct the Manager and any other applicable parties to cause all Gross Revenues
to be transferred to the Bank on each Business Day for deposit into the Dominion
Account. If any Gross Revenues are inadvertently deposited in any other account,
the Authority shall immediately transfer or cause to be transferred all such
Gross Revenues or other Collateral, consisting of cash and other collected funds
directly by wire transfer of immediately available funds to the Dominion
Account, on each Business Day. In the event that the Authority receives any
payment that should have been deposited into the Dominion Account as provided
pursuant to this Agreement, the Authority agrees that it will hold such amounts
in trust for the benefit of the Collateral Agent and the Manager as set forth
herein, and shall not commingle any such funds with any of its funds or other
property and shall immediately transfer such amounts to the Bank for deposit
into the Dominion Account. The Authority agrees that the Bank's officers, agents
and employees are irrevocably authorized by it to endorse for payment to the
Bank any instruments received by the Bank for deposit into the Dominion Account.
Notwithstanding the foregoing, if the security interest granted pursuant to
Section 3.1 to the Collateral Agent is released or terminated for any reason
(including, without limitation, in connection with the payment in full of the
First Lien Secured Obligations), only Enterprise Revenues shall be required
thereafter to be deposited in the Dominion Account pursuant to this Section 2.2.

      Section 2.3 Withdrawals from Dominion Account. Subject at all times to a
Collateral Agent Notice of Exclusive Control of the Collateral Agent, the
Manager acknowledges and agrees with the Authority and the Collateral Agent that
during each calendar month it may only make such transfers from the Dominion
Account to and for the benefit of each of the Authority and the Manager in such
amounts, for such purposes, and as and when both (i) required or permitted under
the Management Agreement and (ii) permitted under the Indenture. Except during
any First Lien Secured Obligations Event of Default Period, in connection with
any such withdrawals and transfers and any other aspects of the Dominion
Account, the Bank shall acknowledge and comply with only the withdrawal requests
and other directions received from the Manager, except as provided in an
arbitration award in an arbitration to which the Manager and the Authority are
parties, and, for avoidance of doubt, the Bank shall so comply without

                                       7
<PAGE>

further consent by the Authority or any other person. Notwithstanding anything
contained in the foregoing, upon receipt by the Bank of a Collateral Agent
Notice of Exclusive Control, then during any subsequent First Lien Secured
Obligations Event of Default Period, the Bank shall acknowledge and comply with
only the withdrawal requests and other directions received from the Collateral
Agent; provided, however, that following the receipt by the Bank of a Collateral
Agent Notice of Exclusive Control, the Collateral Agent, on behalf of the
Authority and the Manager, shall make withdrawals from the Dominion Account for
the payment of certain Operating Expenses permitted to be paid pursuant to and
in accordance with the terms of the Indenture.

      Section 2.4 Interest. The Dominion Account shall bear interest, and
subject to Section 3.3 of this Agreement, funds in that account shall be
invested in Cash Equivalents that are reasonably acceptable to the Authority,
the Manager and the Bank and otherwise in conformity with the terms of the
Indenture. All interest accruing with respect to amounts now or hereafter on
deposit with respect to the Dominion Account shall be deposited into the
Dominion Account and become part of the proceeds of the Collateral and
distributed as part of such proceeds. Notwithstanding anything to the contrary
contained in this Section 2.4, Section 3.3 or otherwise, the Bank shall not be
responsible for determining if any investment qualifies as Cash Equivalents.

      Section 2.5 Monthly Reporting. On or before the 5th Business Day of each
calendar month, the Bank shall provide to the Authority, the Manager and the
Collateral Agent an account statement with respect to the Dominion Account
reflecting all deposits to, withdrawals from and charges credited against the
Dominion Account, and specifying the financial assets held in such account.

                                    ARTICLE 3
                     PLEDGE AND GRANT OF SECURITY INTERESTS

      Section 3.1 Grant of the Security Interest to the Collateral Agent.
Subject to the terms of the Intercreditor and Subordination Agreement, as
security for the payment and performance of all of the First Lien Secured
Obligations, the Authority hereby pledges to the Collateral Agent and grants a
continuing first priority security interest to the Collateral Agent in all of
the Authority's right, title and interest in and to the Collateral.

      Section 3.2 Grant of the Security Interest to the Manager. Subject to the
terms of the Intercreditor and Subordination Agreement, as security for the
payment and performance of all of the Manager Obligations, the Authority hereby
pledges to the Manager and grants a continuing security interest to the Manager
in all of the Authority's right, title and interest in and to the Enterprise
Collateral. Such security interest shall be subordinate to the security interest
of the Collateral Agent for the benefit of the First Lien Secured Parties as set
forth in the Intercreditor and Subordination Agreement. The grant of a security
interest in the Enterprise Collateral as security for the Minimum Payments Note
does not alter the limitations on the Manager's limited right to recoup Minimum
Guaranteed Payment Advances as provided in such Note and in Section 5.6.2 of the
Management Agreement, and the Manager shall only be entitled

                                       8
<PAGE>

to payment on such Note from Enterprise Collateral to the extent that it is
entitled to receive such recoupment under the Note and Section 5.6.2 but does
not receive such recoupment.

      Section 3.3 Control.

      (a) Subject to a Collateral Agent Notice of Exclusive Control as set forth
in Section 2.1 and Section 3.3(b), the Bank covenants and agrees that it will
comply with all instructions, requests or other directions originated by the
Manager concerning the Dominion Account at any time without further consent by
the Authority, the Collateral Agent or any other party. Except as otherwise
provided in this Agreement, the Bank shall accept investment instructions with
respect to the Collateral held in the Dominion Account at the direction of the
Authority or its authorized representatives and Manager until such time as
Manager delivers a written notice to Agent and the Borrower in accordance with
Section 5.2(a) that Manager is thereby exercising exclusive control over the
Account ("Manager Notice of Exclusive Control"); provided that amounts on
deposit in the Dominion Account shall at all times be held as Cash Equivalents;
provided, further, that the proceeds of any such investments are deposited in or
credited to the Dominion Account contemporaneously with such transaction; and
provided, further, such investment instructions shall not affect the type or
nature of Collateral for attachment and perfection purposes under the Michigan
Uniform Commercial Code (as may be amended from time to time). Without limiting
the foregoing, all investments that are not in the form of cash credited to the
Dominion Account shall be legally titled in the name of the Bank (and not in the
record name of the Authority, the Manager or the Collateral Agent), as a
securities intermediary and for the benefit each of the Authority, the Manager
and the Collateral Agent in accordance with this Agreement prior to the
occurrence of a First-Lien Secured Obligations Event of Default. In addition, no
investments shall be subject to or held in a margin account. After the Bank
receives a Manager Notice of Exclusive Control, it will immediately cease
complying with any investment instructions concerning the Dominion Account
originated by the Authority or its representatives and shall comply with only
such investment instructions as are originated by the Manager.

      (b) Notwithstanding the foregoing Section 3.3(a), if the Bank receives a
Collateral Agent Notice of Exclusive Control, then during the pendency of any
subsequent First Lien Secured Obligations Event of Default Period, the Bank will
immediately cease complying with any investment instructions concerning the
Dominion Account originated by the Authority or the Manager or any of their
representatives and shall comply with only such investment instructions as are
originated by the Collateral Agent; provided, however, that all amounts on
deposit in the Dominion Account shall at all times be held as Cash Equivalents
in accordance with the terms of the Indenture; provided, further, that the
proceeds of any such investments are deposited in or credited to the Dominion
Account contemporaneously with such transaction; and provided, further, such
investment instructions shall not affect the type or nature of Collateral for
attachment and perfection purposes under the Michigan Uniform Commercial Code
(as may be amended from time to time).

      Section 3.4 Duration and Transfer of Funds in Dominion Account.

                                       9
<PAGE>

      (a) Manager. Subject to the terms of the Intercreditor and Subordination
Agreement, the pledge and security interests granted herein in the Enterprise
Collateral will continue with respect to the Manager, until (i) indefeasible
payment in cash in full of all of the Manager Obligations, (ii) other Discharge
of the Manager Obligations, or (iii) the cancellation or termination by the
Manager under a written cancellation instrument signed by the Manager or except
as otherwise provided in an arbitration award in an arbitration to which the
Manager and the Authority are parties. If the pledge and security interests
granted to the Manager herein are terminated for any reason, including pursuant
to this Section, the Manager shall have no further interest in the Dominion
Account or the funds on deposit therein and the Manager or the Collateral Agent
(as applicable) shall direct the Bank to follow the transfer instructions of the
Authority and the Authority shall transfer all of the funds held in the Dominion
Account to a separate securities or deposit account (the "Collateral Agent
Deposit Account") that is (i) subject to an account control agreement in favor
of the Collateral Agent for the benefit of the First Lien Secured Parties, and
(ii) in which the Collateral Agent holds a first priority security interest to
all of the Authority's right, title and interest in such funds and such account
for the benefit of the First Lien Secured Parties. Following such transfer, this
Agreement shall terminate and all future Gross Revenues shall be deposited in
the Collateral Agent Deposit Account and the terms of the account control
agreement for such Collateral Agent Deposit Account shall govern the treatment
of such Gross Revenues. In conjunction with such transfer and termination of
this Agreement, the Authority shall deliver to the Collateral Agent a legal
opinion in form and substance reasonably acceptable to the Collateral Agent
opining as to the due authorization, execution, and delivery of the account
control agreement for the Collateral Agent Deposit Account by the Authority,
together with opinions as to the Authority's sovereign immunity waiver,
noncontravention with laws and agreements, and validity of the security interest
in favor of the Collateral Agent for the benefit of the First Lien Secured
Parties. The Manager also acknowledges and agrees that it shall cause the
termination of this Agreement as and when required pursuant to the applicable
terms and provisions of the Development Agreement and Management Agreement.

      (b) Collateral Agent. Subject to the terms of the Intercreditor and
Subordination Agreement, the pledge and security interests granted herein in the
Collateral will continue with respect to the Collateral Agent, until (i) payment
in cash in full of all of the First Lien Secured Obligations, (ii) other
Discharge of all of the First Lien Secured Obligations or (iii) the cancellation
or termination by the Collateral Agent under a written cancellation instrument
signed by the Collateral Agent. Upon termination of the pledge and security
interests of the Collateral Agent set forth herein, the Collateral Agent shall
provide notice of same to the Bank, and upon receipt by the Bank of such notice,
the Collateral Agent shall cease to be a party to this Agreement and shall have
no further interest in the Dominion Account or the funds on deposit therein,
whereupon the Manager may (but shall not be required to), by written notice to
the Bank and the Authority, terminate this Agreement and direct that all of the
funds and other property held in the Dominion Account be deposited in such other
dominion account as the Manager shall specify in such notice.

      Section 3.5 Transfers Free of Security Interest. Without modifying the
terms of Section 2.1 and 2.3 hereof, all funds transferred from the Dominion
Account as provided herein, including without limitation any funds transferred
by or at the direction of the Manager to

                                       10
<PAGE>

Disbursement Accounts pursuant to Sections 4.19.6, 5.3 and 5.5 of the Management
Agreement, as well as all Minimum Guaranteed Monthly Payments (as such term is
defined in the Management Agreement), Monthly Distribution Payments (as such
term is defined in the Management Agreement), and other funds distributed to the
Authority, shall be free of the security interest of the Manager immediately
upon their transfer from the Dominion Account.

                                    ARTICLE 4
                               AUTHORITY COVENANTS

      Section 4.1 Covenants of the Authority. During the term of this Agreement,
the Authority will observe and comply with the following requirements, unless
the Manager and the Collateral Agent shall otherwise consent in writing;
provided, however, that the consent of the Manager shall not be required during
any First Lien Secured Obligations Event of Default Period:

      (a) Further Assurance. The Authority will promptly execute and deliver all
instruments and documents, and take such actions that may be necessary or that
the Bank, the Manager or the Authority may reasonably request, in order to
perfect and protect the security interests granted hereby or, after a Manager
Event of Default or First Lien Secured Obligations Event of Default and in
accordance with the Intercreditor and Subordination Agreement, to enable each of
the Bank, the Manager or the Collateral Agent, as applicable, to exercise and
enforce its rights and remedies hereunder with respect to any Collateral in
which it holds a security interest in accordance with this Agreement. Without
limiting the generality of the foregoing, the Authority hereby authorizes, and
will execute and file, such financing statements or continuation statements in
respect thereof, or amendments thereto, and such other instruments of notices,
as may be necessary or desirable, or as the Bank, the Manager or the Collateral
Agent may reasonably request, in order to perfect, preserve, and enhance the
security interests granted hereby. The Authority hereby authorizes the Bank,
with the prior written consent of the Manager and the Collateral Agent, or the
Manager or the Collateral Agent to file this Agreement (if the Authority shall
fail to provide an appropriate financing statement within ten (10) business days
after request) or one or more continuation statements in respect thereof,
relating to all or any part of the Collateral without the additional signature
or consent of the Authority where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

      (b) No Revocation. The Authority shall not revoke any direction or
authorization required or authorized to be given to the Bank pursuant to Article
2 or elsewhere herein; provided, however, that the Authority may revoke any
direction or authorization required or authorized to be given to the Bank
pursuant to Article 2 or elsewhere herein if authorized pursuant to an
arbitration award to which the Manager and the Authority are parties; provided,
further that any such revocation pursuant to an arbitration award to which the
Manager and the Authority are parties shall only be with respect to any rights
of the Manager or the Authority and may not affect the rights of the Collateral
Agent.

                                       11
<PAGE>

      (c) Financial Statements. After the occurrence of a Band Event of Default
and termination of the Management Agreement, the Authority will furnish the
following to the Manager upon request:

          (i)   Within thirty (30) days after the end of each month and one
                hundred twenty (120) days after the end of each fiscal year,
                financial and operating statements of the Enterprise for such
                month (and year-to-date) or fiscal year, as applicable,
                including a balance sheet and a profit and loss statement, all
                in reasonable detail and conforming to generally accepted
                accounting principles for casinos. The monthly statements shall
                be prepared and certified by the Authority as being true and
                correct representations of the information set forth therein and
                the annual financial statements shall be prepared, audited and
                certified by independent certified public accountants with
                casino auditing experience employed or retained by the
                Authority. The Manager agrees that any such information, as well
                as any other information it may receive from the Authority
                relating to the Enterprise, shall be and remain subject to the
                provisions of Section 15.13 of the Development Agreement.

          (ii)  Within fifteen (15) days after the filing thereof, a copy of the
                Authority's regulatory filings under IGRA and its Compact for
                each calendar year during the term hereof, with all schedules
                attached.

          (iii) With each of the annual audited and monthly unaudited financial
                statements delivered pursuant to this subsection a certificate
                of the chief financial officer of the Authority or an
                appropriate officer of the manager of the Enterprise
                substantially in the form set forth in Exhibit A stating that,
                except as explained in reasonable --------- detail in such
                certificate, all Enterprise Revenues have been deposited into
                the Dominion Account for the period covered by such financial
                statement. If such certificate discloses an exception to such
                certification, such certificate shall set forth what action the
                Authority has taken or proposes to take with respect thereto.

      (d)       Insurance. At such time as the Manager shall no longer be the
                Manager of the Enterprise, the Authority shall cause to be
                maintained, insurance as required by the Management Agreement
                (except that the Manager shall not be a named insured or
                additional insured but will be named as a certificate holder if
                permitted by the insurer without granting an insurable
                interest). Upon request, the Authority shall provide to the Bank
                and the Manager certificates of insurance or copies of insurance
                policies evidencing that such insurance is in effect at all
                times.

      (e)       Other Accounts. So long as the Collateral Agent continues to
                hold a security interest in the Collateral, the Authority shall
                not establish any demand, time, savings, passbook or other
                deposit account other than the

                                       12
<PAGE>

                Permitted Accounts, unless otherwise consented to in writing by
                the Collateral Agent.

                                    ARTICLE 5
                           EVENTS OF DEFAULT/REMEDIES

      Section 5.1 Events of Default.

      (a) Manager Events of Default. Each of the following occurrences shall
constitute a "Manager Event of Default":

          (i)   Any material representation or warranty made by or on behalf of
                the Authority herein or in any report, certificate or other
                document furnished by or on behalf of the Authority pursuant to
                this Agreement shall prove to be false or misleading in any
                material respect when made.

          (ii)  The Authority shall default in the due observance or performance
                of any of its material obligations hereunder and such default
                shall continue for thirty (30) days after written notice thereof
                has been sent to the Authority by the Manager or the Bank.

          (iii) A Band Event of Default shall occur.

      (b) First Lien Secured Obligations Event of Default. A "First Lien Secured
Obligations Event of Default" shall mean any event of default under the
Indenture.

      Section 5.2 Remedies on Default.

      (a) Remedies of the Manager. Subject at all times to the Intercreditor and
Subordination Agreement, and provided that there has not been a Collateral Agent
Notice of Exclusive Control, whenever a Manager Event of Default shall have
occurred and be continuing (if such default is not cured within any applicable
cure period) and, if arbitration is timely demanded, after entry of an
arbitrator's award finding that a Manager Event of Default has occurred (if such
default is not cured within any applicable cure period), the Manager may
thereafter give the Bank and the Authority a Manager Notice of Exclusive
Control, and the Bank (for and on behalf and at the direction of the Manager) or
the Manager, as applicable, shall be entitled to pay to the Manager from
Enterprise Collateral all amounts otherwise payable to the Authority with
respect to the Monthly Distribution Payment (as such term is defined in the
Management Agreement), and to apply the same towards the repayment of the
Manager Obligations (subject, as to the Minimum Payments Note (as such term is
defined in the Development Agreement), to the provisions of Section 3.2), and to
endorse in the name of the Authority any checks, drafts, notes or other
instruments or documents received in payment of or on account of the Enterprise
Collateral; and any such proceeds so received and prepaid shall be applied to
installments of principal on the Manager Obligations in the inverse order of
their maturity; and provided further that the Manager may obtain any injunctive
or other relief as is necessary for the enforcement of this Agreement and the
terms and provisions set forth herein;

                                       13
<PAGE>

provided, however, that any and all remedies of the Manager shall be Limited
Recourse (as defined in the Development Agreement); and provided further that,
notwithstanding any term or provision contained herein, the Manager shall take
all steps necessary to continue to permit and cause the necessary withdrawals
and transfers to be made from the Dominion Account in accordance with Section
2.3 hereof, with the exception that the Manager shall be entitled to retain all
amounts otherwise payable to the Authority with respect to the Monthly
Distribution Payment and apply the same towards the repayment of the Manager
Obligations; and in no event shall the Manager exercise any remedy against the
Authority (excluding third parties) with respect to the Enterprise Revenues
other than such remedies as are necessary to require their deposit into the
Dominion Account or seeking an accounting and turnover of any Enterprise
Revenues held in trust by the Authority as required under Section 2.2 hereof;
and, as to third parties, in no event shall the Manager seek to recover funds
paid to third parties through transfers from the Dominion Account in accordance
with Section 2.3. The Authority agrees that, to the extent notice of sale shall
be required by law with respect to the disposition of any Collateral, at least
ten (10) calendar days notice to the Authority of the time and place of any
public sale or the time after which a private sale is to be made shall
constitute reasonable notification. Notwithstanding the foregoing, in the event
that the Collateral Agent provides a Collateral Agent Notice of Exclusive
Control, the provisions of Section 5.02(b) shall control and this Section 5.2(a)
shall not apply and any the Manager Notice of Exclusive Control shall cease to
be of effect.

      (b) Remedies of the Collateral Agent. Notwithstanding Section 5.2(a),
whenever a First Lien Secured Obligations Event of Default shall have occurred
and be continuing and, if such default is not cured within any applicable cure
period, the Collateral Agent may thereafter give the Bank and the Authority a
Collateral Agent Notice of Exclusive Control, and the Bank (for and on behalf
and at the direction of the Collateral Agent) or the Collateral Agent, as
applicable, shall be entitled to pay to the Collateral Agent from the Dominion
Account all amounts otherwise payable to the Authority, and to endorse in the
name of the Authority any checks, drafts, notes or other instruments or
documents received in payment of or on account of the Enterprise Revenues or
other Collateral; and provided further that the Collateral Agent may obtain any
injunctive or other relief as is necessary for the enforcement of this Agreement
and the terms and provisions set forth herein; and in no event shall the
Collateral Agent exercise any remedy against the Authority (excluding third
parties) with respect to the Gross Revenues other than such remedies as are
necessary to require their deposit into the Dominion Account or seeking an
accounting and turnover of any Gross Revenues held in trust by the Authority as
required under Section 2.2 hereof; and, as to third parties, in no event shall
the Collateral Agent seek to recover funds paid to third parties through
transfers from the Dominion Account in accordance with Section 2.3. The
Authority agrees that, to the extent notice of sale shall be required by law
with respect to the disposition of any Collateral, at least ten (10) calendar
days notice to the Authority of the time and place of any public sale or the
time after which a private sale is to be made shall constitute reasonable
notification.

      (c) Each of the parties hereto acknowledge and agree that all reasonable
costs and expenses incurred by the Bank, the Manager or the Collateral Agent
after a Manager Event of Default or a First Lien Secured Obligations Event of
Default, as the case may be, in connection with the exercise of any remedy
hereunder, including reasonable attorneys' fees, are the costs,

                                       14
<PAGE>

expense and responsibility of the Authority and shall be paid from the Dominion
Account notwithstanding any other terms, provisions or priorities set forth in
this Agreement.

      Section 5.3 Waivers; Remedies. Any waiver given by the Manager or the
Collateral Agent hereunder shall be effective if it is in writing and only in
the specific instance and for the specific purpose given. Mere delay or failure
to act shall not preclude the exercise or enforcement of any rights and remedies
available to the Manager or the Collateral Agent. All rights and remedies of the
Bank, the Manager or the Collateral Agent shall be cumulative and may be
exercised singularly in any order or concurrently, at the option of the Manager
or the Collateral Agent, as applicable, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor a bar to the exercise
or enforcement of any other.

                                    ARTICLE 6
                                    THE BANK

      Section 6.1 Bank's Rights and Duties.

      (a) The Bank's sole agency and duty with respect to the Manager and the
Collateral Agent under this Agreement is for the purposes of perfecting the
Manager's and the Collateral Agent's pledge and security interest in the
Collateral and the Bank shall have no other duty or obligation, fiduciary or
otherwise to the Manager or the Collateral Agent except to the extent expressly
set forth herein. Notwithstanding anything to the contrary contained herein, the
Bank shall not be liable to any party hereto for any transfer from the Dominion
Account which the Bank, in its commercially reasonable judgement, believes was
authorized by the appropriate person under this Agreement, whether or not such
transfer violates any contractual or fiduciary obligations of such person.

      (b) The Bank undertakes to perform such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Bank.

      (c) In the absence of bad faith on its part, the Bank may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Bank and
conforming to the requirements of this Agreement; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Bank, the Bank shall be under a duty to examine the same
to determine whether or not they conform to the requirements hereof.

      (d) In case that a Manager Event of Default or a First Lien Secured
Obligations Event of Default has occurred and is continuing and the Bank has
been so notified in writing, the Bank shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

                                       15
<PAGE>

      (e) No provision of this Agreement shall be construed to relieve the Bank
from liability for its own willful misconduct, gross negligence or breach of
duty hereunder, except that:

          (i)   this subsection shall not be construed to limit the effect of
                subsections (a) or (b) of this Section;

          (ii)  the Bank shall not be liable for any error of judgment made in
                good faith by an officer, employee or agent of the Bank, unless
                it shall be proved that the Bank was grossly negligent in
                ascertaining the pertinent facts; and

          (iii) no provision of this Agreement shall require the Bank to expend
                or risk its own funds or otherwise incur any financial liability
                in the performance of any of its duties hereunder, or in the
                exercise of any of its rights or powers, if it shall have
                reasonable grounds for believing that repayment of such funds or
                adequate indemnity against such risk or liability is not
                reasonably assured to it.

      (f) Except for the requirements under Section 3.3 hereof, the safekeeping
of any funds in its possession, the accounting for funds actually received by it
hereunder and the investment of the funds in accordance with the instructions of
the Authority (provided the Manager has not issued a Manager Notice of Exclusive
Control or the Collateral Agent has not issued a Collateral Agent Notice of
Exclusive Control), the Manager or the Collateral Agent, the Bank shall have no
duty to the Authority as to any Gross Revenues or other Collateral or as to the
taking of any necessary steps to preserve rights against any Persons or any
other rights pertaining to any Gross Revenues or other Collateral.

      Section 6.2 Indemnification. The Authority agrees to hold the Bank
harmless and to defend the Bank against any claims, causes of actions, damages
or expenses (including all reasonable fees and expenses of counsel) arising out
of any claim against the Bank by any Person with respect to amounts due to such
Person from sums paid to the Bank hereunder, other than with respect to claims
arising out of the willful misconduct, gross negligence, by the Bank, its
officers, agents or employees, in the performance of its duties under this
Agreement.

      Section 6.3 Fees and Expenses. The Authority agrees to pay the Bank its
reasonable fees and charges for serving as the Bank hereunder and after a
Manager Event of Default or First Lien Secured Obligations Event of Default to
pay and reimburse the Bank on demand for all out-of-pocket expenses (including
in each case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel) incurred or expended by the Bank in connection with the
creation, perfection, satisfaction, foreclosure or enforcement of the security
interests granted hereby and the preparation, administration and enforcement of
this Agreement.

      Section 6.4 Certain Rights of Bank. Except as otherwise provided in
Section 6.1:

      (a) The Bank may rely and shall be protected in acting or remaining from
acting upon any certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or

                                       16
<PAGE>

other paper or documents believed by it to be genuine and to have been signed or
presented by the proper party or parties.

      (b) Whenever in the administration of this Agreement the Bank shall deem
it desirable that a matter be proved or established prior to taking, suffering,
or omitting any action hereunder, the Bank (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
a certificate of an officer of the Manager and a certificate of an authorized
employee the Collateral Agent; provided, however, during the First Lien Secured
Obligations Event of Default Period, the Bank may only rely on a certificate of
the Collateral Agent.

      (c) The Bank shall not be bound to make any investigation into the facts
or matters stated in any certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order or other paper or document, but the
Bank, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.

      Section 6.5 Bank Required, Eligibility. There shall at all times be a Bank
hereunder which shall be a corporation organized and doing business under the
laws of the United States of America or of any State, having a combined capital,
undivided profits and surplus of at least $500,000,000.00. If at any time the
Bank shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

      Section 6.6 Resignation and Removal, Appointment of Successor.

