Vessel Construction Agreement Dated As of 3-6-97

VESSEL CONSTRUCTION AGREEMENT.


HULL NAME: "KING OF THE RED"
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PRICE: $19,O39,904
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DELIVERY DATE: 328 Days after Receipt of Down Payment
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CONTRACT.
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This Agreement entered into as of the_____ day of ________, 1997


BETWEEN.
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LEEVAC Shipyards. Inc.
(hereinafter called "BUILDER")


AND
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HORSESHOE ENTERTAINMENT.
(hereinafter called "OWNER").


WITNESSETH:
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ARTICLE I - SCOPE.
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A. For the price and sum of Nineteen Million, Thirty-Nine Thousand, Nine
Hundred Four Dollars U.S. currency ($19,039,904) BUILDER agrees, at its
own risk and expense, subject to and as qualified by, the other terms
and conditions of this Agreement. complete and deliver to OWNER, afloat
at delivery point determined by Article II-C below, on or before above
Delivery Date, time being of the essence, as hereinafter provided one
riverboat casino (hereinafter called the "Vessel") constructed,
outfitted and tested in accordance with the attached Specifications and
Contract Drawings labeled as follows:


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Specifications.


"KING OF THE RED"


Rodney E. Lay Associates, Inc.


Project 3169


January 15, 1997, Revision 1
Including Addendum 1 dated January 28, 1997


Booklet of Gingerbread Details
3169-F50 (Rev O)


January 2, 1997


Contract Drawings
Per Page 5 and 6 of Specifications


References.


A. Letter to Horseshoe with Bid form dated February 3, 1997
B. Letter to Horseshoe dated February 12, 1997 with price
Revisions and Deletions to Specifications and
Contract Drawings
C. "KING Of THE RED" construction organization updated
4 January 1997


The Specifications. Contract Drawings and References have been identified by the signatures of the parties hereto and are hereby made a part of this Agreement.


2 3 B. OWNER agrees to furnish a suitable location for the construction of the
Vessel, in accordance with Reference A, 6.4. BUILDER agrees to furnish
all labor, tools, equipment, materials, services, and fees necessary for
the construction and completion of said vessel, except as otherwise
indicated herein or in said Specification or Contract Drawings.


C. BUILDER shall be responsible for the adequacy and accuracy of the
Specifications and Contract Drawings with regard to compliance with any
requirements or classifications mandated by USCG or any other
governmental or regulatory body for the intended or actual use of the
Vessel, in effect as of date of this Contract.


D. BUILDER will provide and/or install ready for use all parts, equipment
and appurtenances shown in the Specifications and Contract Drawings
(including OWNER Furnished items, except those Items to be installed by
OWNER or its Subcontractors). BUILDER shall store, safe keep and handle
OWNER'S equipment and supplies both prior to and after placement on
board. BUILDER shall allow sufficient working area and time to allow the
timely and safe installation of equipment and loading of supplies prior
to Vessel's departure voyage to its final mooring area.


E. BUILDER will allow OWNER and/or its representatives at all reasonable
times to examine the Vessel during construction.


F. BUILDER will provide OWNER with a production schedule updated every
fifteen (15) days.


G. BUILDER will do all work hereunder in a good and workman-like manner in
accordance with the Specification and Contract Drawings. All material
and equipment shall be in accordance with the Specifications and
Contract Drawings.


ARTICLE II - DELIVERY.


A. BUILDER agrees, subject to the other provisions of this Agreement, to
complete and deliver said Vessel to aforesaid OWNER free and clear of
all liens, claims and encumbrances, except such as OWNER or its
subcontractors, their employees and/or agents and/or vendors


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shall cause to be placed on the Vessel, and OWNER agrees to accept
delivery upon completion of the Vessel at the agreed delivery point set
forth in Article II-C below.


B. BUILDER agrees to deliver (in accordance with Reference A) the Vessel to
OWNER (subject to the qualifications hereinafter stated), after
satisfactory completion as per Specifications at OWNER's shipyard
(herein referred to as Builder's Managed Shipyard) in accordance with
the Specifications and Contract Drawings on or before the Delivery Date
specified or such later date as may be required by reason of agreed
changes in the Vessel or by reason of Force Majeure delays as that term
is defined in Article V.


C. The Vessel after river trials, USCG approvals, delivery by OWNER of all
protrusions above the 4th deck, and reinstallation of all protrusions
above 4th deck, shall be inspected by OWNER safely afloat at Bossier
City. BUILDER shall execute a "Certificate of Completion and Acceptance"
in a form reasonably acceptable to OWNER at the time of delivery for
such Vessel. A form of the unsigned "Certificate of Completion and
Acceptance" is attached as Exhibit ___ to this Agreement.


D. In the event the contract work is not finished at the time BUILDER
tenders the "Certificate of Completion and Acceptance", OWNER shall have
the option, if it, in its sole discretion, deems the Vessel fit for
service, to take Acceptance of the Vessel and treat all "unfinished
work" as a Guarantee Defect as set forth in Article IX. In that event,
Builder's Certificate of Completion and Acceptance shall specify all
unfinished work. The parties shall agree as to the amount to be withheld
from the Acceptance Payment and the Vessel shall be delivered to OWNER
upon OWNER paying the undisputed amount to BUILDER and by withholding
the amount for "unfinished work" until such time that BUILDER completes
the "unfinished work" and OWNER accepts the "unfinished work" as
complete. BUILDER shall invoice OWNER for completion of "unfinished
work" and, provided the work meets the standards of Article II C. OWNER
shall, within ten (10) days of receipt of Invoice, pay BUILDER. If OWNER
does not exercise such option, BUILDER shell completely finish all
contract work.


