--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

EXHIBIT
 

THIRD AMENDMENT TO IOWA SHORE MORTGAGE

This THIRD AMENDMENT TO IOWA SHORE MORTGAGE (this “Amendment”) is entered into
as of August 15, 2007, between DIAMOND JO, LLC (formerly known as Peninsula
Gaming Company, LLC), a Delaware limited liability company (the “Company”), and
WELLS FARGO FOOTHILL, INC., a California corporation, as agent for the Lenders
(“Agent”; Agent, together with its successors and assigns, is referred to herein
as “Mortgagee”).
 
W I T N E S S E T H:

WHEREAS, the Company and The Old Evangeline Downs, L.L.C., a Louisiana limited
liability company, as borrowers (collectively, “Borrowers”), Mortgagee, and the
Lenders (as defined therein) are parties to that certain Loan and Security
Agreement dated as of June 16, 2004, as amended by that certain First Amendment
to Loan and Security Agreement dated as of November 10, 2004, that certain
Second Amendment to Loan and Security Agreement dated as of July 12, 2005, that
certain Third Amendment to Loan and Security Agreement and Consent dated as of
December 6, 2006, and that certain Fourth Amendment to Loan and Security
Agreement and Consent dated as of December 22, 2006, and as supplemented by that
certain Borrower Supplement No. 1 dated as of May 13, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”);
 
WHEREAS, as an inducement for Mortgagee and the Lenders to enter into the Loan
Agreement, the Company executed and delivered that certain Mortgage, Leasehold
Mortgage, Assignment of Rents, Security Agreement and Fixture Financing
Statement dated as of June 16, 2004, recorded on June 18, 2004, as Document No.
10729-04 in the official records of the Recorder of Dubuque County, Iowa,  as
amended by that certain First Amendment to Iowa Shore Mortgage dated as of
November 10, 2004, recorded on November 12, 2004, as Document No. 2004-00019859
in the official records of the Recorder of Dubuque County, Iowa and that Second
Amendment to Iowa Shore Mortgage dated as of July 12, 2005, recorded on July 15,
2005, as Document No. 005209020009 in the official records of the Recorder of
Dubuque County, Iowa (the “Mortgage”; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Mortgage), in favor of Mortgagee for the benefit of the Lender Group; and
 
WHEREAS, the Company and Mortgagee have agreed to amend the Mortgage on the
terms and conditions set forth herein;
 

LEGAL_US_W # 56327611.3
 
 

--------------------------------------------------------------------------------

 

NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
 
1. Additional Mortgaged Property.
 
(a) Exhibit A to the Mortgage is hereby amended by adding thereto the
description of real property contained on Exhibit A hereto (such described real
property being hereinafter referred to as the “Additional Land”).
 
(b) To further effect the foregoing, the Company does hereby grant, mortgage,
remise, alien, assign and convey unto Mortgagee, as security for the payment and
performance of the Secured Obligations, the Additional Land, together with all
appurtenances and rights thereto and all improvements thereon, to the same
extent as given with respect to all other Mortgaged Property under the Mortgage,
with all covenants, representations and warranties as to such property as are
given with respect to all other Mortgaged Property under the Mortgage; to have
and to hold such property in fee simple, to the use, benefit, and behoof of
Mortgagee and its successors and assigns forever.
 
(c) It is the intent of the Company that the Mortgage be construed in every
sense as though the Additional Land was originally described in the Mortgage,
and each and every other term and provision of the Mortgage should be applicable
thereto as though the Additional Land had been originally described therein
 
2. Amendments to the Mortgage.
 
(a) The cover page of the Mortgage is hereby modified and amended by deleting
“$64,666,667” therefrom and in place thereof inserting “$79,666,667”.
 
(b) The Granting Clauses of the Mortgage are hereby modified and amended by
amending and restating clause (i) of the Granting Clauses in its entirety as
follows:
 
“(i)           the payment when due of indebtedness evidenced by the Loan
Agreement in the maximum principal sum of $79,666,667, bearing interest as set
forth in the Loan Agreement and maturing on June 15, 2008, such date being the
“Maturity Date”, including, without limitation, all accrued and unpaid interest
thereon, and premiums and penalties, if any, thereon, including late payment
charges and Additional Interest (as defined in Section 5.2 hereof).”
 