      (a) No resignation or removal of the Bank and no appointment of a
successor Bank pursuant to this Article shall become effective until the
acceptance of appointment by the successor Bank under Section 6.7 and execution
by such successor Bank of a joinder agreement assuming the obligations of such
resigning Bank hereunder or of a Dominion Account Agreement substantially in the
form of this Agreement.

      (b) The Bank may resign at any time by giving thirty (30) days prior
written notice thereof to the Authority, the Manager and the Collateral Agent.
If an instrument of acceptance by a successor Bank shall not have been delivered
to the Bank within thirty (30) days after the giving of such notice of
resignation, the resigning Bank may close the Dominion Account and commence an
interpleader or other appropriate action seeking a court order for disposition
of the proceeds of the Dominion Account or petition any court of competent
jurisdiction for the appointment of a successor Bank.

      (c) Subject to subsection (a) above, the Bank may be removed at any time
by an instrument in writing executed by the Authority delivered to the Bank
(with a copy to the Manager and the Collateral Agent); provided, however, during
the First Lien Secured Obligations Event of Default Period, the Bank may only be
removed by an instrument in writing executed solely by the Collateral Agent.

                                       17
<PAGE>

      (d) If the Bank shall resign or be removed for any cause, the Authority
(provided a Manager Notice of Exclusive Control has not been issued by the
Manager to the Bank and a Collateral Agent Notice of Exclusive Control has not
been issued by the Collateral Agent to the Bank) or the Manager (if a Manager
Notice of Exclusive Control has been issued by the Manager to the Bank and no
the Collateral Agent Notice of Exclusive Control has been issued by the
Collateral Agent to the Bank) or the Collateral Agent (if a Collateral Agent
Notice of Exclusive Control has been issued by the Collateral Agent to the Bank)
shall promptly appoint a successor Bank; provided, however, that any successor
Bank must satisfy the eligibility requirements set forth in Section 6.5;
provided, further, that the Collateral Agent shall have the right to reject the
choice of the successor Bank by providing notice to the Authority and the
Manager within ten (10) days of receipt by the Collateral Agent of the notice
described in this Section 6.6(d) if (i) the successor Bank fails to comply with
Section 6.5 hereof; (ii) the successor Bank is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the successor Bank
under any bankruptcy law; (iii) a custodian or public officer takes charge of
the successor Bank or its property; or (iv) the successor Bank becomes incapable
of acting.

      (e) The Authority shall give notice of each removal of the Bank and each
appointment of a successor Bank by mailing written notice of such event within
fifteen (15) days thereof by certified mail, return receipt requested, postage
prepaid, to the Manager and the Collateral Agent. Each notice shall include the
name of the successor Bank and the address of its principal corporate trust
office.

      Section 6.7 Acceptance of Appointment by Successor. Every successor Bank
appointed hereunder shall execute, acknowledge, and deliver to the Authority,
the Manager and the Collateral Agent, and to the retiring Bank an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Bank shall become effective and such Bank, without any further act,
deed, or conveyance, shall become vested with all the rights, powers, trusts,
and duties of the retiring Bank, but, on request of the Authority, the Manager,
the Collateral Agent or the successor Bank, such retiring Bank shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Bank all the rights, powers and trusts of the retiring Bank, and shall
duly assign, transfer and deliver to such successor Bank all property and money
held by such retiring Bank hereunder. Upon request of any such successor Bank,
the Authority shall execute any and all instruments for more fully and certain
vesting in and confirming to such successor Bank for all such rights, powers and
trusts.

      Section 6.8 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Bank may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion,
or consolidation to which the Bank shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Bank, shall be the successor of the Bank hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.

      Section 6.9 No Set-Off. The Bank shall not set off from the Collateral any
obligations or other amounts which may be payable to the Bank by the Authority,
the Manager, the Collateral Agent or by any other Person, other than amounts due
pursuant to Section 6.3.

                                       18
<PAGE>

      Section 6.10 Conflicts. In the event of any inconsistency between this
Agreement and any depository agreement of the Bank now or hereafter existing
with respect to the Dominion Account, the terms of this Agreement shall control.

                                    ARTICLE 7
                                  MISCELLANEOUS

      Section 7.1. Notices. Except as otherwise provided herein, any notice or
demand which, by provision of this Agreement, is required or permitted to be
given or served any party to the others shall be deemed to have been
sufficiently given and served for all purposes: (a) (if mailed) three (3)
calendar days after being deposited, postage prepaid, in the United States Mail,
registered or certified mail; or (b) (if delivered by express courier) one
Business Day after being delivered to such courier; or (c) (if delivered in
person) the same day as delivery, or until another address or addresses are
given in writing by a party as follows:

To Authority:                 Pokagon Gaming Authority
                              58620 Sink Road
                              Dowagiac, Michigan  49047
                              Attention: President

                              With a Copy To:

                              Pokagon Band of Potawatomi Indians
                              P.O. Box 180
                              Dowagiac, Michigan  49047
                              Attention: Michael Phelan, General Counsel

                              and

                              Drummond Woodsum & MacMahon
                              P.O. Box 9781
                              245 Commercial Street
                              Portland, Maine 04104-5081
                              Attention: Rob Gips

To Bank:                      Fifth Third Bank
                              830 Pleasant Street
                              St. Joseph, Michigan 49085
                              Attention: David C. Eifler
                              Phone: (262) 982-7562

To Manager:                   Great Lakes Gaming of Michigan, LLC
                              130 Cheshire Lane

                                       19
<PAGE>

                              Minnetonka, Minnesota 55305
                              Attention: Timothy J. Cope, President

                              With a Copy To:

                              Gray, Plant, Mooty, Mooty & Bennett, P.A.
                              500 IDS Center
                              80 South Eighth Street
                              Minneapolis, Minnesota 55402-3796
                              Attn:  Daniel R. Tenenbaum

To Collateral Agent:          U.S. Bank National Association
                              Corporate Trust Services
                              EP-MN-WS3C
                              60 Livingston Avenue
                              St. Paul, Minnesota 55107-1419
                              Attention: Raymond S. Haverstock

      Any notice given under this Agreement by any party shall be given to all
parties.

      Section 7.2 Severability. If any provision of this Agreement is prohibited
by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof, provided, however that where the provisions of any such applicable law
may be waived, they hereby are waived by the parties hereto to the fullest
extent permitted by law to the end that this Agreement shall be deemed to be a
valid and binding agreement in accordance with its terms.

      Section 7.3 Survival. The warranties, representations, covenants and
agreements set forth herein shall survive the execution and delivery of this
Agreement and shall continue in full force and effect until all the Manager
Obligations and First Lien Secured Obligations shall have been paid and
performed in full.

      Section 7.4 Captions. Captions herein are for convenience only and shall
not be deemed part of this Agreement.

      Section 7.5 Binding Effect. Subject to any limitations on assignment set
forth in the Development Agreement, this Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns.

      Section 7.6 Amendments. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.

      Section 7.7 Rights, Powers, Waivers, etc. Each and every right, remedy and
power granted to the Bank, the Manager or the Collateral Agent hereunder or to
the Manager under the Manager Obligations or the Collateral Agent under the
Intercreditor and Subordination

                                       20
<PAGE>

Agreement shall be cumulative and may be exercised by the Bank, the Manager or
the Collateral Agent, as applicable, from time to time concurrently or
independently as often and in such order as the Bank, the Manager or the
Collateral Agent may deem expedient; provided, however, that any and all
remedies of the Bank and the Manager shall be Limited Recourse (as defined in
the Development Agreement). No failure on the part of the Bank, the Manager or
the Collateral Agent to exercise and no delay in exercising, any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof of
any other power or right.

      Section 7.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original but together shall
constitute one and the same instrument.

      Section 7.9 Sovereign Immunity Waiver; Arbitration; Submission to
Jurisdiction; Limitation on Damages.

      (a) Manager. The provisions of Article 14 of the Development Agreement and
Article 13 of the Management Agreement apply to this Agreement and are hereby
incorporated by reference, including, without limitation, the limited sovereign
immunity waiver, limitations on recourse and arbitration provisions contained
therein. Such provisions are for the benefit of the Manager and not for the
benefit of the Trustee, the holders of the Senior Notes or the Collateral Agent.

      (b) Indenture. This Agreement constitutes the Notes Dominion Account
Agreement as defined and referred to in the Indenture, and the provisions of
such Indenture are hereby incorporated by reference, including, without
limitation, the limited sovereign immunity waiver, limitations on recourse and
arbitration provisions contained therein; provided, however, the duties and
obligations of the Bank shall be governed solely by the terms of this Agreement.
Such provisions are for the benefit of the Trustee and the holders of the Senior
Notes and not for the benefit of the Manager. In addition, the Authority
expressly agrees that all limited sovereign immunity waivers, limitations on
recourse and arbitration provisions set forth in the Indenture for the benefit
of the Trustee or any of the First Lien Secured Parties are hereby incorporated
by reference and shall be deemed to apply equally to the Collateral Agent and
the Bank to the full extent set forth in the Indenture.

      Section 7.10 Agreements Control. In the event of inconsistency (x) between
the Development Agreement or the Management Agreement and this Agreement, the
Development Agreement or the Management Agreement shall control or (y) between
the Intercreditor and Subordination Agreement and this Agreement, the
Intercreditor and Subordination Agreement shall control; provided, however, the
duties and obligations of the Bank shall be governed solely by this Agreement.

      Section 7.11 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal law of the State of
Michigan (including the Michigan Uniform Commercial Code as in effect from time
to time, which Code shall apply without regard to any provision therein that
would otherwise provide that such Code is inapplicable to the Tribe,

                                       21
<PAGE>

whether based upon the fact that the Tribe is deemed to be a governmental body
or otherwise); except that, to the extent that Michigan law shall not recognize
or provide for the creation, perfection or first priority of any security
interest of the Secured Party on any Collateral that is recognized under the
Tribal UCC Code, then the Tribal UCC Code shall apply thereto.

      Section 7.12 Compliance with Intercreditor Agreement. The Collateral Agent
and the Manager hereby acknowledge and agree as between themselves that,
notwithstanding anything herein to the contrary, the exercise of any right or
remedy by the Manager hereunder (including, without limitation, its right to
give any instructions to the Bank and to withdraw funds from the Dominion
Account) is subject to the provisions of the Intercreditor and Subordination
Agreement.

         [The remainder of this page has been intentionally left blank.]

                                       22
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
counterparts, as of the Effective Date.

                                "AUTHORITY"

                                POKAGON GAMING AUTHORITY

                                By:   /s/ John A. Miller
                                      ---------------------------------------
                                Name: John A. Miller
                                Its:  President and Chief Executive Officer

                                       23
<PAGE>

                                "BANK"

                                FIFTH THIRD BANK

                                By: /s/ David C. Eifler
                                    ---------------------------
                                Name: David C. Eifler
                                Its:  Vice President

                                       24

<PAGE>


                                "GREAT LAKES"

                                GREAT LAKES GAMING OF MICHIGAN, LLC

                                By:   /s/ Timothy J. Cope
                                      ---------------------------------------
                                Name: Timothy J. Cope
                                Its:  President and Chief Financial Officer

                                       25
<PAGE>

                                   EXHIBIT "A"

                             COMPLIANCE CERTIFICATE

Dated ____________, 200_

      I, the Chief Financial Officer of the Pokagon Gaming Authority (the
"Authority"), do hereby provide this Compliance Certificate in connection with
that certain Notes Dominion Account Agreement dated June 22, 2006 (the "Dominion
Agreement"), by and between the Authority, the Manager, the Collateral Agent and
the Bank (the "Bank"); capitalized terms used but not otherwise defined herein
shall have the meaning set forth in the Dominion Agreement.

      I certify that as of the date hereof:

      1)    All Enterprise Revenues arising from the operations of the
            Enterprise from ________________, 200__ to ______________, 200__
            have been deposited into the Dominion Account with the Bank.

                                      POKAGON GAMING AUTHORITY

                                      By:   _________________________________
                                      Name: _________________________________
                                      Its   Chief Financial Officer

                                        i
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>13
<FILENAME>c06339exv10w12.txt
<DESCRIPTION>SECURITY AGREEMENT ACKNOWLEDGMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.12

                       SECURITY AGREEMENT ACKNOWLEDGMENT

         This Security Agreement Acknowledgment (this "Acknowledgment") is made
and entered into as of the 22nd day of June, 2006, by the POKAGON GAMING
AUTHORITY ("DEBTOR"), a wholly owned unincorporated instrumentality of the
Pokagon Band of Potawatomi Indians, a federally recognized Indian Tribe (the
"BAND"), and Great Lakes Gaming of Michigan, LLC ("SECURED PARTY").

                                    RECITALS

         WHEREAS, the Band executed and delivered that certain First Amended and
 Restated Security Agreement in favor of Secured Party dated as of January 25,
 2006 (the "SECURITY AGREEMENT"), pursuant to which the Band granted Secured
 Party a security interest in the Collateral referred to therein, comprising all
 goods, furniture, furnishings and equipment required for or related to the
 operation of the Enterprise referred to therein;

         WHEREAS, pursuant to the Pokagon Gaming Authority Ordinance adopted by
 the Band (the "ORDINANCE"), the Band created Debtor for the purposes of
 conducting the Gaming Business (as defined in the Ordinance) which encompasses
 the Enterprise, and, in connection therewith, all Gaming Assets and Gaming
 Business Tribal Rights (each as defined in the Ordinance) were assigned and
 allocated to Debtor;

         WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of
 May 25,2006, by and among the Band, Debtor, Secured Party, Lakes Entertainment,
 Inc., Lakes Gaming and Resorts, LLC, Pokagon Properties, LLC, and Filbert Land
 Development, LLC (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), Debtor has
 assumed all obligations of the Band under and has become bound as a new debtor
 by the Security Agreement;

          WHEREAS, Section 15 of the Assignment and Assumption Agreement
 provides that the parties thereto will execute and deliver such additional
 documents and take such additional actions as may be reasonably requested by a
 party for the purpose of implementing or effectuating the provisions of the
 Assignment and Assumption Agreement, and Secured Party has requested that this
 Acknowledgment be so executed and delivered;

         WHEREAS, contemporaneously herewith, Debtor is entering into an
 equipment financing facility pursuant to a Loan Agreement by and among Debtor,
 Wells Fargo Bank Northwest, National Association ("WF"), and other parties
 named therein, for which Banc of America Leasing & Capital, LLC is Arranger and
 Administrative Agent (the indebtedness incurred by Debtor pursuant to which
 being herein referred to as the "FF&E FINANCING"), the collateral for which,
 granted pursuant to a Security Agreement dated as of June 22, 2006, by and
 between Debtor and WF (the "FF&E Security Agreement"), will consist of
 furniture, furnishings and equipment purchased with the



<PAGE>
proceeds of such FF&E Financing and all other collateral described in the FF&E
Security Agreement (such collateral being referred to herein as the "FF&E
COLLATERAL"); and

         WHEREAS, Debtor has requested that Secured Party not claim a security
interest in the FF&E Collateral until such time as the FF&E Financing shall have
been paid in full or otherwise discharged or defeased or the FF&E Collateral
shall no longer secure the FF&E Financing;

         NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:

         1.       Acknowledgment. Debtor confirms each acknowledgment and
agreement set forth in Section 5 of the Assignment and Assumption Agreement.
Without limiting the generality of the foregoing, Debtor hereby confirms (i)
that the Security Agreement is binding upon Debtor as the Debtor thereunder, as
if Debtor had originally been a party thereto, (ii) that the Secured Obligations
(as defined in the Security Agreement) include both the obligations assumed by
the Debtor pursuant to the Assignment and Assumption Agreement and such
obligations as remain obligations of the Band in accordance with the provisions
of the Assignment and Assumption Agreement, and (iii) that the Tribal Commercial
Code and the Tribal UCC, as referenced in the Security Agreement, shall be
deemed to refer to the secured transactions code adopted by the Band and
applicable to Debtor as an instrumentality of the Band. Debtor further makes and
confirms, as of the date hereof, all representations and warranties of the
Debtor set forth in the Security Agreement. Debtor's notice addresses shall be
the same as those originally provided in the Security Agreement with respect to
the Band.

         2.       FF&E Collateral. Secured Party hereby agrees that,
notwithstanding anything in the Security Agreement or any other document,
agreement or instrument to the contrary, no security interest granted by Debtor
to Secured Party shall attach to the FF&E Collateral unless and until (i) the
FF&E Financing (and any renewal, refunding, replacement or refinancing thereof)
shall be paid in full or otherwise discharged or defeased, or (ii) with respect
to any item of FF&E Collateral, such item otherwise shall be released and no
longer constitute FF&E Collateral.

         3.       Counterparts. This Acknowledgment may be executed in any
number of counterparts and by facsimile, each of which when so executed and
delivered shall be deemed an original, but all of which shall together
constitute one and the same agreement.


                                       2
<PAGE>


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

                                 DEBTOR:

                                 POKAGON GAMING AUTHORITY


                                 By: /s/ John Miller
                                    --------------------------------------------
                                 Name: John Miller
                                    --------------------------------------------
                                 Title: President/CEO
                                    --------------------------------------------




                                 SECURED PARTY:

                                 GREAT LAKES GAMING OF MICHIGAN, LLC


                                 By: /s/ Timothy J. Cope
                                    --------------------------------------------
                                 Name: Timothy J. Cope
                                    --------------------------------------------
                                 Title: President and Chief Financial Officer
                                    --------------------------------------------




                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>14
<FILENAME>c06339exv10w13.txt
<DESCRIPTION>INTERCREDITOR AND SUBORDINATION AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.13

                    INTERCREDITOR AND SUBORDINATION AGREEMENT

                            dated as of June 22, 2006

                                      among

                         U.S. BANK NATIONAL ASSOCIATION,
                         as Trustee under the Indenture

                     GREAT LAKES GAMING OF MICHIGAN, LLC,
          as lender under the Lakes Notes and as Manager of the Project

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,
                               as Collateral Agent

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
1. Definitions and General Provisions..............................................................       2

   1.1      Definitions............................................................................       2
   1.2      Interpretation.........................................................................      11

2. Deferral and Subordination of Lakes Obligations and Band Obligations............................      11

   2.1      Deferral and Accrual of Lakes Obligations..............................................      12
   2.2      [Intentionally Omitted]................................................................      12
   2.3      Subordination to First Lien Secured Obligations........................................      12
   2.4      Default on First Lien Secured Obligations..............................................      12
   2.5      Deferral Not a Default.................................................................      12
   2.6      Continuing Subordination...............................................................      12
   2.7      Subordination of the Lakes Obligations upon Insolvency or Liquidation Proceeding.......      12
   2.8      [Intentionally Omitted]................................................................      14
   2.9      Judgment Liens.........................................................................      14
   2.10     When Proceeds Must be Paid Over........................................................      14
   2.11     Subrogation............................................................................      14

3. Collateral Agent................................................................................      14

   3.1      Appointment............................................................................      14
   3.2      Nature of Duties.......................................................................      15
   3.3      Lack of Reliance on the Collateral Agent...............................................      15
   3.4      Certain Rights of the Collateral Agent; Pari Passu in Priority of Liens; Separate
            Collateral.............................................................................      15
   3.5      Reliance...............................................................................      17
   3.6      Indemnification........................................................................      17
   3.7      Collateral Agent in its Individual Capacity............................................      17
   3.8      Holders................................................................................      17
   3.9      Resignation and Removal of the Collateral Agent........................................      17

4. Collateral, Priority, Subordination and Release of Liens........................................      17

   4.1      Liens and Security Interests...........................................................      18
   4.2      Separate Collateral....................................................................      18
   4.3      Confirmation of Liens..................................................................      19
   4.4      Releases...............................................................................      20

5. Rights and Limitation of Actions With Respect to Collateral.....................................      21

   5.1      Rights and Limitations Applicable to Second Lien Secured Parties.......................      21
   5.2      Rights and Limitations Applicable to the First Lien Secured Parties....................      22
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                    <C>
   5.3      Notification of Events of Default......................................................      23
   5.4      Certain Waivers by Second Lien Secured Parties.........................................      23
   5.5      Agent for Perfection...................................................................      23
   5.6      When Proceeds Must be Paid Over........................................................      23

6. Rights and Limitations with Respect to Amendments, Waivers and Other Actions Under Facility
   Agreements......................................................................................      24

   6.1      Rights and Limitations Applicable to Second Lien Secured Parties.......................      24
   6.2      Rights and Limitations Applicable to the First Lien Secured Parties....................      24
   6.3      Waivers and Deferrals of Payments......................................................      25
   6.4      Limitation of Liability................................................................      25

7. Insolvency or Liquidation Proceedings...........................................................      26

   7.1      Right to File Involuntary Bankruptcy...................................................      26
   7.2      Certain Agreements and Consents by Second Lien Secured Parties.........................      26

8. Application of Proceeds of Shared Collateral....................................................      30

   8.1      Application of Proceeds Generally......................................................      30
   8.2      Certain Terms..........................................................................      32
   8.3      Sharing of Non-Pro Rata Payments.......................................................      33
   8.4      Overpayments...........................................................................      33
   8.5      Payment to Class Representatives.......................................................      34

9. Representations and Warranties..................................................................      34

   9.1      Organization...........................................................................      34
   9.2      Authorization..........................................................................      34
   9.3      Binding Agreement......................................................................      34
   9.4      No Consent Required....................................................................      34
   9.5      No Conflict............................................................................      34

10.Miscellaneous Provisions........................................................................      35

   10.1     Notices; Addresses.....................................................................      35
   10.2     Further Assurances.....................................................................      36
   10.3     Waiver.................................................................................      36
   10.4     Entire Agreement.......................................................................      36
   10.5     Governing Law..........................................................................      36
   10.6     Severability...........................................................................      36
   10.7     Headings...............................................................................      36
   10.8     Limitations on Liability...............................................................      37
   10.9     Consent of Jurisdiction, Waiver of Immunity............................................      37
   10.10    Successors and Assigns.................................................................      37
   10.11    Counterparts...........................................................................      38
   10.12    No Third Party Beneficiaries...........................................................      38
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                      <C>
   10.13    Co-Collateral Agents; Separate Collateral Agents.......................................      38
   10.14    Amendments.............................................................................      40
   10.15    Additional Secured Parties.............................................................      40
   10.16    Legends................................................................................      40
   10.17    Trust Indenture Act....................................................................      41
   10.18    Reinstatement..........................................................................      41
   10.19    Attorneys' Fees........................................................................      41
</TABLE>

                                       iii
<PAGE>

      This Intercreditor and Subordination Agreement (this "AGREEMENT") is dated
as of June 22, 2006 and is by and among U.S. BANK NATIONAL ASSOCIATION, as 2014
Notes Indenture Trustee (the "2014 NOTES INDENTURE TRUSTEE"), Great Lakes Gaming
of Michigan, LLC ("GREAT LAKES"), as lender under the Lakes Notes (as defined
below) and as Manager and Developer (each as defined below) and U.S. BANK
NATIONAL ASSOCIATION, as Collateral Agent.

                                    RECITALS:

      A. PROJECT. The Pokagon Gaming Authority (the "BORROWER"), a wholly-owned
unincorporated instrumentality of the Pokagon Band of the Potawatomi Indians, a
federally recognized Indian tribe (the "TRIBE"), is constructing and plans to
own and operate the Four Winds Casino and Resort, a casino, hotel and resort
complex with related ancillary facilities, located in New Buffalo Township,
Michigan.

      B. MANAGEMENT AGREEMENT. Lakes Entertainment, Inc., f/k/a Lakes Gaming,
Inc. ("LAKES") and the Tribe entered into the Management Agreement dated as of
July 8, 1999, the rights and obligations of Lakes under which were thereafter
assumed by Great Lakes pursuant to an Assignment and Assumption Agreement dated
October 16, 2000 (as amended, the "MANAGER ASSUMPTION") among the Tribe, Lakes
and Great Lakes (such Management Agreement, as amended and restated on October
16, 2000, December 22, 2004 and January 25, 2006, as amended on June 1, 2006, as
further amended from time to time, and as subject to the Assignment and
Assumption Agreement referred to below, the "MANAGEMENT AGREEMENT"), pursuant to
which Great Lakes as the manager (the "MANAGER") is entitled to receive a
management fee in consideration of its services relating to the management and
operation of the Project and certain indemnification and other payments (the
"MANAGEMENT AGREEMENT OBLIGATIONS").

      C. DEVELOPMENT AGREEMENT. Lakes and the Tribe entered into the Development
Agreement dated July 8, 1999, the rights and obligations of Lakes under which
were thereafter assumed by Great Lakes pursuant to the Manager Assumption (such
Development Agreement, as amended and restated on October 16, 2000, December 22,
2004 and January 25, 2006, as amended on June 22, 2006, as further amended from
time to time, and as subject to the Assignment and Assumption Agreement referred
to below, the "DEVELOPMENT AGREEMENT"), pursuant to which Great Lakes as the
developer (the "DEVELOPER") advanced (or has committed to advance) borrowings
under the Lakes Notes to the Tribe for the purposes described in the Development
Agreement.

      D. ASSIGNMENT AND ASSUMPTION AGREEMENT. Pursuant to an Assignment and
Assumption Agreement dated May 25, 2006 (the "ASSIGNMENT AND ASSUMPTION
AGREEMENT"), the Tribe assigned, and the Borrower assumed, the rights and
obligations of the Tribe under the Management Agreement, the Development
Agreement and the other Transaction Documents (as defined in the Development
Agreement).

      E. GREAT LAKES OBLIGATION TO SUBORDINATE. Under the Management Agreement,
Great Lakes agreed to fully subordinate its rights with respect to its
Management Fee (defined in the Management Agreement) to the 2014 Indenture
Trustee, Collateral Agent and

<PAGE>

any other third-party lender or equipment lessor, and under the Development
Agreement, Great Lakes agreed to subordinate its rights to the Borrower's
payment of certain Obligations and its lien on the Collateral to the 2014
Indenture Trustee and equipment lenders or lessors.

      F. 2014 NOTES INDENTURE. Concurrently herewith, the Borrower, the
Guarantors named therein and the 2014 Notes Indenture Trustee have entered into
an Indenture (as in effect on the date hereof, the "2014 NOTES INDENTURE"),
pursuant to which the Borrower will issue the 2014 Notes, as more particularly
described therein.

      G. COLLATERAL. In addition to certain other collateral and security
interests, the 2014 Trustee and Great Lakes intend that (a) the 2014 Notes be
secured by a first priority Lien on the 2014 Notes Separate Collateral, the
First Lien Shared Collateral and the Shared Collateral, (b) the First Lien
Secured Obligations be secured by a first priority Lien on the First Lien Shared
Collateral and the Shared Collateral and (c) the Lakes Secured Obligations be
secured by a second priority Lien on the Shared Collateral, all as more
particularly described in Section 3.