4 5 E. BUILDER shall furnish OWNER on delivery of the Vessel a Bill of Sale and
Builder's Certificate together with whatever other documents may be
required by law or by any other regulatory agency of the United States
having jurisdiction in the premises in order for OWNER to document the
Vessel; and will assist OWNER, or its agent, in acquiring all required
information to enable OWNER to obtain all certificates necessary to
operate the Vessel as intended. Any expense in connection with
documentation or Certification of the Vessel shall be paid by BUILDER.


ARTICLE III - DOWN PAYMENT.


Down Payment of 15% ($ ) shall be made upon Contract Signing.


ARTICLE IV - SUBSEQUENT PAYMENTS.


A. OWNER agrees to pay to BUILDER at address indicated on applicable
BUILDER's invoice the following "Interim Installment Payments" for such
Vessel:


12.5% 30 days after receipt of Down Payment 12.5% 60 days after
receipt of Down Payment 12.5% 90 days after receipt of Down
Payment 12.5% 120 days after receipt of Down Payment 72.5% 150
days after receipt of Down Payment 12.5% 180 days after receipt
of Down Payment

All Change Order work to be paid monthly based on mutually agreed
percent complete.


B. Upon completion of the Vessel by BUILDER and acceptance thereof by OWNER
in accordance with the Agreement, OWNER agrees to pay the BUILDER at
address indicated on applicable BUILDER's invoice the "Acceptance
Payment" consisting of:


1. The 10% balance due on Contract Price set out in Article 1-A
above
2. Any applicable State or Local Sales and/or Use Taxes.
3. Plus or less any changes in contract price resulting from agreed
changes in the specifications and Contract Drawings in
accordance with Article VII below not previously invoiced and/or
paid.
4. Less any liquidated damages for delay in accordance with Article
VI below.


C. BUILDER will give OWNER notice of intended date of issuance of each
"Interim Installment Payments" invoice not more than 10 nor less than 7
days before issuance. All


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"Interim Installment Payments" and the "Acceptance Payment" will be due
by wire transfer to First National Banker's Bank, Baton Rouge, LA
#065403370, to credit: FNB, Crowley #065200515, and final credit: LEEVAC
Shipyards, Inc. Acct. #0135942.


D. The "Interim Installment Payments" shall be payable within seven days
after presentation of BUILDER's invoice and the "Acceptance Payment"
shall be payable upon BUILDER'S lnvoice and the "Certificate of
Completion and Acceptance" of said Vessel signed by BUILDER and OWNER.


E. The BUILDER shall furnish an invoice for each "Interim Installment
Payment" which shall state (i) the month invoiced; (ii) that the
contract work completed complies with the Contract Drawings and
Specifications and this Agreement; and (iii) that there are no liens or
claims upon said Vessel for labor, materials or equipment for said
Vessel, except those created by the OWNER, its subcontractors, vendors,
or employees. The Interim Installment Invoice shall be executed and
certified by the President or Assistant Secretary/Treasurer of BUILDER.
If BUILDER has any outstanding lien on Vessel, OWNER shall not be
obligated to make payment until lien is resolved, unless such liens are
held by the OWNER or its vendors.


F. The Certificate of Completion end Acceptance shall state (i) that the
Vessel has been completed: (ii) that all trials and tests have been
satisfactorily completed; (iii) that the Vessel complies with the
Specifications and Contract Drawings and this Agreement, and is free
from defects in materials and workmanship; (iv) that there are no liens
or claims upon said Vessel for materials, equipment or labor for said
Vessel, except those created or incurred by the OWNER, its
subcontractors, vendors or employees.


G. The making of the Interim Installment Payments or Acceptance Payment
with respect to the Vessel shall not stop the OWNER from thereafter
asserting any right or remedy accruing to it because of the failure of
the BUILDER to construct and deliver the completed Vessel in accordance
with the terms thereof.


ARTICLE V - FORCE MAJEURE AND DELAYS.


A. All agreements of the BUILDER contained in this contract respecting the
Date of Delivery of the Vessel shall be subject to extension by reason
of "Force Majeure", which Term is


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hereby declared to be any delay caused by fire, explosion, lightning,
flood, windstorm, hurricane, tornado or extraordinary rains,
earthquakes, act of war, strikes, or civil riot which prevent work for
two (2) consecutive days and not caused, or contributed to, by BUILDER;
and including non-delivery and/or late delivery of all OWNER furnished
equipment subject to the further terms hereinafter set forth.


B. Delays in receiving supplies, materials and equipment shall not be
considered Force Majeure unless (a) caused by strikes or Lockouts of
workmen or (b) BUILDER establishes to the reasonable satisfaction of
OWNER that (1) BUILDER timely ordered such supplies, m ...