3. No Other Amendments or Waivers.  Except as expressly set forth above, the
execution, delivery and effectiveness of this Amendment shall not operate as an
amendment of any right, power or remedy of Mortgagee or the Lenders under the
Mortgage or any of the other Loan Documents, nor constitute a waiver of any
provision of the Mortgage or any of the other Loan Documents.  Except as
expressly set forth above, the text of the Mortgage and all other Loan Documents
shall remain unchanged and in full force and effect and the Company hereby
ratifies and confirms its obligations thereunder.  This Amendment shall not
constitute a modification of the Mortgage or any of the other Loan Documents or
a course of dealing with Mortgagee or the Lenders at variance with the Mortgage
or the other Loan Documents such as to require further notice by Mortgagee or
the Lenders to require strict compliance with the terms of the Mortgage and the
other Loan Documents in the future, except as expressly set forth herein.  The
Company acknowledges and expressly agrees that Mortgagee and the Lenders reserve
the right to, and do in fact, require strict compliance with all terms and
provisions of the Mortgage and the other Loan Documents, as amended herein.  The
Company has no knowledge of any challenge to Mortgagee’s or any Lender’s claims
arising under the Loan Documents, or to the effectiveness of the Loan Documents.
 

 

LEGAL_US_W # 56327611.3
 
2

--------------------------------------------------------------------------------

 

 
4. Conditions Precedent to Effectiveness.  This Amendment shall become effective
as of the date hereof when, and only when, Mortgagee shall have received:
 
(a) counterparts of this Amendment duly executed and delivered by the Company
and Mortgagee
 
(b) evidence in form and substance satisfactory to Mortgagee that the Company
shall have received all licenses (including the Gaming Licenses), approvals or
evidence of other actions required by any Governmental Authority, including the
Louisiana Regulatory Authorities and the Iowa Gaming Authorities, in connection
with the execution and delivery by the Company of this Amendment or with the
consummation of the transactions contemplated hereby; and
 
(c) such other information, documents, instruments or approvals as Mortgagee or
Mortgagee’s counsel may reasonably require.
 
5. Representations and Warranties of the Company.  In consideration of the
execution and delivery of this Amendment by Mortgagee, the Company hereby
represents and warrants in favor of Mortgagee and the Lenders as follows:
 
(a) the execution, delivery, and performance by the Company of this Amendment
have been duly authorized by all necessary action on the part of the Company;
 
(b) the execution, delivery, and performance by the Company of this Amendment do
not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to the Company, the Governing Documents of the Company, or
any order, judgment, or decree of any court or other Governmental Authority
binding on the Company, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of the Company, (iii) result in or require the creation
or imposition of any Lien of any nature whatsoever upon any properties or assets
of the Company, other than Permitted Liens (as defined in the Loan Agreement),
or (iv) require any approval of the Company’s members or shareholders or any
approval or consent of any person or entity under any material contractual
obligation of the Company;
 
(c) the execution, delivery, and performance by the Company of this Amendment do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
person or entity, other than any consent or approval that has been obtained and
remains in full force and effect;
 

 

LEGAL_US_W # 56327611.3
 
3

--------------------------------------------------------------------------------

 

this Amendment, when executed and delivered by the Company, will be the legally
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally;
 
(d) No Default or Event of Default exists under the Mortgage or the other Loan
Documents; and
 
(e) As of the date hereof, all representations and warranties of the Company set
forth in the Mortgage and the other Loan Documents are true, correct and
complete in all material respects, except to the extent such representation or
warranty expressly relates to an earlier date (in which case such statement was
true and correct on and as of such earlier date).
 
6. Counterparts.  This Amendment may be executed in multiple counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute one and the same agreement.  In proving this Amendment in any
judicial proceedings, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such enforcement is
sought.  Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.
 
7. Reference to and Effect on the Loan Documents.  Upon the effectiveness of
this Amendment, on and after the date hereof, each reference in the Mortgage to
“this Mortgage”, “hereunder”, “hereof” or words of like import referring to the
Mortgage, and each reference in the other Loan Documents to “the Mortgage”,
“thereunder”, “thereof” or words of like import referring to the Mortgage, shall
mean and be a reference to the Mortgage as amended hereby.
 