      H. DISBURSEMENT AGREEMENT. The Borrower, the 2014 Notes Indenture Trustee,
Professional Associates Construction Services, Inc., as the independent
construction consultant, Great Lakes and the Disbursement Agent have entered
into the Cash Collateral and Disbursement Agreement as of even date herewith (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "DISBURSEMENT Agreement"), in order to set forth, among other things,
(a) the mechanics for and allocation of the Borrower's request for advances
under the 2014 Notes and (b) the conditions precedent to the Closing Date, to
the initial advance and to subsequent advances.

      I. INTERCREDITOR AND SUBORDINATION AGREEMENT. The parties hereto desire to
enter into this Agreement in order to (a) appoint the Collateral Agent as the
agent for the First Lien Secured Parties to receive, maintain, administer,
enforce and distribute the Shared Collateral and the First Lien Shared
Collateral as provided herein and therein, (b) set forth certain provisions
relating to the Secured Parties' respective rights in the Collateral, the
exercise of remedies upon the occurrence of an event of default, the application
of proceeds of enforcement and certain other matters and (c) set forth certain
provisions relating to the subordination of the Lakes Obligations and certain
other matters with respect thereto.

      NOW, THEREFORE, with reference to the foregoing recitals and in reliance
thereon, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

   1. DEFINITIONS AND GENERAL PROVISIONS.

      1.1   DEFINITIONS The following terms have the meanings set forth below:

      "2014 NOTEHOLDERS" means the holders, from time to time, of the 2014
Notes.

      "2014 NOTES" means all notes issued by the Borrower pursuant to the 2014
Notes Indenture, whether on or after the Closing Date.

                                       2
<PAGE>

      "2014 NOTES INDENTURE" has the meaning given in the recitals hereto.

      "2014 NOTES INDENTURE TRUSTEE" has the meaning given in the preamble
hereto.

      "2014 NOTES SECURED OBLIGATIONS" means all Obligations of the Borrower and
the Pledgors to, or for the benefit of, the 2014 Notes Indenture Trustee or the
2014 Noteholders under the 2014 Notes Indenture, the 2014 Notes, the First Lien
Security Documents and any other agreement, document or instrument entered into
or delivered by the Borrower and the Pledgors on, prior to, or after the date of
the 2014 Notes Indenture with or to or for the benefit of the Collateral Agent,
the 2014 Notes Indenture Trustee or the 2014 Noteholders in connection with the
financing of the Project.

      "2014 NOTES SEPARATE COLLATERAL" means the Construction Disbursement
Account, the Transition Loan Account, the Interest Reserve Account and the
Authority's Payment Account, each as defined in the Disbursement Agreement, and
any other property or assets of the Borrower and the Pledgors (including, but
not limited to net proceeds received from asset sales and insurance and
condemnation events) which has been pledged to secure the 2014 Notes Secured
Obligations but not the Lakes Secured Obligations or Obligations under any
Permitted Additional Senior Secured Debt Agreement, Permitted Additional Junior
Secured Debt Agreement or the Second Lien Secured Obligations; provided that, in
no event shall such collateral include FF&E Collateral so long as any FF&E
Financing secured by such FF&E Collateral is outstanding.

      "AGREEMENT" has the meaning given in the preamble hereto.

      "ASSET SALE" has the meaning assigned to that term in the 2014 Notes
Indenture.

      "ASSIGNMENT AND ASSUMPTION AGREEMENT" has the meaning given in the
recitals hereto.

      "BANKRUPTCY LAW" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute, and any
other state or federal insolvency, reorganization, moratorium or similar law for
the relief of debtors now or hereafter in effect.

      "BORROWER" has the meaning given in the recitals hereto.

      "BUSINESS DAY" has the meaning assigned to that term in the 2014 Notes
Indenture.

      "CLASS" shall mean each class of Secured Parties, i.e., (a) the 2014
Noteholders as holders of the 2014 Notes Secured Obligations shall constitute a
"Class" and (b) Great Lakes, as lender under the Lakes Secured Obligations,
shall constitute a "Class".

      "COLLATERAL" means the following unique and separate categories of
property encumbered to secure the Obligations to any of the Secured Parties: (a)
the Shared Collateral, (b) the 2014 Notes Separate Collateral and (c) the First
Lien Shared Collateral.

                                       3
<PAGE>

      "CLOSING DATE" means June 22, 2006.

      "COLLATERAL AGENT" means U.S. Bank National Association in its capacity as
collateral agent for the benefit of the First Lien Secured Parties, and any
other First Lien Secured Party that from time to time becomes a party hereto in
accordance with Section 10.15, as appointed in the first sentence of Section 3.1
(together with its successors and assigns and any replacement collateral agent
appointed pursuant to the terms hereof).

      "DEVELOPER" has the meaning given in the recitals hereto.

      "DEVELOPMENT AGREEMENT" has the meaning given in the recitals hereto.

      "DIP FINANCING" has the meaning given in Section 7.2.7.

      "DISBURSEMENT AGENT" has the meaning assigned to that term in the
Disbursement Agreement.

      "DISBURSEMENT AGREEMENT" has the meaning given in the recitals hereto.

      "DISCHARGE" means (a) in respect of the 2014 Notes, the satisfaction and
discharge (pursuant to Article 12 of the 2014 Notes Indenture), defeasance
(pursuant to Article 8 of the 2014 Notes Indenture) or other satisfaction in
cash in full of the 2014 Notes Secured Obligations, (b) in respect of the Lakes
Secured Obligations, payment in full in cash of the principal of and interest
and premium (if any) on all Lakes Secured Obligations and the termination of all
Commitments to extend credit under the Second Lien Documents related to the
Lakes Secured Obligations, (c) in respect of any other Class of Secured
Obligations, the termination of all commitments to extend credit under such
Class of Secured Obligations, the discharge, defeasance or payment in full in
cash of the principal of and interest and premium (if any) on all such Secured
Obligations, the termination, cancellation, expiration or cash collateralization
of all letters of credit, if any, issued under any Facility Agreement and the
discharge, defeasance or payment in full in cash of all other Secured
Obligations of such Class that are unpaid at the time the principal and interest
are paid in full in cash, discharged or defeased.

      "EVENT OF DEFAULT" means, as the context requires, the occurrence and
continuance of an "Event of Default" (or comparable term) by or with respect to
the Borrower under the applicable Facility Agreement that has not been waived by
the applicable Project Credit Party (it being understood that the provisions of
Section 1.2 shall not apply to any such waiver).

      "FACILITY AGREEMENTS" means, collectively, the 2014 Notes Indenture, each
Lakes Note, the Management Agreement, the Development Agreement and each other
Lakes Transaction Document, each Permitted Additional Senior Secured Debt
Agreement and each Permitted Additional Junior Secured Debt Agreement.

      "FF&E" means furniture, furnishings or equipment used in the ordinary
course of the business of the Borrower.

                                       4
<PAGE>

      "FF&E COLLATERAL" means collateral consisting of FF&E purchased pursuant
to and securing any FF&E Financing permitted pursuant to the terms of the 2014
Notes Indenture.

      "FF&E FINANCING" means Indebtedness (as such term is defined in the 2014
Notes Indenture) the proceeds of which are used solely to finance the
acquisition by the Borrower of, or the entry into a capital lease by the
Borrower with respect to, FF&E (provided that neither such acquisition nor any
such capital lease shall be required to be completed or entered into at the time
of incurrence of such Indebtedness (as such term is defined in the 2014 Notes
Indenture)), in each case as amended, restated, modified, renewed, refunded,
replaced (whether upon or after termination or otherwise) or refinanced in whole
or in part from time to time.

      "FIRST LIEN" means a Lien granted by a First Lien Security Document to the
Collateral Agent for the benefit of the First Lien Secured Parties (or any of
them), upon any property or assets of the Borrower to secure First Lien Secured
Obligations.

      "FIRST LIEN DOCUMENTS" means, collectively, the 2014 Notes Indenture, the
2014 Notes, each Permitted Additional Senior Secured Debt Agreement, the First
Lien Security Documents, and all other agreements governing, securing or setting
forth the terms of any First Lien Secured Obligations.

      "FIRST LIEN SECURED CLAIM REDUCTION" has the meaning given in Section 7.3.

      "FIRST LIEN SECURED OBLIGATIONS" means, collectively, (a) the 2014 Notes
Secured Obligations and (b) Obligations of the Borrower and the Pledgors under
any Permitted Additional Senior Secured Debt Agreement.

      "FIRST LIEN SECURED PARTIES" means, collectively, the holders of First
Lien Secured Obligations, the 2014 Notes Indenture Trustee, the Collateral Agent
and the holders or representatives for the holders of any Indebtedness under any
Permitted Additional Senior Secured Debt Agreement.

      "FIRST LIEN SECURITY DOCUMENTS" means, collectively, the Security
Agreement, the Lakes Dominion Account Agreement, the Notes Dominion Account
Agreement and any guaranties, deeds of trust, security agreements or collateral
account agreements or any other document creating or perfecting a lien, security
interest or other preferential arrangement, and any related documents executed,
filed, recorded or delivered from time to time by the Borrower in favor of the
Collateral Agent to secure the First Lien Secured Obligations.

      "FIRST LIEN SHARED COLLATERAL" means all properties and assets of the
Borrower and the Pledgors now owned or hereafter acquired with respect to which
the First Lien Secured Parties are granted as security for any First Lien
Secured Obligations but not the Second Lien Secured Obligations or Obligations
under any Permitted Additional Junior Secured Debt Agreement; provided that, in
no event shall such collateral include FF&E Collateral so long as any FF&E
Financing secured by such FF&E Collateral is outstanding.

      "GREAT LAKES" has the meaning given in the preamble hereto.

                                       5
<PAGE>

      "INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:

      (1) in respect of borrowed money;

      (2) evidenced by bonds, notes, debentures or similar instruments or
   letters of credit (or reimbursement agreements in respect thereof);

      (3) in respect of banker's acceptances;

      (4) representing Capital Lease Obligations (as defined in the 2014 Notes
   Indenture) or Attributable Debt (as defined in the 2014 Notes Indenture) in
   respect of sale and leaseback transactions.

      "INSOLVENCY OR LIQUIDATION PROCEEDING" means (a) any case commenced by or
against the Borrower or any Pledgor under any Bankruptcy Law, any other
proceeding for the reorganization, recapitalization or adjustment or marshalling
of the assets or liabilities of the Borrower, any receivership or assignment for
the benefit of creditors relating to the Borrower or any similar case or
proceeding relative to the Borrower or their creditors, as such, in each case
whether or not voluntary; (b) any liquidation, dissolution, marshalling of
assets or liabilities or other winding up of or relating to the Borrower or any
Pledgor, in each case whether or not voluntary and whether or not involving
bankruptcy or insolvency; or (c) any other proceeding of any type or nature in
which substantially all claims of creditors of the Borrower or the Pledgors are
determined and any payment or distribution is or may be made on account of such
claims.

      "JOINDER AGREEMENT" has the meaning given in Section 10.15.

      "LAKES" has the meaning given in the recitals hereto.

      "LAKES DOMINION ACCOUNT" shall mean the account established pursuant to
the Lakes Dominion Account Agreement.

      "LAKES DOMINION ACCOUNT AGREEMENT" shall mean shall mean the Lakes
Dominion Account Agreement, dated as of June 22, 2006 (as amended, restated,
amended and restated, or modified from time to time), between the Borrower,
Great Lakes, U.S. Bank National Association, as collateral agent for the holders
of the First Lien Secured Obligations (as defined therein), and Fifth Third
Bank, in its capacity as a "bank" as defined in Section 9-102 of the UCC.

      "LAKES NOTES" the Lakes Development Note, the Lakes Facility Note, the
Lakes Working Capital Advance Note, the Minimum Payments Note, the Transition
Loan Note and the Non-Gaming Land Acquisition Line of Credit, each as defined in
the Development Agreement and in each case as in effect on the date of this
Agreement.

      "LAKES OBLIGATIONS" means the Lakes Secured Obligations and any present or
future Obligations of the Borrower to or for the benefit of Great Lakes or any
of its Affiliates named by the Borrower pursuant to Section 4.09 of the 2014
Notes Indenture, as each may be refinanced, assumed, transferred or replaced in
accordance with the 2014 Notes Indenture.

                                       6
<PAGE>

      "LAKES SECURED OBLIGATIONS" means all Obligations of the Borrower to or
for the benefit of Great Lakes or any of its Affiliates under the Lakes Notes
and the Second Lien Security Documents related thereto, together with the
Management Agreement Obligations and all other obligations and liabilities of
the Borrower to or for the benefit of Great Lakes or any of its Affiliates under
the Development Agreement or any other Lakes Transaction Documents.

      "LAKES TRANSACTION DOCUMENTS" means the Management Agreement, the
Development Agreement, the Lakes Notes, the other Transaction Documents referred
to in the Development Agreement, and other documents, instruments and agreements
subject to the Assignment and Assumption Agreement and any instruments or
agreements executed pursuant thereto or in connection therewith, each as from
time to time amended as permitted by the 2014 Notes Indenture.

      "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law.

      "MANAGEMENT AGREEMENT" has the meaning given in the recitals hereto.

      "MANAGEMENT AGREEMENT OBLIGATIONS" has the meaning given in the recitals
hereto.

      "MANAGER" has the meaning given in the recitals hereto.

      "MANAGER ASSUMPTION" has the meaning given in the recitals hereto.

      "NET LOSS PROCEEDS" has the meaning given to that term in the 2014 Notes
Indenture.

      "NET PROCEEDS" has the meaning given to that term in the 2014 Notes
Indenture.

      "NOTES DOMINION ACCOUNT" shall mean the account established pursuant to
the Notes Dominion Account Agreement.

      "NOTES DOMINION ACCOUNT AGREEMENT" shall mean the Notes Dominion Account
Agreement, dated as of June 22, 2006 (as amended, restated, amended and
restated, or modified from time to time), between the Borrower, Great Lakes,
U.S. Bank National Association, as collateral agent for the First Lien Secured
Parties (as defined therein), and Fifth Third Bank, in its capacity as a "bank"
as defined in Section 9-102 of the UCC.

      "OBLIGATIONS" means (i) any principal (including reimbursement obligations
with respect to letters of credit whether or not drawn), interest (including, to
the extent legally permitted, all interest accrued thereon after the
commencement of any Insolvency or Liquidation Proceeding at the rate, including
without limitation any applicable post-default rate, specified in the First Lien
Documents or the Second Lien Documents (as the case may be), even if such
interest is not enforceable, allowable or allowed as a claim in such
proceeding), premium (if any), fees, indemnifications, reimbursements, expenses
and other liabilities payable under the

                                       7
<PAGE>

documentation governing any Indebtedness and (ii) solely with respect to the
Borrower and no other Person, the Management Agreement Obligations and other
Lakes Secured Obligations.

      "PERMITTED ADDITIONAL JUNIOR SECURED DEBT AGREEMENT" shall mean one or
more agreements evidencing secured Indebtedness with, or guaranteed by, the
Borrower, provided that (i) such agreement is permitted to be entered into and
secured with a Second Lien on the Shared Collateral pursuant to the First Lien
Documents and the Second Lien Documents, (ii) the provider of such Indebtedness
becomes a party to this Agreement and agrees to be bound by and comply with all
of the terms and provisions hereof and (iii) if such agreements are entered into
on or before the Discharge of the Lakes Secured Obligations, the holders of the
Lakes Secured Obligations consent in writing prior to the incurrence by the
Borrower of such Indebtedness.

      "PERMITTED ADDITIONAL SENIOR SECURED DEBT AGREEMENT" shall mean one or
more agreements evidencing Indebtedness with, or guaranteed by, the Borrower
that is permitted by Section 4.09(b)(1) of the 2014 Notes Indenture and secured
by Liens described in clause (2) of the definition of "Permitted Liens" under
the 2014 Notes Indenture; provided that the provider of any such Indebtedness
becomes a party to this Agreement and agrees to be bound by and comply with all
of the terms and provisions hereof.

      "PLEDGORS" means all Guarantors (as defined in the 2014 Notes Indenture)
of the Borrower guaranteeing the Obligations of the Borrower under the 2014
Notes Indenture as specified therein.

      "PRIMARY OBLIGATIONS" has the meaning given in Section 8.2.

      "PRO RATA PAYMENTS" means:

      (a) with respect to any amount paid to a First Lien Secured Party on a
   given date other than pursuant to Sections 4.10 and 4.30 of the 2014 Notes
   Indenture, that the ratio of such payment to the total payments made to all
   First Lien Secured Parties on such date is the same as the ratio of (i) the
   total principal amount of First Lien Secured Obligations outstanding with
   respect to such First Lien Secured Party to (ii) the total principal amount
   of First Lien Secured Obligations outstanding with respect to all First Lien
   Secured Parties; provided, however, that reimbursement obligations for
   outstanding Letters of Credit that are secured by a Lien on the Shared
   Collateral ranking pari passu with the Liens securing the First Lien Secured
   Obligations shall be considered outstanding First Lien Secured Obligations;
   and

      (b) with respect to any amount paid to a First Lien Secured Party on a
   given date in connection with Sections 4.10 or 4.30 of the 2014 Notes
   Indenture, that such payment has been allocated or offered among the First
   Lien Secured obligations in accordance with such section of the 2014 Notes
   Indenture.

      "PRO RATA SHARE" has the meaning given in Section 8.2.

      "PROJECT" has the meaning given in the 2014 Note Indenture.

                                       8
<PAGE>

      "PROJECT CREDIT PARTIES" means the 2014 Notes Indenture Trustee, Great
Lakes and any other Persons that from time to time become parties hereto in
accordance with Section 10.15.

      "RELEASE" has the meaning given in Section 6.1.

      "REQUIRED FIRST LIEN SECURED PARTIES" means, at any time, the holders or
representatives of holders of more than 50% of the sum of:

         (a) the aggregate outstanding principal amount of First Lien Secured
      Obligations (including outstanding letters of credit issued by the holders
      of the First Lien Secured Obligations whether or not then available or
      drawn); and

         (b) other than in connection with the exercise of remedies, the
      aggregate unfunded commitments to extend credit which, when funded, would
      constitute First Lien Secured Obligation.

      "REQUIRED SECURED PARTIES" shall mean:

      (a) for purposes of causing the Collateral Agent to commence enforcement
   proceedings against the Shared Collateral or the First Lien Shared Collateral
   pursuant to the First Lien Documents, at any time that an Event of Default
   has occurred and is continuing under any First Lien Documents, then the
   Required First Lien Secured Parties shall constitute the "Required Secured
   Parties" for purposes of causing the Collateral Agent to commence enforcement
   proceedings pursuant to the First Lien Documents;

      (b) for purposes of commencing enforcement proceedings against the 2014
   Notes Separate Collateral, the 2014 Notes Indenture Trustee shall constitute
   the "Required Secured Parties";

      (c) for purposes of directing the manner and method of enforcement
   proceedings, once commenced in accordance with clause (a) and (b) above, the
   Collateral Agent shall make all decisions that it deems appropriate to
   diligently prosecute and complete such proceedings unless instructed to do
   otherwise by the Required First Lien Secured Parties.

      (d) for purposes of amending, modifying, varying or waiving any provisions
   of the First Lien Security Documents with respect to Shared Collateral (other
   than the Note Dominion Account Agreement or Lakes Dominion Account Agreement)
   or the First Lien Shared Collateral (including any event of default
   thereunder), the Required First Lien Secured Parties shall constitute the
   "Required Secured Parties" entitled to amend, modify, vary or waive any
   provision of such First Lien Security Documents (without the consent of any
   other Project Credit Party), and any such amendment, modification, variance
   or waiver shall be effective with respect to, and shall automatically apply
   to the corresponding provisions of, any Security Document entered into with
   respect to any Permitted Additional Senior Secured Debt Agreement; provided,
   however, that any Event of Default occurring by reason of a Event of Default
   under the 2014 Notes Indenture or a Permitted Additional Senior Secured Debt
   Agreement may only be waived by the 2014

                                       9
<PAGE>

   Notes Indenture Trustee or the representative under such Permitted Additional
   Senior Secured Debt Agreement, as the case may be, in each case, acting in
   such capacity;

      (e) For purposes of adjusting settlement of all insurance claims and
   condemnation awards in the event of any covered loss, theft or destruction or
   condemnation of any Shared Collateral or any First Lien Shared Collateral,
   and all claims under insurance constituting Shared Collateral or First Lien
   Shared Collateral, the Required First Lien Secured Parties shall constitute
   the "Required Secured Parties"; and

      (f) Notwithstanding clauses (a) through (e) above, if at the time of an
   action by the Required Secured Parties all First Lien Secured Obligations
   have been Discharged, then the Required Secured Creditors at such time shall
   be the representatives of each Class of any Second Lien Secured Obligations.

      "SECOND LIEN DOCUMENTS" means, (i) with respect to Great Lakes, the Lakes
Transaction Documents and the Second Lien Security Documents related thereto and
(ii) with respect other Second Lien Secured Parties, any Permitted Additional
Junior Secured Debt Agreements, the Second Lien Security Documents related
thereto, and all other agreements governing or securing the Second Lien Secured
Obligations entered into or delivered by the Borrower on, prior to, or after the
Closing Date in connection with any of the foregoing.

      "SECOND LIEN SECURED OBLIGATIONS" means all Obligations of the Borrower
under the Second Lien Security Documents (including, for the avoidance of doubt,
the Management Agreement Obligations and the other Lakes Secured Obligations).

      "SECOND LIEN SECURED PARTIES" means, collectively, the holders of the
Second Lien Secured Obligations, and any representative for the holders of
Indebtedness under any Permitted Additional Junior Secured Debt Agreement
(including any assignee of, or other successor to, Great Lakes under the Lakes
Secured Obligations).

      "SECOND LIEN SECURITY DOCUMENTS" means, collectively, the Lakes Dominion
Account Agreement, the Notes Dominion Account Agreement, the Lakes Security
Agreement (as defined in the Indenture), any guaranties, deeds of trust,
security agreements, pledge agreements, collateral agency agreements, or
collateral account agreements or any other document creating or perfecting a
Lien, security interest or other preferential arrangement, and any related
documents executed, filed, recorded or delivered from time to time by the
Borrower in respect of any Second Lien Secured Obligations.

      "SECONDARY OBLIGATIONS" has the meaning given in Section 8.2.

      "SECURED OBLIGATIONS" means, without duplication, any or all of the First
Lien Secured Obligations and/or the Second Lien Secured Obligations, as the
context requires.

      "SECURED PARTIES" means, collectively, the First Lien Secured Parties and
the Second Lien Secured Parties.

      "SECURITIES INTERMEDIARY" means any entity acting in its capacity as
securities intermediary under any deposit or securities account agreements.

                                       10
<PAGE>

      "SECURITY DOCUMENTS" means, collectively, the First Lien Security
Documents and the Second Lien Security Documents.

      "SHARED COLLATERAL" means all real and personal property encumbered to
secure more than one Class of Secured Obligations including, but not limited to,
(i) the Notes Dominion Account and (ii) the Lakes Dominion Account; provided
that "Shared Collateral" shall exclude (a) the 2014 Notes Separate Collateral,
(b) the First Lien Shared Collateral, (c) after the release of all or any
portion of the Shared Collateral or First Lien Shared Collateral in accordance
with the 2014 Notes Indenture and the terms of this Agreement, such released
Collateral or (d) the FF&E Collateral so long as any FF&E Financing secured by
such FF&E Collateral is outstanding.

      "TRIBE" has the meaning given in the recitals hereto.

      1.2 INTERPRETATION.

      To the extent that reference is made in this Agreement to any term defined
in, or to any other provision of, any other agreement, such term or provision
shall continue to have the original meaning thereof notwithstanding any
termination, expiration or amendment of such other agreement; provided, however,
that to the extent that any agreement to which all of the Project Credit Parties
are parties is amended in accordance with the terms thereof and hereof, then any
references herein to the terms and provisions of such agreement shall be to such
terms or provisions as so amended; and provided, further, that to the extent the
2014 Notes Indenture allows for the amendment of any "Collateral Document" (as
defined in the 2014 Notes Indenture) without the consent of the 2014 Notes
Indenture Trustee, any references herein to the terms and provisions of such
document shall be to such terms or provisions as so amended.

   2. DEFERRAL AND SUBORDINATION OF LAKES OBLIGATIONS AND BAND OBLIGATIONS.

      2.1 DEFERRAL AND ACCRUAL OF LAKES OBLIGATIONS.

      Each of Great Lakes and each successor, assign and transferee of any
portion of Lakes Obligations agrees that any Lakes Obligations (i) not permitted
be paid pursuant to the 2014 Notes Indenture or (ii) the payment of which will
result in or cause an Event of Default under the 2014 Notes Indenture shall be
deferred and shall accrue and may be paid only at such time as such amounts
would otherwise be permitted to be paid pursuant to the provisions of the 2014
Notes Indenture (and the payment of which shall not result or cause an Event of
Default under the 2014 Notes Indenture), and none of Great Lakes nor any
successor, assign and transferee of any portion of Lakes Obligations will ask,
demand, sue for, take or receive from the Borrower, by set-off or in any other
manner, direct or indirect payment (whether in cash or property), any such
amounts or any transfer or property in payment of or as security therefor
(provided that Great Lakes and any successor, assign or transferee of any
portion of Lakes Obligations may ask for or demand payments permitted to be paid
pursuant to this Section 2.1, and provided further that Great Lakes and each
successor, assign or transferee of any portion of the Lakes Obligations may make
any demand, give any notice or take any other action permitted by and in
accordance with the terms of the Management Agreement, the Development Agreement
or any other Lakes Transaction Document so long as such action is not prohibited
by this Agreement and the 2014 Notes Indenture). Without limiting the generality
of the foregoing, nothing in the Agreement shall limit, restrict or otherwise
impair any right of Great Lakes or any of its successor, assign and transferee
to terminate the

                                       11
<PAGE>

Management Agreement, the Development Agreement or any other Lakes Transaction
Document in accordance with the terms thereof.

      2.2 [INTENTIONALLY OMITTED].

      2.3 SUBORDINATION TO FIRST LIEN SECURED OBLIGATIONS. Notwithstanding
Section 4.07 of the 2014 Notes Indenture and the payment priorities as specified
therein or any provision of the Management Agreement, Development Agreement,
Lakes Notes or any agreement and instruments referred to therein, all Lakes
Obligations shall be subordinate and junior in right of payment, to the extent
and in the manner set forth in this Section 2, to the Discharge of all First
Lien Secured Obligations. For avoidance of doubt, each of the First Lien Secured
Parties agrees that, subject to the provisions of Section 2.4, at any time prior
to the Discharge of the First Lien Secured Obligations, the Borrower may make,
and Great Lakes and each successor, assign or transferee of any portion of the
Lakes Obligations may receive and retain, payments with respect to the Lakes
Obligations, so long as such payments are permitted to be paid pursuant to, and
will not result in or cause an Event of Default under, the 2014 Notes Indenture.

