djwmortgage.htm


     

    
      

      

    

     

    EXHIBIT
10.4

    


       

       

       

       

       

       

       

       

       

       

      Recorder’s
Cover Sheet

       

      Document: Mortgage,
Leasehold Mortgage, Assignment of Rents, Security Agreement and Fixture
Financing Statement

       

      Preparer
Information:  Ted Smith, Esq., Paul, Hastings, Janofsky
& Walker LLP, 600 Peachtree Street, Suite 2400, Atlanta, Georgia 30308 (404)
815-2244

       

      Taxpayer
Information:

      Diamond
Jo Worth, LLC

      600
Star Brewery Drive, Suite 110

      Dubuque,
IA  52001

       

      Return Document
To:

      Ted
Smith, Esq.

      Paul,
Hastings, Janofsky & Walker LLP

      600
Peachtree Street, Suite 2400

      Atlanta,
Georgia 30308

      (404)
815-2244

       

      Grantors:

      Diamond
Jo Worth, LLC

       

      Grantees:

      Wells
Fargo Foothill, Inc, as Agent

       

      Legal
Description:  See attached
Exhibits A and B

       

      Document or instrument number of
previously recorded documents:

       

       


      
        
          
            LEGAL_US_W #
6257936.4

          

           


        

        
           


          
            

          

        

        
           


        

      

       

       

       

       

       

      MORTGAGE,
LEASEHOLD MORTGAGE,

      ASSIGNMENT
OF RENTS,

      SECURITY
AGREEMENT

      AND

      FIXTURE
FINANCING STATEMENT

      FROM

      DIAMOND
JO WORTH, LLC

      TO

      WELLS
FARGO FOOTHILL, INC.,

      AS
AGENT

       

       

       

       

       

       

       

       

       

      NOTICE:  This
Mortgage secures credit in the maximum principal amount of
$49,666,666.68.  Loans and advances up to this amount, together with
interest, are senior to indebtedness to other creditors under subordinated or
subsequently recorded and filed mortgages and liens.

       

      This
Mortgage contains an after-acquired property clause.

       

       

       

       

       


      
        
          
            LEGAL_US_W #
6257936.4

          

           


        

        
           


          
            

          

        

        
           


        

      


      This
Mortgage (this “Mortgage”) is made as of August  6, 2009, by Diamond Jo Worth, LLC, a
Delaware limited liability company (the “Company”), in favor of Wells Fargo
Foothill, Inc., a California corporation, as agent (“Agent”; Agent, together
with its successors and assigns, is referred to herein as “Mortgagee”) for the
Lenders (as defined in the hereinafter defined Loan Agreement) under 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, as amended by that certain Second Amendment to Loan and Security
Agreement dated as of July 12, 2005, as amended by that certain Third Amendment
to Loan and Security and Consent Agreement dated as of December 6, 2006, as
amended by that certain Fourth Amendment to Loan and Security Agreement and
Consent dated as of December 22, 2006, as amended by that certain Fifth
Amendment to Loan and Security Agreement dated as of June 30, 2008, and as
further amended by that certain Sixth Amendment to Loan and Security Agreement
dated as of October 6, 2008 (as hereafter amended, restated, supplemented or
otherwise modified from time to time, collectively, the “Loan Agreement”) among
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC), a Delaware
limited liability company (“DJL”), The Old Evangeline Downs, L.L.C., a Louisiana
limited liability company (“OED,” together with DJL and the Company,
collectively, “Borrowers,” and each, a “Borrower”), Mortgagee and
Lenders.

       

      RECITALS

       

      WHEREAS,
the Company is the sole owner of (i) a fee simple interest (the “Fee Simple
Interest”) for certain premises located in Worth County, Iowa and more
particularly described on Exhibit
A attached hereto, and (ii) a leasehold interest (the “Leasehold
Interest”) created under the lease with respect to certain premises located in
Worth County, Iowa and more particularly described on Exhibit
B attached hereto (the “Lease”) (such Leasehold interest and Fee Simple
Interest is hereinafter referred to as the “Real Property”);

       

      WHEREAS,
pursuant to that certain Borrower Supplement, dated as of even date herewith,
among the Company, Peninsula Gaming, LLC, a Delaware limited liability company,
and Agent, the Company has become a “Borrower” under the Loan Agreement with the
same force and effect as if original named therein as a “Borrower”;
and

       

      WHEREAS,
pursuant to the Loan Agreement, Lenders have agreed to loan Borrowers the
maximum principal amount of $49,666,666.68, subject to the terms and conditions
in the Loan Agreement and maturing on January 15, 2012.  The Loan
Agreement provides that to secure performance by Borrowers of their obligations
under the Loan Agreement, the Company will execute and deliver this Mortgage to
Mortgagee for the benefit of the Lender Group (as defined in the Loan
Agreement).  The Loan Agreement, this Mortgage, the other Loan
Documents (as defined in the Loan Agreement) and any other document referred to
in or made with reference to the Loan Documents are hereby incorporated by
reference, and are sometimes collectively referred to as “Transaction
Documents”.