8. Costs, Expenses and Taxes.  The Company agrees to pay on demand all costs and
expenses in connection with the preparation, execution, and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the fees and out-of-pocket expenses of counsel
for Mortgagee with respect thereto and with respect to advising Mortgagee as to
its rights and responsibilities hereunder and thereunder.  In addition, the
Company agrees to pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Amendment and
the other instruments and documents to be delivered hereunder, and agree to save
Mortgagee and the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes.  The Company hereby acknowledges and agrees that Mortgagee may, without
prior notice to Borrowers, charge such costs and fees to Borrowers’ Loan Account
pursuant to Section 2.6(d) of the Loan Agreement.
 
9. Section Titles.  The section titles contained in this Amendment are included
for the sake of convenience only, shall be without substantive meaning or
content of any kind whatsoever, and are not a part of the agreement between the
parties.
 
10. Entire Agreement.  This Amendment and the other Loan Documents constitute
the entire agreement and understanding between the parties hereto with respect
to the transactions contemplated hereby and thereby and supersede all prior
negotiations, understandings and agreements between such parties with respect to
such transactions.
 

 

LEGAL_US_W # 56327611.3
 
4

--------------------------------------------------------------------------------

 

 
11. GOVERNING LAW.  THE COMPANY AND MORTGAGEE AGREE THAT THE RIGHTS AND
OBLIGATIONS UNDER THIS AMENDMENT REGARDING THE CREATION, PERFECTION AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF IOWA.  ALL OTHER PROVISIONS OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
 
12. Loan Document.  This Amendment shall be deemed to be a Loan Document for all
purposes.
 

[Remainder of page intentionally left blank.]

 

LEGAL_US_W # 56327611.3
 
5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first written above.

IMPORTANT:  READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY
ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.  THIS NOTICE APPLIES TO ALL AGREEMENTS ENTERED INTO TO WHICH THE
COMPANY AND MORTGAGEE ARE PARTIES
 
COMPANY:
DIAMOND JO, LLC (formerly known as Peninsula Gaming Company, LLC), a Delaware
limited liability company
         
 
By:
/s/Natalie Schramm        Title: CFO                  

MORTGAGEE:
WELLS FARGO FOOTHILL, INC.,
a California corporation
         
 
By:
/s/Lan Wong       Title:  Lan Wong - VP                  

 
 

                                                          
 

THIRD AMENDMENT TO IOWA SHORE MORTGAGE
 
6

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENT OF THE COMPANY
 
STATE OF   IOWA         )
            )  ss:
COUNTY OF DUBUQUE        )
 
On this  5th  day of  July, A.D., 2007, before me, a Notary Public in and for
the State of Iowa,  personally appeared Natalie Schramm, to me personally known,
who being by me duly sworn did say that the person is (a) (the)  CFO of  Diamond
Jo, LLC, a Delaware limited liability company, executing the foregoing
instrument, that the instrument was signed on behalf of the said limited
liability company by authority of the limited liability company and the
said Natalie Schramm acknowledged the execution of said instrument to be the
voluntary act and deed of said limited liability company by it voluntarily
executed.
 

/s/Dori J. Kostka                                                              
 
Notary Public in the State of  Iowa 

THIRD AMENDMENT TO IOWA SHORE MORTGAGE
 
7

--------------------------------------------------------------------------------

 

CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
 
STATE OF CALIFORNIA             )
              )ss:
COUNTY OF LOS ANGELES       )
 
On July 6, 2007 , before me, Christy S. Walsh, personally appeared Lan Wong,
personally known to me to be the person whose name is subscribed to the wtihin
instrument and acknowledged to me that she executed the same in her authorized
capacity, and that by her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
 
Witness my hand and official seal.
 

             
 
 
/s/Christy S. Walsh       Signature of Notary                  

 
 
8

--------------------------------------------------------------------------------

 

EXHIBIT A

Lot 2, Lot 3 and Lot 4 of Adams Company's 3rd Addition, in the City of Dubuque,
Iowa, according to the recorded Plat thereof.

LEGAL_US_W # 56327611.3

 
9

--------------------------------------------------------------------------------