      2.4 DEFAULT ON FIRST LIEN SECURED OBLIGATIONS. In the event that any Event
of Default shall occur and be continuing with respect to the 2014 Notes
Indenture, or if any payment of Lakes Obligations would create an Event of
Default under the 2014 Notes Indenture, unless and until the prior Discharge of
all First Lien Secured Obligations, the right of Great Lakes to receive any
payments or other distributions with respect to Lakes Obligations as the case
may be shall be deferred during the continuance of such Event of Default.

      2.5 DEFERRAL NOT A DEFAULT. Great Lakes agrees that any deferral pursuant
to this Section 2 of payment of any Lakes Notes shall not constitute a default
under the Management Agreement, Development Agreement, Lakes Notes, or any
agreement and instruments referred to therein so long as the 2014 Notes have not
been accelerated. For avoidance of doubt, the foregoing sentence shall not
limit, restrict or otherwise impair any right of Great Lakes or any of its
successors, assigns or transferees to terminate or exercise any other right or
remedy under the Management Agreement, the Development Agreement or any other
Transaction Documents (as defined in the Development Agreement) in accordance
with the terms thereof, other than as a result of such non-payment under the
Lakes Notes.

      2.6 CONTINUING SUBORDINATION. The subordination effected by this Section 2
is a continuing subordination and may not be modified or terminated by Great
Lakes, any of its successors, assigns and transferees until the prior Discharge
of all First Lien Secured Obligations.

      2.7 SUBORDINATION OF THE LAKES OBLIGATIONS UPON INSOLVENCY OR LIQUIDATION
PROCEEDING. Without limiting the application of Sections 7 or 8, in the event of
any distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of the Borrower or the proceeds thereof to creditors of the Borrower or upon any
Indebtedness of the Borrower, by reason of the liquidation, dissolution or other
winding up, partial or complete, of the Borrower, or any Insolvency or
Liquidation Proceeding, then and in any such event:

                                       12
<PAGE>

          2.7.1.1 The holders of First Lien Secured Obligations shall be
   entitled to receive payment in full in cash of all such First Lien Secured
   Obligation before Great Lakes, its successors, assigns and transferees shall
   be entitled to receive any payment or other distributions on, or with respect
   to, the Lakes Obligations;

          2.7.1.2 Any payment or distribution of any kind or character, whether
   in cash, securities or other property, which but for these provisions would
   be payable or deliverable upon or with respect to the Lakes Obligations shall
   instead be paid or delivered directly to the Collateral Agent for application
   on the First Lien Secured Obligations, whether then due or not due, until
   such First Lien Secured Obligations shall have first been Discharged;

          2.7.1.3 Each of Great Lakes, its successors, assigns and transferees
   hereby irrevocably authorizes and empowers the Collateral Agent, and appoints
   the Collateral Agent as attorney-in-fact, to demand, sue for, collect and
   receive every such payment or distribution and give acquittance therefor, and
   to file and vote claims (in bankruptcy proceedings or otherwise) and take
   such other actions, in the Collateral Agent's own name or otherwise, as the
   Collateral Agent may deem necessary or advisable for the enforcement of these
   provisions. Great Lakes, its successors, assigns and transferees shall duly
   and promptly take such action as may be reasonably requested by the
   Collateral Agent to assist in the collection of the Lakes Obligations for the
   account of any holder of the First Lien Secured Obligations, and to file
   appropriate proofs of claim with respect to the Lakes Obligations and to vote
   the same, and to execute and deliver to the Collateral Agent on demand such
   powers of attorney, proofs of claim, assignments of claim or other
   instruments as may be reasonably requested by the Collateral Agent to enable
   the Collateral Agent or any other holder of First Lien Secured Obligations to
   enforce any and all claims upon or with respect to the Lakes Obligations and
   to collect and receive any and all payments or distributions which may be
   payable or deliverable at any time upon or with respect to the Lakes
   Obligations. In addition, none of Great Lakes, any of its successors, assigns
   or transferees shall take any action (whether oral, written or otherwise) in
   contravention of any action of the Collateral Agent duly taken and permitted
   hereunder. Such appointment as attorney-in-fact pursuant to this Section
   2.7.1.3 is irrevocable and coupled with an interest until payment in full in
   cash and complete performance of all the First Lien Secured Obligations. The
   Collateral Agent may appoint a substitute attorney-in-fact. Each of Great
   Lakes, its successors, assigns and transferees ratifies all actions
   reasonably taken by the attorney-in-fact but, nevertheless, if the Collateral
   Agent requests, each of them will specifically ratify any action taken by the
   attorney-in-fact by executing and delivering to the attorney-in-fact or to
   any entity designated by the attorney-in-fact all documents necessary to
   effect such ratification;

          2.7.1.4 Following any Insolvency or Liquidation Proceedings or Event
   of Default under the 2014 Notes Indenture, each of Great Lakes, its
   successors, assigns and transferees will forthwith deliver any direct or
   indirect payment thereafter made to it upon or with respect to the Lakes
   Obligations prior to the Discharge of all First Lien Secured Obligations to
   the Collateral Agent in precisely the form received (except for the
   endorsement or assignment by Great Lakes and its successors, assigns and
   transferees

                                       13
<PAGE>

   where necessary) for application on the First Lien Secured Obligations,
   whether then due or not due. Until so delivered, the payment or distribution
   shall be held in trust by Great Lakes, its successors, assigns and
   transferees as property of the holders of the First Lien Secured Obligations.
   In the event of the failure by Great Lakes, its successors, assigns and
   transferees to make any such endorsement or assignment, the Collateral Agent,
   or any of its officers or employees, are hereby irrevocably authorized to
   make the same.

      2.8 [INTENTIONALLY OMITTED].

      2.9 JUDGMENT LIENS. In the event any of Great Lakes, its successors,
assigns and transferees becomes a judgment Lien creditor in respect of any
assets of the Borrower as a result of its enforcement of its rights as a
creditor with respect to the Lakes Obligations such judgment Lien shall be
subject to the terms of this Agreement for all purposes (including in relation
to the First Lien Secured Obligations) as the other Liens securing the Second
Lien Secured Obligations are subject to this Agreement.

      2.10 WHEN PROCEEDS MUST BE PAID OVER. Any payment received by Great Lakes,
its successors, assigns and transferees (including, without limitation, payments
and prepayments made for application against the Lakes Secured Obligations)
prior to the Discharge of all First Lien Secured Obligations when such payment
is not expressly permitted by the terms of this Agreement or the 2014 Notes
Indenture shall be held in trust for the benefit of the holders of First Lien
Secured Obligations and shall be turned over to the Collateral Agent promptly
upon the request of the Collateral Agent.

      2.11 SUBROGATION. With respect to the value of any payments or
distributions in cash, property or other assets that Great Lakes or any of its
successors, assigns and transferees pays over to the Collateral Agent or any of
the First Lien Secured Parties under the terms of this Agreement, Great Lakes
shall be subrogated to the rights of the Collateral Agent or such First Lien
Secured Parties; provided, however, that, Great Lakes and its successors,
assigns and transferees hereby agree not to assert or enforce all such rights of
subrogation it may acquire as a result of any payment hereunder until the
Discharge of all First Lien Secured Obligations has occurred. To the extent
permitted by applicable law, the value of any payments or distributions in cash,
property or other assets received by Great Lakes or its successors, assigns and
transferees that are paid over to the Collateral Agent or any First Lien Secured
Party pursuant to this Agreement shall not reduce any of the Lakes Obligations.

   3. COLLATERAL AGENT.

      3.1 APPOINTMENT. The 2014 Notes Indenture Trustee hereby designates U.S.
Bank National Association as the Collateral Agent to act as specified herein and
in each of the First Lien Security Documents. Each First Lien Secured Party
hereby irrevocably authorizes, and each holder of any instrument evidencing any
First Lien Obligations by the acceptance of such instrument evidencing any First
Lien Obligations shall be deemed irrevocably to authorize, the Collateral Agent
to take such action on its behalf under the provisions of this Agreement, the
First Lien Security Documents and any other instruments and agreements referred
to herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Collateral Agent by the terms hereof and thereof and

                                       14
<PAGE>

such other powers as are reasonably incidental thereto. The Collateral Agent may
perform any of its duties hereunder or thereunder by or through its authorized
agents or employees.

      3.2 NATURE OF DUTIES. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth herein and in the First Lien
Security Documents. Neither the Collateral Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or under the First Lien Security Documents or in
connection herewith or therewith to the maximum extent permitted by law. The
duties of the Collateral Agent shall be mechanical and administrative in nature.
The Collateral Agent shall not have, by reason of this Agreement, the First Lien
Security Documents, any Facility Agreement or any other document or instrument
or otherwise, a fiduciary relationship in respect of any First Lien Secured
Party; and nothing in this Agreement, the First Lien Security Documents, any
Facility Agreement or any other document or instrument, expressed or implied, is
intended to or shall be so construed as to impose upon the Collateral Agent any
obligations in respect of the First Lien Security Documents except as expressly
set forth herein or therein.

      3.3 LACK OF RELIANCE ON THE COLLATERAL AGENT. Independently and without
reliance upon the Collateral Agent, each First Lien Secured Party, to the extent
it deems appropriate, has made and shall continue to make (a) its own
independent investigation of the financial condition and affairs of the Borrower
and their Affiliates in connection with the making and the continuance of the
Obligations and the taking or not taking of any action in connection therewith,
and (b) its own appraisal of the creditworthiness of the Borrower and their
Affiliates, and the Collateral Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any First Lien Secured
Party with any credit or other information with respect thereto, whether coming
into its possession before the extension of any Obligations, or at any time or
times thereafter. The Collateral Agent shall not be responsible to any First
Lien Secured Party for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of the First
Lien Security Documents, the First Lien Shared Collateral or the Shared
Collateral or the financial condition of the Borrower or any of their Affiliates
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of the First Lien
Security Documents, or the financial condition of the Borrower or their
Affiliates, or the existence or possible existence of any Event of Default.

      3.4 CERTAIN RIGHTS OF THE COLLATERAL AGENT; PARI PASSU IN PRIORITY OF
LIENS; SEPARATE COLLATERAL.

          3.4.1 Prior to the discharge of the First Lien Secured Obligations, no
Secured Party shall have the right to take any action with respect to (or
against) any Shared Collateral or First Lien Shared Collateral, but instead may
only cause the Collateral Agent to take any action with respect to (or against)
any Shared Collateral or First Lien Shared Collateral in accordance with the
terms and subject to the limitations set forth herein. Notwithstanding the
preceding sentence or any other provision of this Agreement to the contrary, the
2014 Notes Indenture Trustee (acting in accordance with the 2014 Notes
Indenture) shall have the right at any time to exercise any rights or remedies
with respect to the 2014 Notes Separate Collateral. If the Collateral Agent
shall request instructions from the Required Secured Parties with respect to

                                       15
<PAGE>

any act or action (including failure to act) in connection with this Agreement
or the First Lien Security Documents, the Collateral Agent shall be entitled to
refrain from such act or taking such action unless and until it shall have
received instructions from the Required Secured Parties and to the extent
requested, appropriate indemnification in respect of actions to be taken, and
the Collateral Agent shall not incur liability to any Secured Party or any other
Person by reason of so refraining. Without limiting the foregoing, no Secured
Party shall have any right of action whatsoever against the Collateral Agent as
a result of the Collateral Agent acting or refraining from acting (i) hereunder
in accordance with the instructions of the Required Secured Parties or (ii)
under any First Lien Security Document as provided for therein.

          3.4.2 Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent is authorized, but not obligated, (a) to take
any action reasonably required to perfect or continue the perfection of the
Liens on the First Lien Shared Collateral and the Shared Collateral for the
benefit of the First Lien Secured Parties, including entering into any Security
Document with respect to First Lien Shared Collateral or any other document in
connection with a Security Document, as secured party or beneficiary, as
applicable, on behalf of the applicable First Lien Secured Parties (and each
Project Credit Party, on behalf of the First Lien Secured Parties it represents,
agrees to be bound by such documents to the extent the Collateral Agent has
entered into such documents on behalf of such parties), and (b) when
instructions from the Required Secured Parties have been requested by the
Collateral Agent but have not yet been received, to take any action which the
Collateral Agent, in good faith, believes to be reasonably required to promote
and protect the interests of the First Lien Secured Parties in the First Lien
Shared Collateral and the Shared Collateral; provided that once instructions
have been received, the actions of the Collateral Agent shall be governed
thereby and the Collateral Agent shall not take any further action which would
be contrary thereto. In addition, once the Collateral Agent has been instructed
by the Required Secured Parties to commence enforcement proceedings under the
First Lien Security Documents, the Collateral Agent shall in good faith and in
the manner reasonably believed by the Collateral Agent to be in the interest of
the First Lien Secured Parties, promptly commence and diligently pursue to
completion the exercise of all rights and remedies available to the Collateral
Agent under the First Lien Security Documents, subject to the Collateral Agent's
right to request instructions and/or indemnities from the Required Secured
Parties as provided in Sections 3.4.1 and 3.4.3.

          3.4.3 Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent shall not be required to take any action that
exposes or, in the good faith judgment of the Collateral Agent may expose, the
Collateral Agent or its officers, directors, agents or employees to personal
liability unless the Collateral Agent shall be adequately indemnified as
provided herein or that is, or in the good faith judgment of the Collateral
Agent may be, contrary to the First Lien Security Documents or applicable law.
In addition, none of the provisions of this Agreement shall be construed to
require the Collateral Agent to expend or risk its own funds or otherwise to
incur any personal financial liability in the performance of any of its duties
hereunder or under the First Lien Security Documents, or in the exercise of any
of its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or inadequate indemnity against such risk or liability
is not reasonably assured to it.

                                       16
<PAGE>

      3.5 RELIANCE. The Collateral Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or facsimile message, cablegram, order
or other document or telephone message signed, sent or made by a Person believed
by it to be authorized to sign, send or make the same, and, with respect to all
legal matters pertaining to this Agreement or the First Lien Security Documents
and its duties hereunder and thereunder, upon the advice of counsel selected by
it.

      3.6 INDEMNIFICATION. To the extent the Collateral Agent is not reimbursed
and indemnified by the Borrower under the respective First Lien Security
Documents to which they are a party, the Collateral Agent shall be entitled to
reimbursement from the proceeds of the First Lien Shared Collateral and the
Shared Collateral, but shall have no claim against any First Lien Secured Party
for reimbursement or indemnification.

      3.7 COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY. The Collateral Agent may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrower or any of their Affiliates as
if it were not performing the duties specified herein or in the First Lien
Security Documents.

      3.8 HOLDERS. The Collateral Agent may deem and treat the registered owner
of any 2014 Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Collateral Agent. Any request, authority
or consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the registered owner of any 2014 Note shall
be final and conclusive and binding on any subsequent holder, transferee,
assignee or endorsee, as the case may be, of such 2014 Note.

      3.9 RESIGNATION AND REMOVAL OF THE COLLATERAL AGENT.

          3.9.1 The Collateral Agent may resign from the performance of all of
its functions and duties under the First Lien Security Documents at any time by
giving 30 days' prior written notice to the Borrower and each First Lien Secured
Parties and may be removed at any time, with or without cause, by the Required
First Lien Secured Parties.

          3.9.2 Upon receiving notice of any such resignation or removal, a
successor Collateral Agent shall be appointed by the Required First Lien Secured
Parties; provided, however, that such successor Collateral Agent shall be (a) a
bank or trust company having a combined capital and surplus of at least
$500,000,000 subject to supervision or examination by a federal or state banking
authority, (b) authorized under the laws of the jurisdiction of its
incorporation or organization to assume the functions of the Collateral Agent
and (c) not disqualified to act in such capacity pursuant to applicable gaming
laws and regulations. If the appointment of such successor shall not have become
effective (as provided in Section 3.9.3) within such 30 day period after the
Collateral Agent shall have given such notice, then the Required First Lien
Secured Parties may petition a court of competent jurisdiction for the
appointment of a successor Collateral Agent. Such court shall, after such notice
as it may deem proper, appoint a successor Collateral Agent meeting the
qualifications specified in this Section 3.9.2. The First Lien Secured Parties
hereby consent to such petition and appointment so long as such criteria are
met.

                                       17
<PAGE>

          3.9.3 The resignation of a Collateral Agent shall become effective on
the date specified in the notice provided in accordance with Section 3.9.1. The
removal of a Collateral Agent shall become effective only upon the execution and
delivery of such documents or instruments as are necessary to transfer the
rights and obligations of the Collateral Agent under the First Lien Security
Documents and the recording or filing of such documents, instruments or
financing statements as may be necessary to maintain the priority and perfection
of any security interest granted by any First Lien Security Document. Copies of
each such document or instrument shall be delivered to each Project Credit
Party. The appointment of a successor Collateral Agent pursuant to Section 3.9.2
shall become effective upon the acceptance of such appointment (and execution by
such successor of the documents, instruments or financing statements referred to
above) and such successor Collateral Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent and shall be deemed to be the "Collateral Agent" hereunder.

          3.9.4 After any resignation or removal hereunder of the Collateral
Agent, the indemnification provisions of this Agreement shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it in
connection with its agency hereunder while it was Collateral Agent.

   4. COLLATERAL, PRIORITY, SUBORDINATION AND RELEASE OF LIENS.

      4.1 LIENS AND SECURITY INTERESTS. The Project Credit Parties agree that
each Secured Party shall have the benefit of the following Liens on and security
interests in the Collateral:

          4.1.1 COLLATERAL FOR 2014 NOTES SECURED OBLIGATIONS. The 2014 Notes
Secured Obligations shall be secured by a first priority Lien on and security
interest in the 2014 Notes Separate Collateral, the First Lien Shared Collateral
and the Shared Collateral, which first priority Lien and security interest in
the First Lien Shared Collateral and the Shared Collateral shall be pari passu
in priority with the Lien and security interest in the First Lien Shared
Collateral and the Shared Collateral securing the Obligations securing any
Permitted Additional Senior Secured Debt Agreement, subject to the sharing of
proceeds provisions hereof.

          4.1.2 COLLATERAL FOR OTHER PERMITTED ADDITIONAL SENIOR SECURED DEBT.
The Permitted Additional Senior Secured Debt Agreements shall be secured by a
first priority Lien on and security interest in the First Lien Shared Collateral
and the Shared Collateral, which first priority Lien and security interest in
the First Lien Shared Collateral and the Shared Collateral shall be pari passu
in priority with the Lien and security interest in the First Lien Shared
Collateral and the Shared Collateral securing the 2014 Notes Secured
Obligations, subject to the sharing of proceeds provisions hereof.

          4.1.3 COLLATERAL FOR LAKES SECURED OBLIGATIONS. The Lakes Secured
Obligations shall be secured by a second priority Lien on and second priority
security interest in the Shared Collateral, which second priority Lien and
second priority security interest in the Shared Collateral shall be pari passu
in priority with the Lien and security interest in the Shared Collateral
securing the Obligations securing any Permitted Additional Junior Secured

                                       18
<PAGE>

Debt Agreement, subject to the sharing of proceeds provisions hereof, and
subject and subordinate to the Lien and security interest in the Shared
Collateral securing the First Lien Secured Obligations.

          4.1.4 COLLATERAL FOR PERMITTED ADDITIONAL JUNIOR SECURED DEBT. Any
Permitted Additional Junior Secured Debt Agreements shall be secured by a second
priority Lien on and security interest in the Shared Collateral, which second
priority Lien and security interest in the Shared Collateral shall be pari passu
in priority with the Lien and security interest in the Shared Collateral
securing the Lakes Secured Obligations, subject to the sharing of proceeds
provisions hereof and subject and subordinate to the Lien and security interest
in the Shared Collateral securing the First Lien Secured Obligations.

      4.2 SEPARATE COLLATERAL. The 2014 Notes Separate Collateral secures only
the 2014 Notes Secured Obligations, and no other Secured Party shall have any
Liens thereon or any security interest therein. The First Lien Shared Collateral
secures only the First Lien Secured Obligations, and no other Secured Party
shall have any Liens thereon or any security interest therein.

      4.3 CONFIRMATION OF LIENS. Each Secured Party hereby confirms and agrees
that the Liens and security interests held by or for the benefit of such Secured
Party in the Collateral, as provided for in the preceding provisions of this
Section 4, shall secure all Obligations of the Borrower now or hereafter owing
to such Secured Party in connection with the applicable Facility Agreement
throughout the term of this Agreement, in each case with the priority specified
in Section 4.1, notwithstanding (a) the availability of any other collateral to
any Secured Party, (b) the execution, delivery, recording, filing or perfection
of any of the Security Documents, or the order of such execution, delivery,
recording, filing or perfection or the priorities which would otherwise result
therefrom, (c) the fact that any Lien or security interest created by any of the
Security Documents, or any claim with respect thereto, is or may be
subordinated, avoided or disallowed in whole or in part under any Bankruptcy
Law, (d) the taking of possession of any Shared Collateral or any First Lien
Shared Collateral by any Project Credit Party (and such possession to be deemed
to be on behalf of all Project Credit Parties for purposes of perfecting the
security interest or Lien of each therein) or (e) any other matter whatsoever.
All provisions of this Agreement, including but not limited to, all matters
relating to the creation, validity, perfection, priority, subordination and
release of the Liens and security interests intended to be created by any
Security Document and all provisions regarding the allocation and priority of
payments with respect to any Class of Secured Obligations shall survive any
Insolvency or Liquidation Proceeding and be fully enforceable by and against
each Project Credit Party during any such proceeding. In the event of an
Insolvency or Liquidation Proceeding, each Secured Party further confirms and
agrees that the Obligations due and outstanding under and with respect to each
Class of Secured Obligations shall include all principal, additional advances
permitted thereunder, interest, default interest, London Interbank Offered Rate
(LIBOR) breakage and swap breakage, post petition interest and all other amounts
due thereunder, for periods before and for periods after the commencement of any
such proceedings, even if the claim for such amounts is disallowed pursuant to
applicable law, and all proceeds from the sale or other disposition of the
Collateral shall be paid to the Secured Parties in the order and priority
provided for in this Section 4 notwithstanding the disallowance of any such
claim or the invalidity or subordination of any Lien on or security interest in
the

                                       19
<PAGE>

Collateral under applicable law and further notwithstanding any release of any
such Lien or security interest pursuant to Section 4.4.

      4.4 RELEASES

          4.4.1 Great Lakes hereby represents and warrants that it has released
all Liens on collateral securing Lakes Secured Obligations not constituting the
Shared Collateral prior to the date hereof; Great Lakes further represents and
agrees that it shall not allow any collateral not constituting the Shared
Collateral to secure the Lakes Secured Obligations prior to the Discharge of the
First Lien Secured Obligations.

          4.4.2 If in connection with the exercise of the First Lien Required
Secured Party's remedies in respect of any Shared Collateral as provided for in
Section 5.2, the Collateral Agent, on behalf of the First Lien Secured Parties,
releases its Liens on any part of the Shared Collateral, then the Liens of the
Second Lien Secured Parties on the Shared Collateral sold or disposed of in
connection with such exercise, shall be automatically, unconditionally and
simultaneously released. The Second Lien Secured Parties promptly shall execute
and deliver to the Collateral Agent such termination statements, releases and
other documents as the Collateral Agent may request to effectively confirm such
release.

          4.4.3 If in connection with any sale, lease, exchange, transfer or
other disposition of any Shared Collateral permitted under Section 4.10 of the
2014 Notes Indenture, the Collateral Agent, on behalf of the Required First Lien
Secured Parties, releases its Liens on any part of the Shared Collateral, then
the Liens of the Second Lien Secured Parties on such Shared Collateral shall be
automatically, unconditionally and simultaneously released. The Second Lien
Secured Parties promptly shall execute and deliver to the Collateral Agent such
termination statements, releases and other documents as the Collateral Agent may
request to effectively confirm such release.

          4.4.4 If in connection with the distribution by the Borrower of Net
Loss Proceeds (as defined in the 2014 Notes Indenture) from any Event of Loss of
any Shared Collateral as required under Section 4.30 of the 2014 Notes
Indenture, the Collateral Agent, on behalf of the Required First Lien Secured
Parties, releases its Liens on any part of the Shared Collateral, then the Liens
of the Second Lien Secured Parties on such Shared Collateral shall be
automatically, unconditionally and simultaneously released. The Second Lien
Secured Parties promptly shall execute and deliver to the Collateral Agent such
termination statements, releases and other documents as the Collateral Agent may
request to effectively confirm such release.

          4.4.5 Until the Discharge of First Lien Secured Obligations shall
occur, each of the Second Lien Secured Parties hereby irrevocably constitutes
and appoints the Collateral Agent as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of each of the
Second Lien Secured Parties for the purpose of carrying out the terms of this
Section 4.4, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary to accomplish the purposes of
this Section 4.4, including any endorsements or other instruments of transfer or
release.

                                       20
<PAGE>

      4.4.5 Notwithstanding the release of any Lien in accordance with this
Section 4, the proceeds of any Collateral released in accordance with this
Section 4 by any Secured Party or any successor, assign or transferee shall be
distributed in accordance with the terms of this Agreement.

   5. RIGHTS AND LIMITATION OF ACTIONS WITH RESPECT TO COLLATERAL.

      5.1 RIGHTS AND LIMITATIONS APPLICABLE TO SECOND LIEN SECURED PARTIES.

          5.1.1 Subject to Section 5.1.2, at any time prior to the Discharge of
all First Lien Secured Obligations, the Second Lien Secured Parties shall not,
and shall not authorize or direct any other Person acting for them or to,
exercise any right or remedy with respect to any Collateral (including any right
of set-off) or take any action to enforce, collect or realize upon any
Collateral, including, without limitation, any right, remedy or action to:

      (a)   take possession of or control over any Collateral;

      (b)   exercise any collection rights in respect of any Collateral;

      (c)   exercise any right of set-off against any property subject to any
            Lien securing any First Lien Secured Obligations;

      (d)   foreclose upon any Collateral or take or accept any transfer of
            title in lieu of foreclosure upon any Collateral;

      (e)   enforce any claim to the proceeds of insurance upon any Collateral;

      (f)   deliver any notice, claim or demand relating to the Collateral to
            any Person (including any securities intermediary, depositary bank
            or landlord) in the possession or control of any Collateral or
            acting as bailee, custodian or agent for any of the First Lien
            Secured Obligations in respect of any Collateral;

      (g)   otherwise enforce any remedy available upon default for the
            enforcement of any Lien upon any Collateral;

      (h)   deliver any notice or commence any proceeding for any of the
            foregoing purposes;

      (i)   seek relief in any Insolvency or Liquidation Proceeding permitting
            it to do any of the foregoing; or

      (j)   retain any proceeds of accounts and other obligations receivable
            paid to it directly by any account debtor.

          5.1.2 Notwithstanding the foregoing, nothing in this Section 5.1 shall
prohibit, limit or restrict Great Lakes or any successor, assign or transferee
of any portion of the Lakes Obligations from applying funds comprising
Collateral as contemplated by the Lakes

                                       21
<PAGE>

Transaction Documents, so long as such application is permitted by the 2014
Notes Indenture and this Agreement.

          5.1.3 Notwithstanding Section 5.1.1, any right or remedy set forth in
clauses (a) through (j) thereof may be exercised and any such action may be
taken, authorized or instructed by the Second Lien Secured Parties as necessary
to redeem any Collateral in a creditor's redemption permitted by law or to
deliver (subject to the prior Discharge of the First Lien Secured Obligations)
any notice or demand necessary to enforce any right to claim, take or receive
proceeds of Collateral remaining after the Discharge of the First Lien Secured
Obligations in the event of foreclosure or other enforcement of any Lien
securing the First Lien Secured Obligations, so long as the enforcement of any
such Lien securing the First Lien Secured Obligations is not adversely affected
or delayed.

          5.1.4 Notwithstanding Section 5.1.1, any right or remedy set forth in
clauses (a) through (j) thereof may be exercised and any such action may be
taken, authorized or instructed by the Second Lien Secured Parties:

      (a)   as necessary to perfect a Lien upon any Shared Collateral by any
            method of perfection except through possession or control; or

      (b)   as necessary to create, prove, preserve or protect (but not enforce)
            the Liens upon any Shared Collateral securing the Second Lien
            Secured Obligations.

          5.1.5 Nothing in this Agreement or any other Facility Agreement shall
affect the relative rights of the Second Lien Secured Parties, collectively, vis
a vis creditors of the Borrower (other than the First Lien Secured Parties).

      5.2 RIGHTS AND LIMITATIONS APPLICABLE TO THE FIRST LIEN SECURED PARTIES.

          5.2.1 At all times until Discharge of all First Lien Secured
Obligations, the Collateral Agent at the direction of the Required Secured
Parties shall have the exclusive right to manage, perform and enforce the terms
of the First Lien Security Documents with respect to all Shared Collateral and
to exercise and enforce all privileges and rights thereunder according to its
discretion and exercise of its business judgment, including, without limitation,
the exclusive right to take the actions enumerated in clauses (a) through (j) of
Section 5.1.1.

      In connection therewith, provided that each of the First Lien Secured
Parties acts in a commercially reasonable manner and otherwise in accordance
with applicable law, each Second Lien Secured Party waives any and all rights to
affect the method or challenge the appropriateness of any action by the First
Lien Secured Parties and hereby consents to each of the First Lien Secured
Parties exercising or not exercising such rights and remedies as if no Lien
securing any Second Lien Secured Obligations existed, except only that the
Second Lien Secured Parties reserve all rights granted by law (i) to request or
receive notice of any sale of Shared Collateral in foreclosure of any Lien
securing the First Lien Secured Obligations and (ii) to redeem any Shared
Collateral or enforce any right to claim, take or receive proceeds of Shared
Collateral remaining after the Discharge of the First Lien Secured Obligations
as provided in Section 5.1.3.

                                       22
<PAGE>

      5.3 NOTIFICATION OF EVENTS OF DEFAULT. Each Project Credit Party hereby
agrees, for the benefit of each other Project Credit Party, to use its best
efforts to provide written notice to each other Project Credit Party within 10
Business Days after obtaining actual knowledge of the occurrence or assertion of
an Event of Default under their respective Facility Agreements. No Project
Credit Party shall have any liability to the other for failing to provide any
such notice.

      5.4 CERTAIN WAIVERS BY SECOND LIEN SECURED PARTIES. To the fullest extent
permitted by law, the Second Lien Secured Parties waive and agree not to assert
or enforce, at any time prior to the Discharge of all First Lien Secured
Obligations:

      (a)   any right of subrogation to the rights or interests of the First
            Lien Secured Parties or any claim or defense based upon impairment
            of any such right of subrogation (it being understood and agreed
            that the Second Lien Secured Parties shall have such subrogation
            rights as substantially provided in Section 2.11);

      (b)   any right of marshalling accorded to a junior lienholder, as against
            a priority lienholder, under equitable principles; and

      (c)   any statutory right of appraisal or valuation accorded to a junior
            lienholder in a proceeding to foreclose a senior Lien;

in each case, that otherwise may be enforceable in respect of any Lien securing
any of the Second Lien Secured Obligations as against the First Lien Secured
Parties.

      5.5 AGENT FOR PERFECTION. Each of the Project Credit Parties agrees to
hold all Collateral that is part of the Shared Collateral in its respective
possession, custody, or control (or in the possession, custody, or control of
agents or bailees for either, as applicable) as agent for itself and the other
Project Credit Parties solely for the purpose of perfecting the security
interest granted to each in such Collateral subject to the terms and conditions
of this Section 5.5. None of the Project Credit Parties shall have any
obligation whatsoever to the other Project Credit Parties to assure that the
Collateral is genuine or owned by the Borrower, or to preserve rights or
benefits of any Person. The duties or responsibilities of each Project Credit
Party under this Section 5.5 are and shall be limited solely to holding or
maintaining control of the Collateral as agent for itself and the others for
purposes of perfecting the Lien held by the Project Credit Parties. Persons
acting pursuant to this Section 5.5 are not and shall not be deemed to be
fiduciaries of any kind for any other Person.

      5.6 WHEN PROCEEDS MUST BE PAID OVER. Any payment received by any Second
Lien Secured Party (including, without limitation, payments and prepayments made
for application against the Second Lien Secured Obligations and all other
payments and deposits made pursuant to any provision of any Permitted Additional
Junior Secured Debt Agreement or any Second Lien Security Document) prior to the
Discharge of all First Lien Secured Obligations when such payment is not
expressly permitted by the terms of this Agreement shall be held in trust for
the benefit of the First Lien Secured Parties and shall be turned over to the
Collateral Agent promptly upon the request of the Collateral Agent or any other
First Lien Secured Party.

                                       23
<PAGE>

   6. RIGHTS AND LIMITATIONS WITH RESPECT TO AMENDMENTS, WAIVERS AND OTHER
      ACTIONS UNDER FACILITY AGREEMENTS.

      6.1 RIGHTS AND LIMITATIONS APPLICABLE TO SECOND LIEN SECURED PARTIES.
Prior to the Discharge of the First Lien Secured Obligations, the Second Lien
Secured Parties will not enter into, authorize or direct, any amendment of or
supplement to any Second Lien Security Document relating to any Collateral that
would make such document inconsistent in any material respect with the
comparable provisions of the First Lien Security Document upon such Collateral.
For purposes of the foregoing, any provision granting rights or powers to any
Second Lien Secured Party that are not granted to the First Lien Secured Parties
will constitute a material inconsistency. For avoidance of doubt, each Project
Credit Party acknowledges and agrees (i) that certain inconsistencies referred
to in the Release and Indemnification Agreement, dated as of June 22, 2006, by
and among Lakes, Great Lakes, Banc of America Securities LLC, Banc of America
Leasing & Capital, LLC, Bank of America, N.A., Fifth Third Bank and U.S. Bank
National Association (the "RELEASE") exist between (A) the 2014 Notes Indenture
and other First Lien Security Documents, and (B) the Lakes Transaction Documents
and (ii) that the existence of such inconsistencies shall not be deemed a breach
of this Section 6.1.

      6.2 RIGHTS AND LIMITATIONS APPLICABLE TO THE FIRST LIEN SECURED PARTIES.

          6.2.1 The First Lien Secured Parties may at any time and from time to
time, without the consent of or notice to any Second Lien Secured Party, without
incurring any responsibility or liability to any Second Lien Secured Party and
without in any manner prejudicing, affecting or impairing the ranking or
priority of the Liens and the security interests in the Collateral created by
the First Lien Security Documents or the rights and obligations of the Project
Credit Parties hereunder, take (or instruct the Collateral Agent to take) any of
the following, subject to the provisions of Section 5.2:

      (a)   make loans and advances to the Borrower or issue, guaranty or obtain
            letters of credit for account of the Borrower or otherwise extend
            credit to the Borrower in any amount and on any terms, whether
            pursuant to a commitment or as a discretionary advance and whether
            or not any default or Event of Default or failure of condition is
            then continuing;

      (b)   change the manner, place or terms of payment or extend the time of
            payment of, or renew or alter, compromise, accelerate, extend or,
            subject to Section 10.14, refinance any First Lien Secured
            Obligations or any agreement, guaranty, Lien or obligation of the
            Borrower or any other Person in any manner related thereto, or
            otherwise amend, supplement or change in any manner any First Lien
            Secured Obligations or Liens securing First Lien Secured Obligations
            or any such agreement, guaranty, Lien or obligation;

      (c)   increase or reduce the amount of any First Lien Secured Obligation
            or the interest, premium, fees or other amounts payable in respect
            thereof;

                                       24
<PAGE>

      (d)   release or discharge any First Lien Secured Obligation or any
            guaranty thereof or any agreement or obligation of the Borrower or
            any other Person with respect thereto;

      (e)   take or fail to take any first priority Lien or any other collateral
            security for any First Lien Secured Obligation or take or fail to
            take any action which may be necessary or appropriate to ensure that
            any Lien securing a First Lien Secured Obligation or any other Lien
            upon any property is duly enforceable or perfected or entitled to
            priority as against any other Lien or to ensure that any proceeds of
            any property subject to any Lien are applied to the payment of any
            First Lien Secured Obligation or any other obligation secured
            thereby;

      (f)   release, discharge or permit the lapse of any or all Liens securing
            a First Lien Secured Obligation or any other Liens upon any property
            at any time;

      (g)   exercise or enforce, in any manner, order or sequence, or fail to
            exercise or enforce, any right or remedy against the Borrower or any
            collateral security or any other Person or property in respect of
            any First Lien Secured Obligation or any Lien securing any First
            Lien Secured Obligation or any right or power under the First Lien
            Security Documents and hereunder and apply any payment or proceeds
            of collateral in any order of application; or

      (h)   sell, exchange, release, foreclose upon or otherwise deal with any
            property that may at any time be subject to any Lien securing any
            First Lien Secured Obligation.

          6.2.2 No (a) exercise, delay in exercising or failure to exercise any
right arising under the First Lien Security Documents or this Agreement, (b) act
or omission of any First Lien Secured Party in respect of the Borrower or any
other Person or any collateral security for any First Lien Secured Obligation or
any right arising under the First Lien Security Documents and hereunder, (c)
change, impairment, or suspension of any right or remedy of any First Lien
Secured Party, or (d) other act, failure to act, circumstance, occurrence or
event, including, without limitation, the acts listed in Section 6.2.1, which,
but for this provision, would or could act as a release or exoneration of the
agreements or obligations of any Second Lien Secured Party hereunder shall in
any way affect, decrease, diminish or impair any of such agreements or
obligations, including, without limitation, the Lien subordination provisions
and the standstill obligations set forth in Sections 4.1 and 5.1.

      6.3 WAIVERS AND DEFERRALS OF PAYMENTS. Any Project Credit Party may,
without the consent of the other Project Credit Parties, defer any payments due
under its Class of Secured Obligations or waive any provisions thereof.

      6.4 LIMITATION OF LIABILITY

          6.4.1 Except as expressly set forth herein (and, with respect to any
rights or obligations among Secured Parties within the same Class, in their
respective Facility

                                       25
<PAGE>

Agreements), no Secured Party will have any duty, express or implied, fiduciary
or otherwise, to any other Secured Party.

          6.4.2 To the maximum extent permitted by law, each Second Lien Secured
Party waives any claim it may have against any First Lien Secured Party with
respect to or arising out of any action or failure to act or any error of
judgment or negligence (but not gross negligence, willful misconduct or any
breach of this Agreement) on the part of any First Lien Secured Party or their
respective directors, officers, employees or agents with respect to any exercise
of rights or remedies in respect of the Secured Obligations or under any
Security Documents or any transaction relating to the Collateral. Neither any
First Lien Secured Party nor any of their respective directors, officers,
employees or agents will be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so, except to the extent
arising out of breach of this Agreement by or out of the gross negligence or
willful misconduct of such Secured Party or any of their respective directors,
officers, employees or agents, or will be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Borrower or upon the
request of any Second Lien Secured Party or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.

          6.4.3 Each Second Lien Secured Party (subject to its respective
Facility Agreement) shall be responsible for keeping itself informed of the
financial condition of the Borrower and its Affiliates and all other
circumstances bearing upon the risk of nonpayment of any Secured Obligations.
Except as set forth in Section 5.3, no First Lien Secured Party shall have any
duty to advise any other Project Credit Party of information regarding such
condition or circumstances or as to any other matter. Subject, with respect to
any rights and obligations among Secured Parties of the same Class, to the
provisions of their respective Facility Agreements, if any Secured Party, in its
sole discretion, undertakes at any time or from time to time to provide any such
information to any other Secured Party, it shall be under no obligation to
provide any similar information on any subsequent occasion, to provide any
additional information, or undertake any investigation, or to disclose any
information which, pursuant to accepted or reasonable commercial finance
practice, it wishes to maintain confidential.

   7. INSOLVENCY OR LIQUIDATION PROCEEDINGS

      7.1 RIGHT TO FILE INVOLUNTARY BANKRUPTCY. Notwithstanding any other
provision of this Agreement to the contrary, any Project Credit Party shall be
entitled, at any time and at its sole discretion, to initiate or join as a
petitioning creditor in an involuntary Insolvency or Liquidation Proceeding
against the Borrower; provided, however, that, until the prior Discharge of all
First Lien Secured Obligations, none of the Second Lien Secured Party shall,
without the prior written consent of the Collateral Agent, acting at the
direction of the Required First Lien Secured Parties, initiate or join as a
petitioning creditor in an involuntary Insolvency or Liquidation Proceeding
against the Borrower.

      7.2 CERTAIN AGREEMENTS AND CONSENTS BY SECOND LIEN SECURED PARTIES.

          7.2.1 At no time prior to the Discharge of all First Lien Secured
Obligations shall any Second Lien Secured Party:

                                       26
<PAGE>

      (a)   request judicial relief in an Insolvency or Liquidation Proceeding
            or in any other court, that would hinder, delay, limit or prohibit
            the exercise or enforcement of any right or remedy otherwise
            available to the holders of First Lien Secured Obligations that
            would limit, invalidate, avoid or set aside any Lien securing the
            First Lien Secured Obligations or subordinate the Lien securing the
            First Lien Secured Obligations to the Liens securing the Second Lien
            Secured Obligations or grant the Liens securing the Second Lien
            Secured Obligations equal ranking to the Liens securing the First
            Lien Secured Obligations;

      (b)   oppose or otherwise contest any motion for relief from the automatic
            stay or from any injunction against foreclosure or enforcement of
            Liens securing the First Lien Secured Obligations made by any holder
            of First Lien Secured Obligations in any Insolvency or Liquidation
            Proceeding;

      (c)   oppose or otherwise contest any exercise by any holder of First Lien
            Secured Obligations of the right to credit bid First Lien Secured
            Obligations at any sale in foreclosure of Lien securing the First
            Lien Secured Obligations; or

      (d)   oppose or otherwise contest any other request for judicial relief
            made in any court by any holder of First Lien Secured Obligations
            relating to the enforcement of any Lien securing the First Lien
            Secured Obligations.

            7.2.2 If, in any Insolvency or Liquidation Proceeding prior to the
Discharge of all First Lien Secured Obligations, the First Lien Secured Parties:

      (a)   consent to any order for use of cash collateral for payment of (i)
            expenses reasonably necessary or appropriate for the conduct of the
            Project or for the preservation of the Collateral, (ii) debt secured
            by Liens upon the Shared Collateral that are senior to the Liens
            securing the Second Lien Secured Obligations or (iii) administrative
            expenses arising in connection with the Insolvency or Liquidation
            Proceeding;

      (b)   consent to any order granting any priming Lien, replacement Lien,
            cash payment or other relief on account of First Lien Secured
            Obligations as adequate protection (or its equivalent) for the
            interests of the First Lien Secured Parties in property subject to
            the Liens securing the First Lien Secured Obligations in connection
            with any order for use of cash collateral; or

      (c)   consent to any order relating to any sale of assets of the Borrower
            and providing, to the extent the sale is to be free and clear of
            Liens, that all such Liens shall attach to the proceeds of the sale
            (except that the First Lien Secured Parties need not admit, consent
            to or support any valuation of the Collateral alleged in support of
            the allowance of any secured claim based upon the Liens securing the
            Second Lien Secured Obligations),

                                       27
<PAGE>

then, the Second Lien Secured Parties will not oppose or otherwise contest the
entry of such order, except that any such order relating to a sale of assets may
be opposed or otherwise contested by them based on any ground that may be
asserted by a holder of unsecured claims (but not on any grounds arising from or
relating to any Lien securing the Second Lien Secured Obligations or any secured
claim or secured creditor rights based on any Lien securing the Second Lien
Secured Obligations, provided that such sale is conducted in a commercially
reasonable manner and otherwise in accordance with applicable law).

          7.2.3 If, in any Liquidation or Insolvency Proceeding, debt
obligations of the reorganized debtor secured by Liens upon any property of the
reorganized debtor are distributed pursuant to a plan of reorganization or
similar dispositive restructuring plan, on more than one Class of Secured
Obligations, then, to the extent the debt obligations distributed on such
account are secured by Liens upon the same property, the provisions of this
Agreement will survive the distribution of such debt obligations pursuant to
such plan and will apply with like effect to the Liens securing such debt
obligations.

          7.2.4 The Second Lien Secured Parties will not assert or enforce, at
any time prior to the Discharge of the First Lien Secured Obligations, any claim
under Section.506(c) of the United States Bankruptcy Code with respect to the
Liens securing the First Lien Secured Obligations for costs or expenses of
preserving or disposing of any Shared Collateral.

          7.2.5 If, for purposes of valuation of the secured claims of the First
Lien Secured Parties in any Insolvency or Liquidation Proceeding, the First Lien
Secured Parties determine, and the Collateral Agent or any other First Lien
Secured Party notifies any Project Credit Party on behalf of any Class of Second
Lien Secured Obligations, that the Collateral should be valued as of any
particular time in the period from the date of commencement of such Insolvency
or Liquidation Proceeding to the date of confirmation of any plan of
reorganization or other dispositive restructuring plan therein, then the Second
Lien Secured Parties shall not oppose or otherwise contest that the date as of
which such secured claims should be valued is the date chosen by the First Lien
Secured Parties. The Second Lien Secured Parties shall not have the right to
assert the lack of adequate protection of their Liens or the collateral securing
the Second Lien Secured Obligations as a basis for opposing a motion or other
relief sought in any Insolvency or Liquidation Proceeding and approved by the
First Lien Secured Parties.

          7.2.6 If, in connection with the approval by creditors of any plan of
reorganization or other dispositive restructuring plan in any Insolvency or
Liquidation Proceeding, either:

      (a)   secured claims based upon the Second Lien Secured Obligations are
            classified in the same class of secured claims as secured claims
            based upon the First Lien Secured Obligations; or

      (b)   secured claims based upon the Second Lien Secured Obligations are
            classified in a separate class from secured claims based upon the
            First Lien Secured Obligations and are treated under such plan as an
            impaired secured class, and such plan could not lawfully be
            confirmed or approved by the court in such Insolvency or Liquidation
            Proceeding unless the class

                                       28
<PAGE>

            of secured claims based upon the Second Lien Secured Obligations
            votes, as a class or as classes, to accept such plan;

then the holders of secured claims based upon the Second Lien Secured
Obligations shall not vote such secured claims to accept such plan if: (i) the
Collateral Agent or any other First Lien Secured Party notifies the holders of
such secured claims (in such manner and to such Person at such addresses as each
Project Credit Party on behalf of any Class of Second Lien Secured Obligations
may direct), at least 5 Business Days before ballots are due in the voting on
such plan, that fewer than the holders of two-thirds in amount of secured claims
based upon the 2014 Notes Secured Obligations or fewer than the holders of
two-thirds in amount of secured claims based upon Obligations under any
Permitted Additional Senior Secured Debt Agreement will vote, in each case as a
separate class (or as if they were a separate class), to accept such plan, (ii)
such notice is not withdrawn by the Collateral Agent or any other First Lien
Secured Party by written notice to such Project Credit Party (or, if required by
law, to the holders of such secured claims) and (iii) such plan is not accepted
by the holders of secured claims based upon the First Lien Secured Obligations
voting as a separate class (or as if they were a separate class).

      The Project Credit Party on behalf of each Class of Second Lien Secured
Obligations shall provide the Collateral Agent with such information as may be
available to such Project Credit Party as to the names and notice addresses of
the holders of secured claims based upon such Class of Second Lien Secured
Obligations. The notice described in clause (i) of the preceding paragraph shall
be conclusively deemed sufficiently given if mailed by ordinary mail, postage
prepaid, to such names and addresses. No ballot voting a secured claim based
upon any of the Second Lien Secured Obligations shall be delivered in respect of
any such plan by any holder of secured claims based upon any of the Second Lien
Secured Obligations prior to the last date on which the notice described in
clause (i) may be given. Any ballot cast in violation of this Section 7.2.6 will
be invalid.

          7.2.7 Until the Discharge of the First Lien Secured Obligations has
occurred, if the Borrower shall be subject to any Insolvency or Liquidation
Proceeding and the Collateral Agent shall, acting in accordance with the First
Lien Documents, agree to permit the use of "Cash Collateral" (as such term is
defined in Section 363(a) of the Bankruptcy Code), on which a Lien has been
granted to the Collateral Agent pursuant to the First Lien Documents or to
permit the Borrower to obtain financing, whether from any of the First Lien
Secured Parties or any other Person under Section 364 of the Bankruptcy Code or
any similar Bankruptcy Law ("DIP FINANCING"), then each Second Lien Secured
Party agrees that it will raise no objection to such Cash Collateral use or DIP
Financing so long as such Cash Collateral use or DIP Financing meet the
following requirements: (i) it is on commercially reasonable terms, (ii) each
Second Lien Secured Party retains the right to object to any ancillary
agreements or arrangements regarding the Cash Collateral use or the DIP
Financing that are materially prejudicial to their interests in the Shared
Collateral, and (iii) the terms of the DIP Financing (a) do not compel the
Borrower to seek confirmation of a specific plan of reorganization for which all
or substantially all of the material terms are set forth in the DIP Financing
documentation or a related document and (b) do not expressly require the
liquidation of the Shared Collateral prior to a default under the DIP Financing
documentation or Cash Collateral order. To the extent the Liens securing the
First Lien Secured Obligations are subordinated to or pari passu with such DIP
Financing which meets the requirements of clauses (i) through (iii) above, each
Second Lien Secured Party will

                                       29
<PAGE>

subordinate any Liens in the Shared Collateral to the Liens securing such DIP
Financing (and all Obligations relating thereto). Each Second Lien Secured Party
agrees that, so long as it is actually receiving adequate protection on a
current basis (and cash payments included therein are not being deferred), it
shall not directly or indirectly propose or support any DIP Financing which the
Collateral Agent on behalf of the First Lien Secured Parties has not approved.
For purposes of this Section 7.2.7 only, any adequate protection that is either
not requested or affirmatively waived by the Second Lien Secured Parties shall
be deemed to be received by the Second Lien Secured Parties. If the bankruptcy
court hearing any motion of the Second Lien Secured Parties for allowance of
adequate protection does not approve same, such disapproval shall constitute a
failure to receive same under this Section 7.2.7, unless cured by the Collateral
Agent on behalf of the First Lien Secured Parties, who shall have the right but
not the obligation to do so.

   8. APPLICATION OF PROCEEDS OF SHARED COLLATERAL.

      8.1 APPLICATION OF PROCEEDS GENERALLY. Other than (i) the Net Proceeds
from any Asset Sale and (ii) the Net Loss Proceeds from any Event of Loss, in
each case involving any or all of the Shared Collateral or the First Lien Shared
Collateral, both of which shall be applied in accordance with the 2014 Notes
Indenture or, in the case of any such Net Loss Proceeds prior to the termination
of the Disbursement Agreement, in accordance with the Disbursement Agreement,
all monies collected by the Collateral Agent or any other Secured Party upon any
sale or other disposition of any Shared Collateral or any First Lien Shared
Collateral pursuant to the enforcement of any of the First Lien Security
Documents with respect to Shared Collateral or First Lien Shared Collateral or
the exercise of any of the remedial provisions thereof, together with all other
monies received by the Collateral Agent or any other Secured Party hereunder or
under any Security Document with respect to Shared Collateral or First Lien
Shared Collateral as a result of any such enforcement or the exercise of any
such remedial provisions or as a result of any distribution of any Shared
Collateral or any First Lien Shared Collateral upon the bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of the obligations and Indebtedness of the
Borrower, or the application of any Shared Collateral or any First Lien Shared
Collateral to the payment thereof or any distribution of the Shared Collateral
or the First Lien Shared Collateral upon the liquidation or dissolution of the
Borrower, or the winding up of the assets or business of the Borrower, or any
distribution made on or in connection with any Facility Agreement or otherwise
payable under any Security Document with respect to Shared Collateral or the
First Lien Shared Collateral Shared Collateral shall be applied as follows:

      With respect to Shared Collateral:

      (a)   first, to the payment of all amounts owing to the Collateral Agent
            in the event of any proceeding for the collection or enforcement of
            any Indebtedness or payment obligations of the Borrower, after an
            Event of Default under the 2014 Notes Indenture shall have occurred
            and be continuing, the reasonable expenses of re-taking, holding,
            preparing for sale or lease, selling or otherwise disposing of or
            realizing on the Shared Collateral, or of any exercise by the
            Collateral Agent of its rights

                                       30
<PAGE>

            hereunder or under the First Lien Security Documents with respect to
            Shared Collateral, together with reasonable attorneys' fees and
            court costs;

      (b)   second, to the extent proceeds remain after the application pursuant
            to the preceding clause (a), an amount equal to the outstanding
            Primary Obligations shall be paid to the First Lien Secured Parties
            as provided in Section 8.2, with each Class of First Lien Secured
            Parties collectively receiving an amount equal to their respective
            aggregate outstanding Primary Obligations or, if the proceeds are
            insufficient to pay in full in cash all such Primary Obligations,
            their respective Pro Rata Share of the amount remaining to be
            distributed;

      (c)   third, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) and (b), an amount equal to the
            outstanding Secondary Obligations shall be paid to the First Lien
            Secured Parties as provided in Section 8.2, with each Class of First
            Lien Secured Parties collectively receiving an amount equal to their
            respective aggregate outstanding Secondary Obligations or, if the
            proceeds are insufficient to pay in full in cash all such Secondary
            Obligations, their respective Pro Rata Share of the amount remaining
            to be distributed;

      (d)   fourth, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) through (c), inclusive, an amount equal
            to the outstanding Primary Obligations shall be paid to the Second
            Lien Secured Parties as provided in Section 8.2, with each Class of
            Second Lien Secured Parties collectively receiving an amount equal
            to their respective aggregate outstanding Primary Obligations or, if
            the proceeds are insufficient to pay in full all such Primary
            Obligations, their respective Pro Rata Share of the amount remaining
            to be distributed;

      (e)   fifth, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) through (d), inclusive, an amount equal
            to the outstanding Secondary Obligations shall be paid to the Second
            Lien Secured Parties as provided in Section 8.2, with each Class of
            Second Lien Secured Parties collectively receiving an amount equal
            to their respective aggregate outstanding Secondary Obligations or,
            if the proceeds are insufficient to pay in full in cash all such
            Secondary Obligations, their respective Pro Rata Share of the amount
            remaining to be distributed;

      (f)   sixth, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) through (e), inclusive, and following
            the termination of this Agreement pursuant to the terms hereof, to
            the Borrower under its respective Security Documents, or to whomever
            may be lawfully entitled to receive such surplus;

                                       31
<PAGE>

      With respect to First Lien Shared Collateral:

      (a)   first, to the payment of all amounts owing to the Collateral Agent
            in the event of any proceeding for the collection or enforcement of
            any Indebtedness or payment obligations of the Borrower, after an
            Event of Default shall have occurred and be continuing, the
            reasonable expenses of re-taking, holding, preparing for sale or
            lease, selling or otherwise disposing of or realizing on the First
            Lien Shared Collateral, or of any exercise by the Collateral Agent
            of its rights hereunder or under the First Lien Security Documents
            with respect to First Lien Shared Collateral, together with
            reasonable attorneys' fees and court costs;

      (b)   second, to the extent proceeds remain after the application pursuant
            to the preceding clause (a), an amount equal to the outstanding
            Primary Obligations shall be paid to the First Lien Secured Parties
            as provided in Section 8.2, with each Class of First Lien Secured
            Parties collectively receiving an amount equal to their respective
            aggregate outstanding Primary Obligations or, if the proceeds are
            insufficient to pay in full in cash all such Primary Obligations,
            their respective Pro Rata Share of the amount remaining to be
            distributed;

      (c)   third, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) and (b), an amount equal to the
            outstanding Secondary Obligations shall be paid to the First Lien
            Secured Parties as provided in Section 8.2, with each Class of First
            Lien Secured Parties collectively receiving an amount equal to their
            respective aggregate outstanding Secondary Obligations or, if the
            proceeds are insufficient to pay in full in cash all such Secondary
            Obligations, their respective Pro Rata Share of the amount remaining
            to be distributed;

      (d)   fourth, to the extent proceeds remain after the application pursuant
            to the preceding clauses (a) through (c), inclusive, and following
            the termination of this Agreement pursuant to the terms hereof, to
            the Borrower under its respective Security Documents, or to whomever
            may be lawfully entitled to receive such surplus.

      8.2 CERTAIN TERMS. For purposes of this Agreement (a) "PRO RATA SHARE"
means, when calculating each Class of Secured Parties' respective portions of
any distribution or amount, the amount (expressed as a percentage) equal to a
fraction the numerator of which is the then aggregate unpaid amount of the
Primary Obligations or Secondary Obligations, as the case may be, owed to such
Class of Secured Parties and the denominator of which is the then outstanding
amount of all Primary Obligations or Secondary Obligations, as the case may be,
(b) "PRIMARY OBLIGATIONS" means all Obligations under such Class of Secured
Obligations, in each case excluding indemnities, fees (including, without
limitation, attorneys' fees) and similar obligations and liabilities (except,
with respect to Great Lakes or any successor, assign or transferee of any
portion of the Lakes Obligations, "Primary Obligations" shall include, without
limitation, the management fee and other Management Agreement Obligations) and
(c)

                                       32
<PAGE>

"SECONDARY OBLIGATIONS" means all other obligations owed to such Class of
Secured Parties other than Primary Obligations; provided, however, that the
principal amount will be calculated without duplication of the underlying
obligation for any guarantees.

      8.3 SHARING OF NON-PRO RATA PAYMENTS. Each First Lien Secured Party agrees
that in the event any First Lien Secured Party shall obtain payment that is not
a Pro Rata Payment of any amounts due to it on or in respect of any First Lien
Secured Obligations and such payment arises from the items or circumstances
listed in items (a), (b) or (c) below, then such First Lien Secured Party shall
promptly remit to the Collateral Agent for distribution to other First Lien
Secured Parties the portion of such payment necessary to ensure that each First
Lien Secured Party shall have received a Pro Rata Payment; provided that, if at
such time redistribution of such payment in such manner is inadvisable in the
reasonable judgment of the Collateral Agent, then at the request of such First
Lien Secured Party, the Project Credit Parties representing such First Lien
Secured Parties shall promptly consult with each other to determine whether
there is a preferable manner to make equitable adjustments (including the
purchase by such First Lien Secured Parties) to permit all First Lien Secured
Parties to share such payment (net of expenses incurred by the recipient First
Lien Secured Party in obtaining or preserving such payment) pro rata (in
accordance with the definition of Pro Rata Payment). If any such redistributed
or shared payment is rescinded or must otherwise be restored by the First Lien
Secured Party who originally obtained such payment, then each First Lien Secured
Party which shares the benefit of such payment shall return to such First Lien
Secured Party its portion of the payment so rescinded or required to be
restored. The payments that are subject to the foregoing provisions are those
that: (a) arise from any exercise of a right of setoff, banker's Lien or
counterclaim, or from any security or from any realization (whether through
attachment, foreclosure or otherwise) of assets of the Borrower, (b) are made
after an Event of Default has occurred and is continuing, or (c) are made in
connection with the events or circumstances described in Section 3.08 of the
2014 Notes Indenture, but in the case of this clause (c), only to the extent
that a prepayment of principal outstanding under any Class of First Lien Secured
Obligations is required in connection with the same events or circumstances.

      8.4 OVERPAYMENTS. When payments to Secured Parties are based upon their
respective Pro Rata Shares, the amounts received by such Secured Parties
hereunder shall be applied (for purposes of making determinations under this
Section 8 only) (a) first, to their Primary Obligations and (b) second, to their
Secondary Obligations. If any payment to any Secured Party of its Pro Rata Share
of any distribution would result in overpayment to such Secured Party, then (x)
such Secured Party shall promptly notify the other Secured Parties within the
same Class as such Secured Party of such overpayment and (y) the amount of such
overpayment shall instead be distributed in respect of the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of the other Secured
Parties of such Class. Each Secured Party of such Class whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid in
full shall receive an amount equal to such overpayment amount multiplied by a
fraction the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Party and the denominator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of all Secured Parties entitled to such distributions.

                                       33
<PAGE>

      8.5 PAYMENT TO CLASS REPRESENTATIVES. All payments required to be made
under this Section 8 shall be made, with respect to each Class of Secured
Parties, to the Project Credit Party acting on behalf of such Class. Each such
Project Credit Party shall apply such funds in accordance with its respective
Facility Agreement.

   9. REPRESENTATIONS AND WARRANTIES. Each party hereto represents and warrants
      to each other party as follows:

      9.1 ORGANIZATION. It is duly organized and is validly existing under the
laws of the jurisdiction under which it was organized with full power to
execute, deliver, and perform this Agreement and consummate the transactions
contemplated hereby.

      9.2 AUTHORIZATION. All actions necessary to authorize the execution,
delivery and performance of this Agreement on behalf of such party have been
duly taken, and all such actions continue in full force and effect as of the
date hereof.

      9.3 BINDING AGREEMENT. It has duly executed and delivered this Agreement
and this Agreement constitutes the legal, valid, and binding agreement of such
party enforceable in accordance with its terms and subject to (a) Bankruptcy
Laws, and (b) principles of equity, which may apply regardless of whether a
proceeding is brought in law or in equity.

      9.4 NO CONSENT REQUIRED. To the best of its knowledge, no consent of any
other party (other than any consent that would otherwise be required to avoid
conflicts referred to in the Release) and no consent, license, approval, or
authorization of, or exemption by, or registration or declaration or filing
with, any governmental authority, bureau or agency is required in connection
with the execution, delivery, or performance by such party of this Agreement or
consummation by such party of the transactions contemplated by this Agreement.

      9.5 NO CONFLICT. None of the execution, delivery, and performance of this
Agreement nor the consummation of the transactions contemplated by this
Agreement will (a) violate or conflict with any provision of the organizational
or governing documents, if any, of such party; (b) to the best of its knowledge,
violate, conflict with, or result in the breach or termination of, or otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time, or both, would constitute) a default under the terms of
any contract, mortgage, lease, bond, indenture, agreement, or other instrument
to which such party is a party or to which any of its properties are subject,
other than certain conflicts with the Lakes Transaction Documents referred to in
the Release, it being acknowledged that the performance of this Agreement and
the consummation of the transactions contemplated by this Agreement may
conflict; (c) to the best of its knowledge, result in the creation of any Lien,
charge, encumbrance, mortgage, lease, claim, security interest, or other right
or interest upon the properties or assets of such party pursuant to the terms of
any such contract, mortgage, lease, bond, indenture, agreement, franchise, or
other instrument; (d) violate any judgment, order, injunction, decree, or award
of any court, arbitrator, administrative agency, or governmental or regulatory
body of which it has knowledge against, or binding upon such party or upon any
of the securities, properties, assets, or business of such party; or (e) to the
best of its knowledge, constitute a violation by such party of any statute, law,
or regulation that is applicable to such party.

                                       34
<PAGE>

   10. MISCELLANEOUS PROVISIONS.

      10.1 NOTICES; ADDRESSES. Any communications between the Project Credit
Parties hereto or notices herein to be given may be given to the following
addressees:

If to the 2014 Notes Indenture Trustee:  U.S. Bank National Association
                                         Corporate Trust Services
                                         EP-MN-WS3C
                                         60 Livingston Avenue
                                         St. Paul, Minnesota 55107-1419
                                         Attention: Raymond S. Haverstock

If to Great Lakes:                       Great Lakes Gaming of Michigan, LLC
                                         Lakes Entertainment, Inc.
                                         130 Cheshire Lane
                                         Minnetonka, Minnesota  55305
                                         Attention:  Timothy J. Cope, President

                                         with a copy to:

                                         Lakes Entertainment, Inc.
                                         130 Cheshire Lane
                                         Minnetonka, Minnesota  55305
                                         Facsimile: [__]
                                         Attention:  [Damon Schramm]

                                         with a copy to:

                                         [Hamilton Quigley & Twait, PLC]
                                         First National Bank Building, Suite
                                         W1450
                                         332 Minesota Street
                                         Saint Paul, Minnesota  55101
                                         Facsimile:  [__]
                                         Attention:  Kevin Quigley

                                         with a copy to:

                                         Gray, Plant, Mooty, Mooty & Bennett,
                                         P.A.
                                         500 IDS Center
                                         80 South Eight Street
                                         Minneapolis, Minnesota 55402-3796
                                         Attention:  Daniel R. Tenenbaum

                                       35
<PAGE>

If to the Collateral Agent:              U.S. Bank National Association
                                         Corporate Trust Services
                                         EP-MN-WS3C
                                         60 Livingston Avenue
                                         St. Paul, Minnesota 55107-1419
                                         Attention: Raymond S. Haverstock

All notices or other communications required or permitted to be given hereunder
shall be in writing and shall be considered as properly given (a) if delivered
in person, (b) if sent by reputable overnight delivery service, (c) in the event
overnight delivery services are not readily available, if mailed by first class
mail, postage prepaid, registered or certified with return receipt requested or
(d) if sent by prepaid telex, or by telecopy with correct answer back received.
Notice so given shall be effective upon receipt by the addressee, except that
any communication or notice so transmitted by telecopy or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Business Day and, if not, on the next following Business Day) on
which it is validly transmitted if transmitted before 4 p.m., recipient's time,
and if transmitted after that time, on the next following Business Day;
provided, however, that if any notice is tendered to an addressee and the
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. Any party shall have the right to change its address for
notice hereunder to any other location by giving of no less than twenty (20)
days' notice to the other parties in the manner set forth hereinabove.

      10.2 FURTHER ASSURANCES. Each party hereto (a) shall deliver to each other
party, to the Disbursement Agent and to any Securities Intermediary such
instruments, agreements, certificates and documents as any such Person may
reasonably request to confirm the validity and priority of the Liens on and
security interests in the Collateral granted pursuant to the Security Documents
as affected hereby, (b) shall fully cooperate with each other, with the
Disbursement Agent and with any Securities Intermediary, and (c) shall perform
all additional acts reasonably requested by any such Person to effect the
purposes of this Agreement. Without limiting the generality of the foregoing,
Great Lakes shall fully cooperate with the Borrower and any other Person in
connection with the incurrence by the Borrower of Indebtedness under any
proposed Permitted Additional Junior Secured Debt Agreement, provided that Great
Lakes and any other holders of the Lakes Secured Obligations, in their sole
discretion, have given their prior written consent to the incurrence of such
Indebtedness.

      10.3 WAIVER. Any waiver, permit, consent or approval of any kind or
character on the part of any of the parties hereto, the Disbursement Agent or
any Securities Intermediary of any Event of Default or other breach or default
under this Agreement, any Security Document or any other Facility Agreement, or
any waiver on the part of any of the parties hereto, the Disbursement Agent or
any Securities Intermediary, of any provision or condition of this Agreement or
any other operative document, must be in writing and shall be effective only to
the extent in such writing specifically set forth.

      10.4 ENTIRE AGREEMENT. As among the parties hereto, this Agreement and any
agreement, document or instrument attached hereto or referred to herein
integrate all the terms

                                       36
<PAGE>

and conditions mentioned herein or incidental hereto and supersede all oral
negotiations and prior writings in respect to the subject matter hereof, all of
which negotiations and writings are deemed void and of no force and effect. As
among the parties hereto, in the event of any conflict between the terms of this
Agreement and the terms of the Disbursement Agreement, the terms of this
Agreement shall control.

      10.5 GOVERNING LAW. This Agreement shall be governed by the laws of State
of New York of the United States of America and shall for all purposes be
governed by and construed in accordance with the laws of such state without
regard to the conflict of law rules thereof other than Sections 5-1401 and
5-1402 of the New York General Obligations Law.

      10.6 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and the parties hereto shall enter into
good faith negotiations to replace the invalid, illegal or unenforceable
provision.

      10.7 HEADINGS. Section headings have been inserted in this Agreement as a
matter of convenience for reference only and it is agreed that such headings are
not a part of this Agreement and shall not be used in the interpretation of any
provision of this Agreement.

      10.8 LIMITATIONS ON LIABILITY. In addition to requirements under Section
6.4, no claim shall be made by any party hereto or any of its Affiliates against
any other party hereto, the Disbursement Agent, any Securities Intermediary or
any of their respective Affiliates, directors, employees, attorneys or agents
for any special, indirect, consequential or punitive damages (whether or not the
claim therefor is based on contract, tort or duty imposed by law), in connection
with, arising out of or in any way related to the transactions contemplated by
this Agreement or any act or omission or event occurring in connection
therewith; and each party hereto hereby waives, releases and agrees not to sue
upon any such claim for any such special, indirect, consequential or punitive
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

      10.9 CONSENT OF JURISDICTION, WAIVER OF IMMUNITY. Any legal action or
proceeding arising out of this Agreement may be brought in or removed to the
courts of the State of New York, in and for the County of New York, or of the
United States of America for the Southern District of New York. By execution and
delivery of this Agreement, each Project Credit Party, accepts, for its and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts for legal proceedings arising out of or in connection with this
Agreement and irrevocably consents to the appointment of CT Corporation, a
woltersKluwer Company, located at 111 Eighth Avenue, 13th Floor; New York, NY
10011; telephone: 212-590-9310; facsimile: 212-590-9190, as its agent to receive
service of process in New York, New York. Nothing herein shall affect the right
to serve process in any other manner including judicial or non-judicial
foreclosure of real property interests which are part of the Collateral. Each
party hereto hereby waives any right to stay or dismiss any action or proceeding
under or in connection with any or all of the Project, this Agreement or any
other operative document brought before the foregoing courts on the basis of
forum non-conveniens.

                                       37
<PAGE>

      10.10 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, this Agreement shall terminate upon
the Discharge of all but one of the Classes of Secured Obligations (and each
Secured Party whose Secured Obligations have been Discharged shall cease to be a
party hereto with respect to such Secured Obligations upon such Discharge). Upon
the Discharge of all but one of the Classes of Secured Obligations, the
Collateral Agent or the Project Credit Party whose Secured Obligations are last
to be Discharged, as applicable, agrees to deliver any and all Shared Collateral
of which it has possession (subject to the terms of the applicable Security
Documents), either directly or through an agent, custodian or other
representative as requested by the Project Credit Party whose Secured
Obligations have not been discharged, and to notify each Securities
Intermediary, each counterparty to a consent and such other Persons as such
Project Credit Party may reasonably request that such obligations have been
terminated and discharged in full.

      10.11 COUNTERPARTS. This Agreement may be executed in one or more
duplicate counterparts and when signed by all of the parties hereto listed below
shall constitute a single binding agreement.

      10.12 NO THIRD PARTY BENEFICIARIES. Except for the 2014 Noteholders, any
other First Lien Secured Parties, any Second Lien Secured Parties, the
Disbursement Agent and each Securities Intermediary, the parties hereto do not
intend the benefits of this Agreement to inure to the benefit of nor shall it be
enforceable by any third party (including, without limitation, the Borrower or
any of its Affiliates) nor shall this Agreement be construed to make or render
any party hereto liable to any third party (including, without limitation, the
Borrower or any of its Affiliates) for the performance or failure to perform any
obligations hereunder.

      10.13 CO-COLLATERAL AGENTS; SEPARATE COLLATERAL AGENTS. (a) If at any time
or times it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which any of the Shared Collateral or the First Lien Shared
Collateral shall be located, or the Collateral Agent shall be advised by
counsel, satisfactory to it and to the 2014 Notes Indenture Trustee, that it is
necessary or prudent in the interest of the Collateral Agent or the First Lien
Secured Parties to conform to such law, the Collateral Agent shall execute and
deliver all instruments and agreements necessary or proper to constitute another
bank or trust company, or one or more individuals approved by the Collateral
Agent and the 2014 Notes Indenture Trustee, either to act as co-collateral agent
or co-collateral agents jointly with the Collateral Agent originally named
herein or any successor or successors, or to act as a separate or sub-collateral
agent or agents of the Collateral Agent and the First Lien Secured Parties in
respect of the Shared Collateral and/or First Lien Shared Collateral. Any
co-collateral agent or separate or sub-collateral agent appointed to act with
respect to the Project shall meet the requirements for a successor Collateral
Agent set forth in Section 3.9.

      (b) Every separate or sub-collateral agent (and all references herein to a
"separate collateral agent" shall be deemed to refer also to a "sub-collateral
agent" or a "collateral sub-agent") and every co-collateral agent, other than
any collateral agent which may be appointed as successor to any Collateral
Agent, shall, to the extent permitted by applicable

                                       38
<PAGE>

law, be appointed and act and be such, subject to the following provisions and
conditions, namely:

          (i) all rights, remedies, powers, duties and obligations conferred
   upon, reserved to or imposed upon the Collateral Agent in respect of the
   custody, control and management of monies, papers or securities shall be
   exercised solely by the Collateral Agent hereunder;

          (ii) all rights, remedies, powers, duties and obligation conferred
   upon, reserved or imposed upon the Collateral Agent hereunder shall be
   conferred, reserved or imposed and exercised or performed by the Collateral
   Agent and such separate collateral agent or separate collateral agents or
   co-collateral agent or co-collateral agents, jointly or severally, as shall
   be provided in the instrument appointing such separate collateral agent or
   separate collateral agents or co-collateral agent or co-collateral agents,
   except to the extent that, under any law of any jurisdiction in which any
   particular act or acts are to be performed, the Collateral Agent shall be
   incompetent or unqualified to perform such act or acts, in which event such
   rights, remedies, powers, duties and obligations shall be exercised and
   performed by such separate collateral agent or separate collateral agents or
   co-collateral agent or co-collateral agents;

          (iii) no power given hereby to, or which it is provided hereby may be
   exercised by, any such separate collateral agent or separate collateral
   agents or co-collateral agent or co-collateral agents shall be exercised
   hereunder by such separate collateral agent or separate collateral agents or
   co-collateral agent or co-collateral agents except (subject to applicable
   law) jointly with, or with the consent or at the direction in writing of, the
   Collateral Agent;

          (iv) all provisions of this Agreement relating to the Collateral Agent
   or to releases of Collateral shall apply to any such separate collateral
   agent or separate collateral agents or co-collateral agent or co-collateral
   agents;

          (v) no collateral agent constituted under this Section 10.13 shall be
   personally liable by reason of any act or omission of any other separate or
   co-collateral agent or the Collateral Agent hereunder; and

          (vi) subject to clause (c) below, the Collateral Agent at any time by
   an instrument in writing, executed by it, may (x) accept the resignation of
   any such separate collateral agent or co-collateral agent, (y) remove any
   such separate collateral agent or co-collateral agent, and in that case, by
   an instrument in writing executed by the Collateral Agent, and (z) appoint a
   successor to such separate collateral agent or co-collateral agent.

      (c) Notwithstanding any other provision of this Section 10.13, the
Collateral Agent shall not appoint any separate collateral agent or
co-collateral agent at the objection of any Project Credit Party.

                                       39
<PAGE>

      10.14 AMENDMENTS.

          10.14.1 Upon any refinancing of any Class of Secured Obligations, or
the incurring of other Indebtedness of the Borrower (subject to the rights of
the existing Project Credit Parties under this Agreement or their respective
financing agreements with respect to any such refinancing or other
Indebtedness), the applicable lender shall be bound by the terms of this
Agreement (and, with respect to any refinancing of the 2014 Notes, the financing
agreements relating thereto shall incorporate the provisions of the 2014 Notes
Indenture referenced in Sections 2.1 and 2.3 with respect to permitted payments
of the Lakes Obligations) and such lender, or an agent or trustee on its behalf,
and the parties hereto shall execute and deliver an amendment to this Agreement
to make such Person a party hereunder. Any such new party shall also execute any
other joinder agreements, amendments or counterparts to any existing credit or
security documents to which each of the existing party is a party, as required
by such documents or as reasonably requested by the Collateral Agent.

          10.14.2 Except as otherwise set forth in this Section 10.14.2, no
amendment, modification or waiver of any of the provisions of this Agreement
shall be deemed to be made unless the same shall be in a writing signed by each
party hereto and, if such amendment, modification or waiver affects the rights
or obligations of the Collateral Agent, a writing signed by the Collateral
Agent.

      10.15 ADDITIONAL SECURED PARTIES. Upon the entering into of any Permitted
Additional Senior Secured Debt Agreement or Permitted Additional Junior Secured
Debt Agreement (subject to the rights of the existing Secured Parties under this
Agreement or their respective Facility Agreements with respect to any such
refinancing, replacement or restructuring of a Class of Secured Obligations or
the entering into of such Permitted Additional Senior Secured Debt Agreement or
Permitted Additional Junior Secured Debt Agreement), a representative of the
applicable lender shall execute a joinder to this Agreement in substantially the
form attached as Exhibit A hereto (each, a "JOINDER AGREEMENT"). Upon the
execution and delivery of such a Joinder Agreement by the representative on
behalf of such new lenders (and the execution by such representative of any
other joinder agreements, amendments or counterparts to any existing credit or
security documents to which each of the existing party is a party, as required
by such documents or as reasonably requested by the Collateral Agent), (a) such
new lenders shall become, as the case may be, a "First Lien Secured Party" or a
"Second Lien Secured Party" hereunder and (b) such representative shall become a
"Project Credit Party" hereunder, with the same force and effect as if it were
originally a party to this Agreement in such capacity. The execution and
delivery of such a Joinder Agreement shall not require the consent of any other
party hereunder so long as such addition does not otherwise give rise to an
express violation of the terms of this Agreement or any Facility Agreement, and
the rights and obligations of each party hereunder shall remain in full force
and effect notwithstanding the addition of any new Project Credit Party as a
party to this Agreement.

      10.16 LEGENDS. Each Project Credit Party (to the extent that approval is
not required by the Chairman of the National Indian Gaming Commission) agrees
that each Security Document shall include the following language:

                                       40
<PAGE>

      "Notwithstanding anything herein to the contrary, the lien and security
      interest granted to the First Lien Secured Party, the Second Lien Secured
      Party, as applicable pursuant to this Agreement and the exercise of any
      right or remedy by the First Lien Secured Party, the Second Lien Secured
      Party, as applicable hereunder are subject to the provisions of the
      Intercreditor and Subordination Agreement, dated as of June 22, 2006 (as
      amended, restated, supplemented or otherwise modified from time to time,
      the "INTERCREDITOR AND SUBORDINATION AGREEMENT"), among U.S. Bank National
      Association, as Collateral Agent, U.S. Bank National Association, as the
      2014 Notes Indenture Trustee and Great Lakes Gaming of Michigan, LLC and
      certain other persons which may be or become parties thereto or become
      bound thereto from time to time. In the event of any conflict between the
      terms of the Intercreditor and Subordination Agreement and this Agreement,
      the terms of the Intercreditor and Subordination Agreement shall govern
      and control (all capitalized terms having the meanings ascribed thereto in
      the Intercreditor and Subordination Agreement)."

For the avoidance of doubt, none of the Lakes Transaction Documents shall be
required to bear such legend, unless such documents are assigned to a third
party.

      10.17 TRUST INDENTURE ACT. The parties do not intend that the provisions
of this Agreement violate the requirements of the Trust Indenture Act of 1939,
as amended.

      10.18 REINSTATEMENT. If the payment of any amount applied to any First
Lien Secured Obligations is later avoided, or rescinded (including by settlement
of any claim for avoidance or rescission) or otherwise set aside, then:

      (a)   to the fullest extent lawful, all claims for the payment of such
            amount as First Lien Secured Obligations and, to the extent securing
            such claims, all such Liens under the First Lien Security Documents
            will be reinstated and entitled to the benefits hereof, and

      (b)   if a Discharge of First Lien Secured Obligations became effective
            prior to such reinstatement, all obligations of the Second Lien
            Secured Parties that were terminated as a result of such Discharge
            of First Lien Secured Obligations shall be concurrently reinstated
            to the extent such claims and Liens under the First Lien Security
            Documents are reinstated, beginning on such date but prospectively
            only (and not retroactively), as though no First Lien Secured
            Obligations or Liens under the First Lien Security Documents had
            been outstanding at any time prior to such date and will remain
            effective until the claims for such amount are paid in full in cash.

      10.19 ATTORNEYS' FEES. Unless paid by the Borrower, the prevailing party
in any dispute or controversy hereunder shall be entitled to an award of its
reasonable attorneys' fees.

                            [SIGNATURE PAGE FOLLOWS]

                                       41
<PAGE>


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized as of
the day and year first above written.

                                   2014 Notes Indenture Trustee:

                                   U.S. BANK NATIONAL ASSOCIATION

                                   By: /s/ Raymond S. Haverstock
                                       --------------------------------------
                                        Name:  Raymond S. Haverstock
                                        Title: Vice President

<PAGE>

                               Great Lakes:

                               GREAT LAKES GAMING OF MICHIGAN, LLC

                               By: /s/ Timothy J. Cope
                                   ----------------------------------------
                                   Name:  Timothy J. Cope
                                   Title: President and Chief Financial Officer

                                       2
<PAGE>

                                   Collateral Agent:

                                   U.S. BANK NATIONAL ASSOCIATION


                                   By: /s/ Raymond S. Haverstock
                                       --------------------------------------
                                        Name:  Raymond S. Haverstock
                                        Title: Vice President


                                       3
<PAGE>

Acknowledged by:

Borrower:

POKAGON GAMING AUTHORITY

By: /s/ John Miller
    -------------------------------
      Name:  John Miller
      Title: President/CEO


                                       4
<PAGE>

                                    EXHIBIT A

                            FORM OF JOINDER AGREEMENT

      This JOINDER AGREEMENT, dated as of [___________], 200[_] (this "JOINDER
AGREEMENT"), is made by [___________], a [___________] [identify the agent under
the Permitted Additional Senior Debt Agreement or Permitted Additional Junior
Debt Agreement] (the "NEW AGENT"), in favor of the 2014 Notes Indenture Trustee,
Great Lakes, any additional party thereto, from time to time, and the Collateral
Agent. Capitalized terms used but not defined herein shall have the meaning
ascribed to them in that certain Intercreditor and Subordination Agreement,
dated as of June 22, 2006 (as amended, amended and restated, supplemented and
otherwise modified from time to time, the "INTERCREDITOR AND SUBORDINATION
AGREEMENT"), by and among the 2014 Notes Indenture Trustee, Great Lakes and the
Collateral Agent.

RECITALS:

      WHEREAS, pursuant to the [identify the Permitted Additional Senior Debt
Agreement or Permitted Additional Junior Debt Agreement] (the "ADDITIONAL DEBT
AGREEMENT") among [___________], the New Agent and the lenders party thereto
(the "NEW LENDERS"), the New Lenders have agreed to provide the Borrower (the
"BORROWER") credit facility in a principal amount of up to $[___________]
pursuant to the terms of the [Permitted Additional Senior Debt
Agreement/Permitted Additional Junior Debt Agreement]; and

      WHEREAS, as a condition to permitting the Borrowers to enter into the
Additional Debt Agreement, the New Agent on behalf of the New Lenders is
required to enter into this Joinder Agreement.

      NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the New Agent on behalf of the New Lenders hereby agrees as
follows:

      1. INTERCREDITOR AND SUBORDINATION AGREEMENT. The New Agent on its behalf
and on behalf of the New Lenders agrees that (a) the New Agent shall be bound by
all of the terms and conditions of the Intercreditor Agreement as a "Project
Credit Party" thereunder, and (b) the New Lenders shall be bound by all of the
terms and conditions of the Intercreditor Agreement as "[FIRST][SECOND] Lien
Secured Parties" thereunder.

      2. ADDITIONAL DEBT AGREEMENT. The New Agent on behalf of the New Lenders
hereby agrees that the Additional Debt Agreement constitutes a "[Permitted
Additional Senior Debt Agreement/Permitted Additional Junior Debt Agreement]"
under the Intercreditor Agreement.

      3. AUTHORITY. The New Agent represents that it has been authorized by the
New Lenders to enter into this Joinder Agreement with respect to the matters set
forth herein on their behalf.

<PAGE>

      4. APPOINTMENT. The New Agent hereby designates [_______] as its
collateral agent to act as specified in the Intercreditor and Subordination
Agreement and in the Shared Security Documents.

      5. GOVERNING LAW. This Agreement shall be governed by the laws of State of
New York of the United States of America and shall for all purposes be governed
by and construed in accordance with the laws of such state without regard to the
conflict of law rules thereof other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law.

                            [SIGNATURE PAGE FOLLOWS]

                                       6
<PAGE>

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

                                   [NEW AGENT]

                                       By:   _______________________________
                                       Name: _______________________________
                                       Title:_______________________________

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>15
<FILENAME>c06339exv10w14.txt
<DESCRIPTION>FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED MANAGEMENT AGREEMENT
<TEXT>
<PAGE>
                                                                   Exhibit 10.14

                 FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
                              MANAGEMENT AGREEMENT


         This First Amendment to Third Amended and Restated Management Agreement
(this "First Amendment") is made as of the 1st day of June, 2006, by and between
the POKAGON BAND OF POTAWATOMI INDIANS (the "Band"), the POKAGON GAMING
AUTHORITY (the "Authority"), and GREAT LAKES GAMING OF MICHIGAN, LLC, a
Minnesota limited liability company (f/k/a Great Lakes of Michigan, LLC, ("Great
Lakes").

                                    RECITALS

     A.   Great Lakes and the Band entered into a Third Amended and Restated
          Management Agreement dated as of January 25, 2006 (the "Third Amended
          and Restated Management Agreement"), which agreement was approved by
          the Chairman of the National Indian Gaming Commission on March
          31, 2006.


     B.   The Band created the Pokagon Gaming Authority on May 25, 2006, and
          various rights and obligations of the Band under the Third Amended
          and Restated Management Agreement will be performed by the Authority.


     C.   While the scope and size of the Project have not changed, due to
          increased project construction and development costs, the parties
          desire to amend the Third Amended and Restated Management Agreement to
          increase the maximum dollar amount for recoupment of development and
          construction costs of the Facility and the Enterprise.


         NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises herein contained, the receipt and sufficiency of which are
expressly acknowledged, the Band, the Authority and Great Lakes hereby agree as
follows:


SECTION 1. AMENDMENT TO SECTION 5.10. Section 5.10 of he Third Amended and
Restated Management Agreement is hereby amended to replace the dollar amount
"$379,500,000" with the dollar amount "$495,000,000".


SECTION 2. MISCELLANEOUS. Capitalized but undefined terms used herein have the
meanings set forth in the Third Amended and Restated Management Agreement. All
other provisions of the Third Amended and Restated Management Agreement not
modified by this First Amendment shall remain in full force and effect. All
provisions relating to governing law, jurisdiction, waivers of sovereign
immunity, arbitration and waivers of rights to tribal courts contained in the
Third Amended and Restated Development Agreement shall remain in full force and
effect and shall apply to this First Amendment. This Fist Amendment may be
executed in any number of counterparts and
<PAGE>
by the different parties on separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.


         IN WITNESS WHEREOF, the parties have executed this First Amendment
as of the date first referenced above.

                                        POKAGON BAND OF POTAWATOMI
                                        INDIANS

                                        By  /s/ John Miller
                                           -----------------------------
                                               Chairman, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        POKAGON GAMING AUTHORITY

                                        By  /s/ John Miller
                                           -----------------------------
                                           President/CEO, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        GREAT LAKES GAMING OF MICHIGAN
                                        LLC

                                        By  /s/ Timothy J. Cope
                                          ------------------------------
                                          President/CFO, Timothy J. Cope

Approved pursuant to 25 U.S.C. Section 2711:

NATIONAL INDIAN GAMING COMMISSION

By /s/ Philip N. Hogen
  ---------------------------
   Chairman, Philip N. Hogen




<PAGE>
by the different parties on separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.


         IN WITNESS WHEREOF, the parties have executed this First Amendment
as of the date first referenced above.

                                        POKAGON BAND OF POTAWATOMI
                                        INDIANS

                                        By  /s/ John Miller
                                           -----------------------------
                                               Chairman, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        POKAGON GAMING AUTHORITY

                                        By  /s/ John Miller
                                           -----------------------------
                                           President/CEO, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        GREAT LAKES GAMING OF MICHIGAN
                                        LLC

                                        By  /s/ Timothy J. Cope
                                          ------------------------------
                                          President/CFO, Timothy J. Cope

Approved pursuant to 25 U.S.C. Section 2711:

NATIONAL INDIAN GAMING COMMISSION

By /s/ Philip N. Hogen
  ---------------------------
   Chairman, Philip N. Hogen




<PAGE>
by the different parties on separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.


         IN WITNESS WHEREOF, the parties have executed this First Amendment
as of the date first referenced above.

                                        POKAGON BAND OF POTAWATOMI
                                        INDIANS

                                        By  /s/ John Miller
                                           -----------------------------
                                               Chairman, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        POKAGON GAMING AUTHORITY

                                        By  /s/ John Miller
                                           -----------------------------
                                           President/CEO, John Miller

                                        By  /s/ Judy Winchester
                                           -----------------------------
                                            Secretary, Judy Winchester


                                        GREAT LAKES GAMING OF MICHIGAN
                                        LLC

                                        By  /s/ Timothy J. Cope
                                          ------------------------------
                                          President/CFO, Timothy J. Cope

Approved pursuant to 25 U.S.C. Section 2711:

NATIONAL INDIAN GAMING COMMISSION

By  /s/ Philip N. Hogen
  ---------------------------
   Chairman, Philip N. Hogen




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>16
<FILENAME>c06339exv10w15.txt
<DESCRIPTION>FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED DEVELOPMENT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.15


                  FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
                             DEVELOPMENT AGREEMENT


         This First Amendment to Third Amended and Restated Development
Agreement (this "First Amendment") is made as of the 1st day of June, 2006, by
and between the POKAGON BAND OF POTAWATOMI INDIANS (the "Band"), the Pokagon
Gaming Authority (the "Authority"), and GREAT LAKES GAMING OF MICHIGAN, LLC, a
Minnesota limited liability company (f/k/a Great Lakes of Michigan, LLC, ("Great
Lakes").


                                    RECITALS


A. Great Lakes and the Band entered into a Third Amended and Restated
Development Agreement dated as of January 25, 2006 (the "Third Amended and
Restated Development Agreement"), which amended and restated a Second Amended
and Restated Development Agreement dated as of December 22, 2004, which amended
and restated a First Amended and Restated Development Agreement dated as of
October 16, 2000, which amended and restated a Development Agreement dated as of
July 8, 1999, between Lakes Entertainment, Inc., f/k/a Lakes Gaming, Inc.
("Lakes") and the Band which Lakes assigned to Great Lakes pursuant to an
Assignment and Assumption Agreement dated as of October 16, 2000 and the Band
assigned to the Pokagon Gaming Authority pursuant to an Assignment and
Assumption Agreement dated as of May 25, 2006.


B. This First Amendment amends the Third Amended and Restated Development
Agreement to reflect the intent of the Band, the Authority, and Great Lakes to
have the term of the Third Amended and Restated Development Agreement expire no
later than six years and eleven months after the date land was first taken into
trust for the Band by the United States, which occurred on January 27, 2006,
unless terminated earlier in accordance with its terms.


         NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises herein contained, the receipt and sufficiency of which are
expressly acknowledged, the Band, the Authority, and Great Lakes hereby agree as
follows:


SECTION 1. AMENDMENT TO SECTION 7.1. Section 7.1 of the Third Amended and
Restated Development Agreement is hereby amended and restated in its entirety to
read as follows:


         Section 7.1. Term.


         This Agreement shall enter into and remain in full force and effect
from the date of execution hereof until, unless earlier terminated in accordance
with its terms, the earlier of:


         (a) December 27, 2012; and


         (b) the later of:


             (i) seven (7) years from the Commencement Date, provided that if
         the Term of the Management Agreement is reduced to five (5) years
         pursuant to (section) 3.2 of the Management Agreement, the term of this
         Agreement shall be five (5) years plus the


<PAGE>

         period of development and construction, or such earlier date as the
         Management Agreement shall have been terminated in accordance with its
         terms; and


                  (ii) the date on which all obligations owed to Great Lakes by
         the Authority pursuant to this Agreement and any related notes have
         been satisfied in full or otherwise discharged.


SECTION 2. MISCELLANEOUS. Capitalized but undefined terms used herein have the
meanings set forth in the Third Amended and Restated Development Agreement. All
other provisions of the Third Amended and Restated Development Agreement not
modified by this First Amendment shall remain in full force and effect. All
provisions relating to governing law, jurisdiction, waivers of sovereign
immunity, arbitration and waivers of rights to tribal courts contained in the
Third Amended and Restated Development Agreement shall remain in full force and
effect and shall apply to this First Amendment. This First Amendment may be
executed in any number of counterparts and by the different parties on separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same instrument.


         IN WITNESS WHEREOF, the parties have executed this First Amendment as
 of the date first referenced above.


                            [Signature Pages follow]
<PAGE>

                                              POKAGON BAND OF POTAWATOMI
                                              INDIANS


                                              By  /s/ John Miller
                                                -----------------------
                                                 Its: Council Chairman


                                              By /s/ Judy Winchester
                                                -----------------------
                                                 Its: Secretary




                                              POKAGON GAMING AUTHORITY


                                              By  /s/ John Miller
                                                -----------------------
                                                 Its: President/CEO


                                              By  /s/ Judy Winchester
                                                -----------------------
                                                 Its: Secretary









[Signature Page to First Amendment to Third Amended and Restated Development
Agreement]




<PAGE>

                                              GREAT LAKES GAMING OF MICHIGAN LLC

                                                  By:  /s/ Timothy Cope
                                                      ----------------------

                                                  Its:  Pres/CFO
                                                       ---------------------

        [Signature Page to First Amendment to Third Amended and Restated
                             Development Agreement]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>17
<FILENAME>c06339exv10w16.txt
<DESCRIPTION>ASSIGNMENT AND ASSUMPTION AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.16


                       ASSIGNMENT AND ASSUMPTION AGREEMENT

      This Assignment and Assumption Agreement ("Assignment Agreement") is made
the 25th day of May, 2006, by and among the Pokagon Band of Potawatomi Indians
(the "Band"), the Pokagon Gaming Authority, an unincorporated governmental
component of the Pokagon Band of Potawatomi Indians (the "Authority"), Great
Lakes Gaming of Michigan, LLC, a Minnesota limited liability company ("Great
Lakes"), Lakes Entertainment, Inc., f/k/a Lakes Gaming, Inc., a Minnesota
corporation ("Lakes"), Lakes Gaming and Resorts, LLC, a Minnesota limited
liability company ("LG&R"), Pokagon Properties, LLC, a Delaware limited
liability company, and Filbert Land Development, LLC, an Indiana limited
liability company.

                                   WITNESSETH:

      WHEREAS, the Band and Lakes entered into a Development Agreement dated as
of July 8, 1999 (the "1999 Development Agreement") and a Management Agreement
dated as of July 8, 1999 (the "1999 Management Agreement"; collectively, with
the 1999 Development Agreement, the "1999 Agreements"), pursuant to which the
Band engaged Lakes to, among other things, assist the Band in the design,
development, construction and management of a gambling casino and certain
related amenities; and

      WHEREAS, pursuant to the 1999 Management Agreement, Lakes agreed to manage
the Facility on the terms set out in the 1999 Management Agreement; and

      WHEREAS, Lakes assigned its rights and obligations under the 1999
Agreements to Great Lakes pursuant to an Assignment and Assumption Agreement
dated as of October 16, 2000 (the October 16, 2000 Assignment and Assumption
Agreement, as the same has been amended, restated, substituted or modified, the
"Lakes Assignment and Assumption Agreement"), subject to the terms and
conditions set out in the Lakes Assignment and Assumption Agreement; and

      WHEREAS, the 1999 Agreements were amended and restated by (i) a First
Amended and Restated Development Agreement dated as of October 16, 2000 and a
First Amended and Restated Management Agreement dated as of October 16, 2000;
(ii) a Second Amended and Restated Development Agreement dated as of December
22, 2004 and a Second Amended and Restated Management Agreement dated as of
December 22, 2004 and (ii) a Third Amended and Restated Development Agreement
dated as of January 25, 2006 (the "Third Amended and Restated Development
Agreement") and a Third Amended and Restated Management Agreement dated as of
January 25, 2006 (the "Third Amended and Restated Management Agreement",
collectively with the Third Amended and Restated Development Agreement, and as
such may be further amended, restated, substituted or modified, the "Third
Amended and Restated Agreements") (the Third Amended and Restated Agreements,
together with all documents and instruments set forth in SCHEDULE A attached
hereto, as such may be further amended, restated, substituted or modified, are
hereinafter, collectively called the "Agreements"); and


<PAGE>


      WHEREAS, LG&R and Lakes unconditionally guaranteed the full and punctual
payment and performance by Great Lakes of all covenants, obligations and
representations of Great Lakes to the Band under or relating to the Agreements,
pursuant to an Unlimited Guaranty dated as of October 16, 2000, as amended by a
First Amendment to Unlimited Guaranty dated as of December 22, 2004 and a Second
Amended and Restated Unlimited Guaranty dated as of January 25, 2006 (the
"Guaranty"); and

      WHEREAS, pursuant to a certain Guaranty dated March 9, 2000 (the "Pokagon
Properties Guaranty") and a certain Guaranty dated February 28, 2001 (the
"Filbert Guaranty") (the Pokagon Properties Guaranty and the Filbert Guaranty
are hereinafter, collectively, called the "Band Designee Guarantees"), Pokagon
Properties, LLC and Filbert Land Development, LLC (the "Band Designee
Guarantors") unconditionally guaranteed the full and punctual payment and
performance by the Band of amounts advanced by Great Lakes under certain notes,
namely, (i) the Lakes Development Note in the original principal amount of
$43,000,000 dated as of July 8, 1999, as amended and restated by a First Amended
and Restated Lakes Development Note dated as of October 16, 2000, a Second
Amended and Restated Lakes Development Note dated as of December 22, 2004, and a
Third Amended and Restated Lakes Development Note dated as of January 25, 2006
and (ii) the Non-Gaming Land Acquisition Line of Credit Agreement dated as of
July 8, 1999, as amended and restated by a First Amended and Restated Non-Gaming
Land Acquisition Line of Credit Agreement dated as of October 16, 2000, a Second
Amended and Restated Non-Gaming Land Acquisition Line of Credit Agreement dated
as of December 22, 2004, and a Third Amended and Restated Non-Gaming Land
Acquisition Line of Credit Agreement dated as of January 25, 2006 (the "Band
Designee Guaranteed Obligations"); and

      WHEREAS, the Band has the legal authority to conduct gaming operations
pursuant to the Indian Gaming Regulatory Act (the "IGRA"), including Class II
and Class III Gaming as defined in the IGRA; and

      WHEREAS, the Band has informed Great Lakes, Lakes and LG&R that it wishes
to provide for the orderly management of the Band's gaming operations by
chartering the Authority as a division of the Band's tribal government to
conduct the Band's gaming operations, to own the assets of such gaming
operations and to have segregated assets and liabilities from the rest of the
Band's tribal government (the "Restructuring"); and

      WHEREAS, the Third Amended and Restated Agreements grant the Band the
right to assign the Agreements and all rights and obligations thereunder to an
instrumentality of the Band; and

      WHEREAS, in connection with such Restructuring and as part of the
conveyance by the Band to the Authority of the assets of the Band's gaming
operations as contemplated by such Restructuring, the Band wishes to assign its
rights and obligations under the Agreements to the Authority under the terms and
conditions set forth in this Assignment Agreement and has requested that Great
Lakes, Lakes and LG&R consent to (i) the assignment of the Band's rights and
obligations under the Agreements, and (ii) subject to Section 11 hereof, the
release of the Band as primary obligor of the obligations under the Agreements;
and


                                       2
<PAGE>

      WHEREAS, it is the intent of the parties that the Restructuring not affect
or impair the rights and remedies of Great Lakes under the Agreements, other
than as provided herein.

      WHEREAS, Great Lakes, Lakes and LG&R wish to consent to the Restructuring,
but only on the terms and conditions set forth in this Assignment Agreement;

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

1. Recitals True. The above recitals are true.

2. Defined Terms. Capitalized terms used but not otherwise defined herein and
defined in the Third Amended and Restated Agreements shall have the same meaning
herein as therein.

3. Assignment of the Band's Rights and Obligations Under the Agreements. The
Band grants, bargains, sells, conveys, assigns and transfers to the Authority,
without recourse, all of the Band's obligations and liabilities under, and all
right, title and interest, legal and equitable, in, to and under, the Agreements
(collectively, the "Band Obligations"); provided that the Band shall have
certain continuing obligations under the Agreements as described in Section 11
hereof.

4. Assumption of Obligations. The Authority hereby accepts the assignment of all
Band Obligations and hereby assumes and agrees to perform and discharge all of
the obligations and liabilities of the Band arising under or relating to the
Band Obligations in accordance with the terms thereof, as if the Authority had
originally been a party thereto; provided that the Band shall also have certain
continuing obligations under the Agreements as described in Section 11 hereof.
Except as otherwise provided herein, the liabilities so assumed by the Authority
include any obligations or liabilities of the Band which have accrued under the
Band Obligations as of the date hereof, as well as those subsequently accruing.
All references to the Band in the Band Obligations shall, except as provided in
Section 11 hereof, be deemed to refer to the Authority.

5. Liens and Security Interests. The Band and the Authority hereby acknowledge
and agree that all mortgage liens, security interests, and collateral
assignments granted by the Band in favor of Great Lakes (i) remain in full force
and effect on the date hereof; (ii) continue to secure all of the obligations
referenced therein, whether such remain obligations of the Band pursuant to
Section 11 hereof or are assumed by the Authority pursuant to this Assignment
Agreement; and (iii) are binding upon the Authority as the transferee, in
connection with the Restructuring, of the assets subject thereto. The Authority
further acknowledges and agrees that, in accordance with the provisions of this
Assignment Agreement, the Authority has become bound by the Agreements by which
the Band granted such mortgage liens, security interests and collateral
assignments, and that such Agreements accordingly are effective with respect to
assets hereafter acquired by the Authority as a "new debtor" (as such term is
defined in the Tribal UCC and the Uniform Commercial Code).

6. Consent of Great Lakes, Lakes and LG&R. Great Lakes, Lakes and LG&R each
consent



                                       3
<PAGE>



to the assignments and assumptions made under this Assignment Agreement,
recognize the Authority as a substituted party under the Band Obligations and
agree that the Authority shall be a party to such Band Obligations to the same
extent as if the Authority had originally been a party thereto; without
prejudice, however, to the Band's continuing obligations provided in Section 11
of this Assignment Agreement.

7. Ratification of Obligations.

      7.1 Lakes and LG&R (the "Guarantors") hereby acknowledge, affirm and
confirm that (i) the obligations of Great Lakes under the Agreements, as amended
and modified by this Assignment Agreement and any related documents which may be
executed in connection herewith (the "Great Lakes Obligations"), constitute
Guarantied Obligations, as such term is defined under the Guaranty, which remain
in full force and effect, (ii) the Guarantors are liable for all such Guarantied
Obligations in accordance with the terms of their Guaranty without offset,
counterclaims or reduction of any kind or nature whatsoever, and (iii) the
Guarantors shall execute and deliver such additional agreements, amendments and
other documents as the Band or the Authority may require to confirm the
foregoing and more fully effect the purposes of this Assignment Agreement.

      7.2 The Band Designee Guarantors hereby acknowledge, affirm and confirm
that (i) the obligations of the Band which were guaranteed by the Band Designee
Guarantors pursuant to the Band Designee Guarantees and which may be assigned to
and assumed by the Authority pursuant to this Assignment Agreement and any
related documents which may be executed in connection herewith (the "Band
Designee Obligations"), constitute Guaranteed Obligations, as such term is
defined under the Band Designee Guarantees, which remain in full force and
effect, (ii) the Band Designee Guarantors are liable for all such Guaranteed
Obligations in accordance with the terms of their Band Designee Guarantees
without offset, counterclaims or reduction of any kind or nature whatsoever, and
(iii) the Band Designee Guarantors shall execute and deliver such additional
agreements, amendments and other documents as Lakes and/or Great Lakes may
require to confirm the foregoing and more fully effect the purposes of this
Assignment Agreement.

8. Assignment of Security Interest in Account. The Band hereby assigns and
transfers to the Authority its first perfected security interest in and to the
Account (as defined in the Third Amended and Restated Control Agreement dated as
of January 24, 2006 (the "Control Agreement")) and all cash, financial assets
and investment property in the Account, and Great Lakes and Lakes confirm and
reaffirm that the Account shall secure all obligations of Great Lakes and Lakes
to the Authority, as assignee of the Band, in accordance with the terms of the
Third Amended and Restated Pledge and Security Agreement, dated as of January
24, 2006, and the Control Agreement.

9. Assignment of Band Account. The Band hereby assigns and transfers to the
Authority all rights of the Band in and to the Band Account (as defined in the
Control Agreement) and all cash, financial assets and investment property in the
Band Account.

10. Release of the Band. Great Lakes and Lakes release and forever discharge the
Band of



                                       4
<PAGE>



any and all liabilities or obligations under the Obligations except as
specifically set forth in Section 11 hereof, and, except as so provided, agrees
to look solely to the Authority for performance of all obligations of the Band
under the Obligations.

11. Band's Continuing Obligations. Notwithstanding any other provision of this
Assignment Agreement, the Band shall continue to have the benefit of, and be
bound by, (a) Sections 10.2, 10.3, 11.2 (a), 11.2 (c), and ll.2(f),(g)and(h),
14.9, 14.10, 15.6, 15.11, 15.13 and 15.14 of the Third Amended and Restated
Development Agreement, and (b) Section 4.22 (as to the right to special audits),
Section 5.3 (as to the Band Working Capital Advances), Article 7, and Sections
9.1, 9.2, 10.2.1, 10.2.4, 10.2.5, 10.5, 13.12, 13.14, 18.4, 18.11, 18.15, and
18.19 of the Third Amended and Restated Management Agreement.

12. Arbitration; Limited Waiver of Sovereign Immunity. Any disputes under this
Assignment Agreement shall be subject to arbitration as provided in Section 14.2
of the Third Amended and Restated Development Agreement and be resolved in the
venues provided in Section 14.1 of the Third Amended and Restated Development
Agreement. The Band's limited waiver of sovereign immunity in Section 14.1 of
the Third Amended and Restated Development Agreement shall apply to this
Assignment Agreement.

13. Covenants and Representations of Great Lakes

      a.    This Assignment Agreement constitutes the legal, valid and binding
            obligation of Great Lakes, Lakes and LG&R, and is fully enforceable
            in accordance with its terms.

      b.    The Great Lakes Obligations constitute the legal, valid and binding
            obligations of Great Lakes, and are fully enforceable in accordance
            with their terms.

      c.    The Guaranty constitutes the legal, valid and binding obligation of
            Lakes and LG&R, and is fully enforceable in accordance with its
            terms.

      d.    Neither the execution or delivery of this Assignment Agreement nor
            fulfillment of or compliance with the terms and provisions hereof,
            will conflict with, or result in a breach of the terms, conditions
            or provisions of, constitute a default under or, except as provided
            in the Agreements, result in the creation of any lien, charge or
            encumbrance upon any property or assets of Great Lakes under any
            agreement or instrument to which it is now a party or by which it is
            bound.

      e.    The fulfillment of and compliance with the terms and provisions of
            the Great Lakes Obligations will not conflict with, result in a
            breach of the terms, conditions or provisions of, constitute a
            default under, or result in the creation of any lien, charge or
            encumbrance upon any property or assets of Great Lakes under any
            agreement or instrument to which it is now a party or by which it is
            bound.

      f.    The Authority has, and shall have until the termination of the Third
            Amended and Restated Pledge and Security Agreement in accordance
            with Section 15 thereof, a



                                       5
<PAGE>



            first perfected security interest in the Account.

14. Covenants and Representations of the Band and the Authority

      a.    This Assignment Agreement constitutes the legal, valid and binding
            obligation of the Band and the Authority, and is fully enforceable
            in accordance with its terms.

      b.    All Band Obligations constitute the legal, valid and binding
            obligations of the Authority, and are fully enforceable in
            accordance with their terms, and the Band's continuing obligations
            arising out of or relating to the provisions identified in Section
            11 shall also be the legal, valid and binding obligations of the
            Band, and remain fully enforceable in accordance with their terms.

      c.    Neither the execution or delivery of this Assignment Agreement nor
            fulfillment of or compliance with the terms and provisions hereof,
            will conflict with, or result in a breach of the terms, conditions
            or provisions of, constitute a default under or result in the
            creation of any lien, charge or encumbrance upon any property or
            assets of the Band or the Authority under any agreement or
            instrument to which it is now a party or may in the future be bound.

      d.    The fulfillment of and compliance with the terms and provisions of
            the Band Obligations will not conflict with, result in a breach of
            the terms, conditions or provisions of, constitute a default under,
            or result in the creation of any lien, charge or encumbrance upon
            any property or assets of the Band or the Authority under any
            agreement or instrument to which either is now a party or by which
            either is bound (except as contemplated by the Agreements, as
            assumed by the Authority in accordance with the provisions of this
            Assignment Agreement).

      e.    Pursuant to the Agreements as assumed by the Authority in accordance
            with the provisions of this Assignment Agreement, Great Lakes has a
            perfected security interest (i) in all personal property subject to
            a security interest under such Agreements that, as a consequence of
            the Restructuring, is now owned by the Authority, to the extent a
            security interest therein may be perfected by the filing of a
            financing statement under the Uniform Commercial Code, and (ii)
            subject to the filing of any financing statement required by the
            Uniform Commercial Code to be so filed against the Authority in the
            jurisdictions identified in the Tribal UCC, a perfected security
            interest in all such personal property hereafter acquired by the
            Authority to the extent a security interest therein may be perfected
            by the filing of a financing statement under the uniform Commercial
            Code.

15. Further Assurances. From time to time hereafter, Lakes, Great Lakes, LG&R,
the Band and/or the Authority will execute and deliver, or will cause to be
executed and delivered, such additional instruments, certificates or documents,
and will take all such actions, as may reasonably be requested by the other
party or parties, for the purpose of implementing or effectuating the provisions
of this Assignment Agreement. Without limiting the generality of the foregoing,
Great Lakes is hereby authorized to file one or more financing statements, and



                                       6
<PAGE>

continuations thereof and amendments thereto, relative to the personal property
in which a security interest has been granted pursuant to the Agreements, as
assumed by the Authority in accordance with the provisions of this Assignment
Agreement.

16. Governing Law; Severability. This Assignment Agreement shall be interpreted
in accordance with the law of Michigan. Wherever possible each provision of this
Assignment Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provisions of this Assignment Agreement
shall be prohibited by, unenforceable or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition,
unenforceability or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Assignment Agreement.

17. Amendments, Assignments, Etc. Any provision of this Assignment Agreement may
be amended if, but only if, such amendment is in writing and is signed by each
of the parties hereto. No modification shall be implied from course of conduct.

18. Gender and Number; Counterparts. Whenever the context so requires the
masculine gender shall include the feminine and/or neuter and the singular
number shall include the plural, and conversely in each case. This Assignment
Agreement may be executed in separate counterparts and said counterparts shall
be deemed to constitute one binding document.

19. Notices. Great Lakes agrees that any notice or demand upon it shall be
deemed to be sufficiently given or served if it is in writing and is personally
served or in lieu of personal service is mailed by first class certified mail,
postage prepaid, or be overnight mail or courier service, addressed to Great
Lakes at the address of Lakes and with copies as set forth in Section 15.4 of
the Third Amended and Restated Development Agreement. Notice to the Band and the
Authority shall be given as provided in Section 15.4 of the Third Amended and
Restated Development Agreement. Any notice or demand so mailed shall be deemed
received on the date of actual receipt, on the third business day following
mailing as herein set forth or one day following delivery to a courier service,
whichever first occurs.

20. Arbitration; Limited Waiver of Sovereign Immunity. Any disputes under this
Agreement shall be subject to arbitration as provided in Section 14.2 of the
Third Amended and Restated Development Agreement; provided that any demand for
arbitration shall be made within 30 days after a notice of default, denominated
as such, is given under this Agreement. The Band's limited waiver of sovereign
immunity in Sections 14.1 and 14.3 of the Third Amended and Restated Development
Agreement shall apply to this Agreement; provided that the liability of the Band
under any judgment shall always be Limited Recourse, and in no instance shall
any enforcement of any kind whatsoever be allowed against any assets of the Band
other than the limited assets of the Band specified in Section 14.3(h) of the
Third Amended and Restated Development Agreement.

21. Ratification of Obligations. Great Lakes, the Band, and the Authority each
ratify and confirm their respective obligations under the Agreements.

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and



                                       7
<PAGE>



Assumption Agreement to be executed as of the day first above written.


                                  THE POKAGON BAND OF POTAWATOMI INDIANS


                                  By: /s/ John Miller
                                      ----------------------------------
                                      Its Council Chairman


                                  By: /s/ Judy Winchester
                                      ----------------------------------
                                      Its Secretary


                                  THE POKAGON GAMING AUTHORITY

                                  By: /s/ John Miller
                                      -----------------------------------------
                                      Its President and Chief Executive Officer


                                  GREAT LAKES GAMING
                                  OF MICHIGAN, LLC

                                  By: /s/ Timothy Cope
                                      -----------------------------------------
                                      Timothy J. Cope
                                      Its President and Chief Financial Officer


                                  LAKES ENTERTAINMENT, INC.,
                                  f/k/a Lakes Gaming, Inc.

                                  By: /s/ Timothy Cope
                                      -----------------------------------------
                                      Timothy J. Cope
                                      Its President and Chief Financial Officer


                                  LAKES GAMING AND RESORTS, LLC

                                  By: /s/ Timothy Cope
                                      -----------------------------------------
                                      Timothy J. Cope
                                      Its President and Chief Financial Officer




                                       8
<PAGE>

                                  POKAGON PROPERTIES, LLC,
                                  a Delaware limited liability company


                                  By:     Pokagon Band of Potawatomi
                                          Indians
                                  Its:    Member


                                  By:     /s/ John Miller
                                          ----------------------------------
                                          John Miller
                                          Its Council Chairman


                                  By:     /s/ Judy Winchester
                                          ----------------------------------
                                          Judy Winchester
                                          Its Secretary


                                  FILBERT LAND DEVELOPMENT, LLC,
                                  an Indiana limited liability company

                                  By:     Pokagon Band of Potawatomi
                                          Indians
                                  Its:    Member


                                  By:     /s/ John Miller
                                          ----------------------------------
                                          John Miller
                                          Its Council Chairman


                                  By:     /s/ Judy Winchester
                                          ----------------------------------
                                          Judy Winchester
                                          Its Secretary




                                       9
<PAGE>


                                   SCHEDULE A

                     TO ASSIGNMENT AND ASSUMPTION AGREEMENT

1.    Third Amended and Restated Development Agreement

2.    Third Amended and Restated Management Agreement

3.    Third Amended and Restated Lakes Development Note dated as of January 25,
      2006

4.    First Amended and Restated Lakes Facility Note dated as of January 25,
      2006

5.    Third Amended and Restated Transition Loan Note dated as of January 25,
      2006

6.    Third Amended and Restated Non-Gaming Land Acquisition Line of Credit
      Agreement dated as of January 25, 2006

7.    Third Amended and Restated Account Control Agreement dated as of
      January 25, 2006

8.    Third Amended and Restated Pledge and Security Agreement dated as of
      January 25, 2006

9.    First Amended and Restated Security Agreement dated as of January 25, 2006

10.   First Amended and Restated Lakes Working Capital Advance Note dated as of
      January 25, 2006

11.   First Amended and Restated Lakes Minimum Payments Note dated as of
      January 25, 2006

12.   Second Amended and Restated Assignment and Assumption Agreement dated as
      of January 25, 2006

13.   Second Amended and Restated Unlimited Guaranty dated as of January 25,
      2006

14.   Third Amended and Restated Indemnity Agreement dated as of January 25,
      2006



                                       10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>18
<FILENAME>c06339exv10w17.txt
<DESCRIPTION>RELEASE AND INDEMNIFICATION AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.17


                      RELEASE AND INDEMNIFICATION AGREEMENT

            RELEASE AND INDEMNIFICATION AGREEMENT (this "Agreement"), dated as
of June 22, 2006, by and among Lakes Entertainment, Inc. ("Lakes"), Great Lakes
Gaming of Michigan, LLC (the "Manager" and, together with Lakes, the "Lakes
Parties"), Banc of America Securities LLC ("BofA Securities"), Banc of America
Leasing & Capital, LLC ("Banc of America Leasing"), Bank of America National
Association, a national banking association ("BANA"), Fifth Third Bank, Wells
Fargo Bank Northwest, National Association, as collateral agent under the FF&E
Documents (defined below) and U.S. Bank National Association ("U.S. Bank").

                                   WITNESSETH:

            WHEREAS, the Pokagon Band of Potawatomi Indians, an Indian tribe
recognized by the Secretary of the Interior pursuant to federal law (the
"Tribe") plans to develop and operate a gaming and entertainment facility to be
known as the Four Winds Casino and Resort (the "Project"), which will be located
on Indian lands consisting of approximately 51 acres and held in trust by the
United States government for the Tribe;

            WHEREAS, the Tribe established the Pokagon Gaming Authority (the
"Authority"), a wholly owned, unincorporated instrumentality of the Tribe, to
develop and operate all gaming and related businesses of the Tribe, including
the Project;

            WHEREAS, the Manager is a subsidiary of Lakes;

            WHEREAS, pursuant to the Third Amended and Restated Development
Agreement dated as of January 25, 2006 (the "Development Agreement"), between
the Tribe and the Manager, and the Third Amended and Restated Management
Agreement dated as of January 25, 2006 (the "Management Agreement"), between the
Tribe and the Manager, in each case, as amended as of the date hereof, the Tribe
has retained the Manager to assist with the development of and to manage the
Project;

            WHEREAS, in connection with the Development Agreement and Management
Agreement, the Tribe and the Manager have entered into, among other agreements,
a First Amended and Restated Lakes Facility Note, a First Amended and Restated
Lakes Working Capital Advance Note, a First Amended and Restated Lakes Minimum
Payments Note, a Third Amended and Restated Lakes Development Note and a First
Amended and Restated Security Agreement, each dated as of January 25, 2006 (all
such agreements and instruments, whether or not specifically referred to herein,
collectively with the Development Agreement and the Management Agreement, the
"Lakes Agreements");

            WHEREAS, pursuant to a Second Amended and Restated Unlimited
Guaranty dated January 25, 2006, Lakes has guaranteed the performance of the
Manager's obligations under the Lakes Agreements;


<PAGE>


            WHEREAS, pursuant to the Assignment and Assumption Agreement dated
as of June 1, 2006, among the Authority and the Tribe, certain of the Tribe's
rights and obligations under the Lakes Agreements have been assigned to the
Authority;

            WHEREAS, the National Indian Gaming Commission has approved the
Management Agreement;

            WHEREAS, the Development Agreement and the Management Agreement
contemplate that certain costs related to the Project will be funded, in part,
through the issuance and sale of notes, equipment financing and funds loaned to
the Tribe by the Manager;

            WHEREAS, concurrently with the execution of this Agreement, (1) the
Tribe, the Authority, the guarantors party thereto, the Manager and BofA
Securities, as initial purchaser, have entered into a Purchase Agreement dated
June 15, 2006 (the "Purchase Agreement"), pursuant to which the Authority will
issue $305.0 million of 10 3/8% Senior Notes due 2014 (the "Notes"). The Notes
will be issued pursuant to an Indenture dated June 22, 2006 (the "Indenture"),
among the Authority, the guarantors party thereto and U.S. Bank, as trustee, the
proceeds of which will fund a portion of the development and construction costs
of the Project (the Purchase Agreement, the Indenture, all security and other
documents and instruments entered into pursuant thereto or in connection
therewith and any engagement letter entered into with respect thereto are
collectively referred to as the "Notes Documents") and (2) the Authority, Banc
of America Leasing and Wells Fargo Bank Northwest, National Association, as
collateral agent, have entered into a furniture and equipment financing facility
(the "FF&E Facility") pursuant to a loan agreement dated June 22, 2006 (the
"Loan Agreement"), among the Authority, the Tribe, Wells Fargo Bank Northwest,
National Association, as collateral agent and the lenders named therein (the
Loan Agreement, all security and other documents and instruments entered into
pursuant thereto or in connection therewith and instruments and a commitment
letter with respect thereto are collectively referred to as the "FF&E
Documents") for the purchase of furniture and equipment for the Project, the
proceeds of which will fund costs of $75.0 million;

            WHEREAS, certain provisions of the Notes Documents and the FF&E
Documents may be in conflict with or otherwise require performance contrary to
certain provisions of the Lakes Agreements (such conflicting provisions in the
Notes Documents and the FF&E Documents being referred to herein as the
"Conflicting Terms");

            WHEREAS, to induce BofA Securities and U.S. Bank to enter into the
Note Documents to which they are a party, in each of the capacities noted
therein, and to induce Banc of America Leasing to enter into the FF&E Documents,
the Tribe and the Authority have requested the Lakes Parties to, and the Lakes
Parties have agreed to, enter into this Agreement as follows and take the
actions set forth therein;

            NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

            Section 1. Release. Each of the Lakes Parties hereby generally,
irrevocably, and unconditionally acquits, remises, discharges and forever
releases BofA Securities, Banc of



                                       2
<PAGE>



America Leasing, BANA, Fifth Third Bank, U.S. Bank, Wells Fargo Bank Northwest,
National Association, any holder of Notes from time to time, any current or
future lender under the FF&E Facility (each an "FF&E lender"), any trustees,
agents, lenders, noteholders for future indebtedness incurred by the Authority,
any counsel of the foregoing, or any of its respective affiliates of any of the
foregoing, and any officer, director, partner, employee or agent of any of the
foregoing (or any of such affiliates) and any entity or person controlling
(within the meaning of Section 20(a) of the Exchange Act) any of them (including
any of their respective affiliated companies) (collectively, the "Released
Parties") of and from any and all sums of money, actions, awards, causes of
action, suits, judgments, damages, demands, debts, contracts, accounts,
agreements, liabilities, obligations, representations, rights, setoffs, torts,
wrongs, losses, expenses, claims and counterclaims of any and all kind
whatsoever, whether known or unknown, suspected or unsuspected, of every name
and nature, both in law and in equity, which each of the Lakes Parties now has,
or which each of the Lakes Parties or its respective successors or assigns
hereafter may have, against any of the Released Parties arising out of any
matters, causes, acts, conduct, claims, circumstances or events arising or
occurring as a result of (i) the Conflicting Terms existing in the Notes
Documents or the FF&E Documents, (ii) the entering into the Notes Documents and
the FF&E Documents, the terms of any of the Notes Documents and/or the FF&E
Documents or the FF&E Documents to the extent they include the Conflicting Terms
or (iii) the performance of any of the Conflicting Terms.

            Section 2. Indemnification. Each of the Lakes Parties agrees to
indemnify and hold harmless each Released Party for any loss, claim, damage,
liability or expense, as incurred, arising out of or in connection with the
entering into of this Agreement or arising or occurring as a result of (i) the
Conflicting Terms being in conflict with or otherwise requiring performance
contrary to provisions in the Lakes Agreements, (ii) the entering into the Notes
Documents and the FF&E Documents, the terms of any of the Notes Documents and/or
the FF&E Documents or the FF&E Documents to the extent they include the
Conflicting Terms or (iii) the performance of any of the Conflicting Terms or in
connection with the entering into of the Notes Documents or the FF&E Documents,
the terms of any of the Notes Documents and/or the FF&E Documents or the
performance of any of the Notes Documents or the FF&E Documents.

            Section 3. Release of Liens. In consideration for the noteholders
and BofA Securities entering into the Indenture, and for Banc of America Leasing
and BANA entering into the FF&E Documents, each of the Lakes Parties hereby
unconditionally and irrevocably releases its mortgages (the "Released
Mortgages") in the Non-Gaming Land (as defined in the Indenture). In furtherance
of the foregoing, the Lakes Parties shall execute and deliver such
satisfactions, terminations, or releases of the Released Mortgages as may be
necessary or advisable to affect, record and evidence the release or the
Released Mortgages.

            Section 4. Counterparts. This Agreement may be executed in two or
more counterparts, all of which together shall be considered a single
instrument, and this Agreement will be effective as of the date first above
written when executed by the Manager.

            Section 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL



                                       3
<PAGE>



OBLIGATIONS LAW, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

            Section 6. Third Party Beneficiaries. The parties hereto acknowledge
and agree that each Released Party hereby shall be an express third-party
beneficiary of this Agreement and shall be entitled to rely upon and enforce the
provisions set forth herein.

            Section 7. Successors and Assigns. Any party to this Agreement other
than the Manager may assign any of its rights or obligations under this
Agreement. The Manager may not assign any of its rights or obligations under
this Agreement.

            Section 8. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

                         [SIGNATURES ON FOLLOWING PAGE]



                                       4
<PAGE>



            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.


                                  LAKES ENTERTAINMENT, INC.

                                  By: /s/ Timothy Cope
                                      ----------------------------------
                                      Name: Timothy Cope
                                      Title: President/CFO


                                  GREAT LAKES GAMING OF MICHIGAN, LLC

                                  By: /s/ Timothy Cope
                                      ----------------------------------
                                      Name: Timothy Cope
                                      Title: President/CFO


                                  BANC OF AMERICA SECURITIES LLC

                                  By: /s/ R. Sean Snipes
                                      ----------------------------------
                                      Name:  R. Sean Snipes
                                      Title: Managing Director


                                  BANC OF AMERICA LEASING & CAPITAL, LLC

                                  By: /s/ Sonia T. Delen
                                      ----------------------------------
                                      Name:  Sonia T. Delen
                                      Title: Senior Vice President


                                  U.S. BANK NATIONAL ASSOCIATION

                                  By: /s/ Raymond S. Haverstock
                                      ----------------------------------
                                      Name:  Raymond S. Haverstock
                                      Title: Vice President


<PAGE>


                                  FIFTH THIRD BANK

                                  By: /s/ David C. Eifler
                                      --------------------------------
                                      Name: David C. Eifler
                                      Title: Vice President


                                  WELLS FARGO BANK NORTHWEST,
                                  NATIONAL ASSOCIATION

                                  By: /s/ Nancy M. Dahl
                                      --------------------------------
                                      Name:  Nancy M. Dahl
                                      Title: Vice President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>19
<FILENAME>c06339exv99w1.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
<PAGE>
                                                                    Exhibit 99.1



[LAKES ENTERTAINMENT, INC. LOGO]                   NEWS RELEASE
                                                   LAKES ENTERTAINMENT, INC.
                                                   130 CHESHIRE LANE
                                                   MINNETONKA, MN  55305
                                                   952-449-9092
                                                   952-449-9353 (FAX)
                                                   WWW.LAKESENTERTAINMENT.COM
                                                   (NASDAQ: LACO)



- --------------------------------------------------------------------------------
FOR FURTHER INFORMATION CONTACT:
Timothy J. Cope 952-449-7030
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE:
Friday, June 23, 2006


                LAKES ENTERTAINMENT, INC. ANNOUNCES COMPLETION OF
              FINANCING FOR THE POKAGON BAND OF POTAWATOMI INDIANS
                             FOUR WINDS CASINO AND
                   CLOSING ON $105 MILLION FINANCING FACILITY

MINNEAPOLIS, JUNE 23, 2006 - LAKES ENTERTAINMENT, INC. (NASDAQ: LACO) announced
today that on June 22, 2006 an affiliate of the Pokagon Band of Potawatomi
Indians (Pokagon Band) closed on a $305 million senior note financing in
addition to a $75 million commitment for furniture, fixtures and equipment to
fund the Four Winds Casino project in New Buffalo Township, Michigan. In
addition, Lakes simultaneously closed on a previously announced $105 million
credit agreement through a wholly-owned subsidiary with Bank of America, N.A.,
as Administrative Agent and the Banc of America Securities, LLC (BAS) serving as
sole lead arranger and sole book manager (BofA credit agreement).

Lakes, through a wholly-owned subsidiary, has management and development
agreements with an affiliate of the Pokagon Band to develop and manage the Four
Winds Casino. The Four Winds Casino will be an approximately 275,000 square foot
full-service facility and is expected to include a 130,000 square foot gaming
floor featuring 3,000 class III slot machines, 90 table games and a 20-table
poker room; a 164-room hotel; six high-quality restaurants; three casino bars; a
childcare facility and arcade; retail space; enclosed parking and other casino
amenities. The Four Winds Casino will be the only land-based casino in the
northern Indiana/western Michigan market.

Lyle Berman, Lakes' Chairman of the Board and Chief Executive Officer, stated,
"We are very pleased for the Pokagon Band and congratulate them on securing the
funds to develop the Four Winds Casino. We look forward to working with them to
open the Four Winds Casino in the third quarter of 2007 and to help make it a
tremendous success."

<PAGE>

Approximately $25 million of the proceeds from the BofA credit agreement were
used to repay in full Lakes' February 16, 2006 financing facility with an
affiliate of Prentice Capital Management, LP (Prentice), and an additional
approximately $22.5 million were used to fund Lakes' remaining obligation to the
Pokagon Band. The remaining proceeds will be used for, among other things,
funding the interest reserve under the BofA credit agreement, for Lakes' other
casino development projects and for working capital purposes. All funds drawn
under the BofA credit agreement bear interest at the rate of LIBOR plus 6.25%
per annum (subject to change pursuant to the terms of the BofA credit
agreement), are due and payable on the fourth anniversary of the closing and are
secured by substantially all of the material assets of Lakes.

Tim Cope, President and CFO of Lakes, stated, "We have started construction of
the Four Winds Casino and with the funds provided by the Lakes' credit agreement
we will continue to move forward with our various other casino development
projects. We will explore additional financing alternatives to fund future
operations and development costs as needed. While we are allowed to sell up to
three million shares of WPT Enterprises, Inc. (Nasdaq "WPTE") under the BofA
credit agreement, we are no longer actively pursuing a sale of such shares."

As a result of repaying the Prentice financing facility in full without any
additional draws, 1.25 million warrants issued to Prentice will remain
outstanding and exercisable while approximately 3.21 million warrants issued to
Prentice will lapse and not become exercisable.

ABOUT LAKES ENTERTAINMENT

Lakes Entertainment, Inc. currently has development and management agreements
with five separate Tribes for new casino operations in Michigan, California, and
Oklahoma, a total of eight separate casino sites. In addition, Lakes has
announced plans to develop a company owned casino resort project in Vicksburg,
Mississippi. The Company also owns approximately 62% of WPT Enterprises, Inc.
(Nasdaq "WPTE"), a separate publicly held media and entertainment company
principally engaged in the development, production and marketing of gaming
themed televised programming including the World Poker Tour television series,
the licensing and sale of branded products and the sale of corporate
sponsorships.


                                       2
<PAGE>

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made or to be made by Lakes Entertainment, Inc.) contains statements
that are forward-looking, such as statements relating to plans for future
expansion and other business development activities as well as other capital
spending, financing sources and the effects of regulation (including gaming and
tax regulation) and competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of the Company.
These risks and uncertainties include, but are not limited to, need for current
financing to meet Lakes' operational and development needs; those relating to
the inability to complete or possible delays in completion of Lakes' casino
projects, including various regulatory approvals and numerous other conditions
which must be satisfied before completion of these projects; possible
termination or adverse modification of management contracts; Lakes operates in a
highly competitive industry; possible changes in regulations; reliance on
continued positive relationships with Indian tribes and repayment of amounts
owed to Lakes by Indian tribes; possible need for future financing to meet
Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes'
management; and the fact that the WPTE shares held by Lakes are currently not
liquid assets, and there is no assurance that Lakes will be able to realize
value from these holdings equal to the current or future market value of WPTE
common stock. There are also risks and uncertainties relating to WPTE that may
have a material effect on the Company's consolidated results of operations or
the market value of the WPTE shares held by the Company, including WPTE's
significant dependence on the Travel Channel as a source of revenue; the
potential that WPTE's television programming will fail to maintain a sufficient
audience; difficulty of predicting the growth of WPTE's online casino business,
which is a relatively new industry with an increasing number of market entrants;
the risk that WPTE may not be able to protect its entertainment concepts,
current and future brands and other intellectual property rights; the risk that
competitors with greater financial resources or marketplace presence might
develop television programming that would directly compete with WPTE's
television programming; risks associated with future expansion into new or
complementary businesses; the termination or impairment of WPTE's relationships
with key licensing and strategic partners; and WPTE's dependence on its senior
management team. For more information, review the Company's filings with the
Securities and Exchange Commission.



                                       3











</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