       

      GRANTING
CLAUSES

       

      NOW,
THEREFORE, in consideration of ten dollars and other good and valuable
consideration, the receipt of and sufficiency of which are hereby acknowledged,
and to secure

       


      
        
          
            LEGAL_US_W #
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      (i)           the
payment when due of indebtedness evidenced by the Loan Agreement in the maximum
principal sum of $49,666,666.68, bearing interest as set forth in the Loan
Agreement and maturing on January 15, 2012, 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),

       

      (ii)           all
other sums that may or shall become due hereunder, in connection with the Loan
Agreement or under the other Transaction Documents, including the costs and
expenses of enforcing any provision of any of the foregoing
documents,

       

      (iii)           the
reimbursement to Mortgagee of all monies which may be advanced as herein
provided and of any and all costs and expenses (including reasonable attorneys’
fees and expenses) incurred or paid on account of any litigation at law or in
equity that may arise in respect of this Mortgage or the obligations secured
hereby or the lands and premises and other property herein mentioned or in
obtaining possession of said lands and premises and other property after any
sale that may be made as hereinafter provided,

       

      (iv)           the
payment by the Company to Mortgagee of all sums, if any, as may be duly expended
or advanced by Mortgagee in the performance of any obligation of the Company as
provided hereunder,

       

      (v)           the
payment of any and all other indebtedness that this Mortgage by its terms
secures and

       

      (vi)           the
performance and observance of the covenants, agreements and obligations of
Borrowers contained herein and in the other Transaction Documents

       

      (all
obligations and sums included in the foregoing clauses (i), (ii), (iii), (iv),
(v) and (vi) being hereinafter collectively referred to as the “Secured
Obligations”), and in order to charge with such performance and with such
payments said lands and premises and other property hereinafter described and
the rents, revenues, issues, income and profits thereof, the Company does hereby
mortgage, affect, hypothecate, to inure to the use and benefit of Mortgagee and
its successors and assigns, for the benefit of the Lender Group, all right,
title and interest of the Company now or hereafter owned or leased, in, to or
under, or derived from each and all of the following properties, estates,
rights, titles and interests (collectively, the “Mortgaged
Property”):

       

      (a)           the
Real Property and all tenements, hereditaments, appurtenances, estates and
rights in and to any of the Real Property and all component parts of the Real
Property, including without limitation all of the Company’s right, title and
interest as tenant under the Lease;

       

      (b)           all
buildings, improvements and other structures now or hereafter located on any of
the Real Property (the “Improvements”);

       

      (c)           all
of the Company’s right, title and interest in and to all servitudes, easements,
rights-of-way, gores of land, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights and powers, and all estates, rights, title,
interests, privileges, liberties, prescriptions, advantages and appurtenances
of any nature whatsoever, in any way belonging, relating or pertaining to any of
the Real Property or the Improvements;

       


      
        
          
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      (d)           all
of the Company’s right, title and interest in and to any right to purchase, or
to use and occupy, any land adjacent to any of the Real Property and any land
lying in the bed of any street, road or avenue, opened or proposed, in front of
or adjoining any of the Real Property;

       

      (e)           all
of the Company’s right, title and interest, to all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever now or hereafter located upon any of the Real Property or the
Improvements, and all component parts of any building or other construction
located on any of the Real Property or appurtenances thereto, and used in
connection with the operation and occupancy of any of the Real Property or the
Improvements, and all building equipment, material and supplies of any nature
whatsoever now or hereafter located in or upon any of the Real Property or the
Improvements, including, without limitation, all metals, lumber and lumber
products, bricks, stones, building blocks, sand, cement, roofing materials,
paint, doors, windows, hardware, wires, wiring and other building materials and
any building equipment, materials and supplies obtained for use in connection
with any of the Real Property or the Improvements and all additions,
replacements, modifications and alterations of any of the foregoing, including,
but without limiting the generality of the foregoing, all heating, lighting
incinerating and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, plumbing, lifting, cleaning, fire prevention, fire extinguishing,
refrigerating, ventilating and communications apparatus, air cooling and air
conditioning apparatus, elevators, ducts and compressors and all other equipment
and fixtures (collectively, the “Fixtures”).  The Company acknowledges
that all Fixtures are part and parcel of the real estate and appropriated to the
use of the real estate and, whether or not affixed or annexed to the
Improvements, shall for the purpose of this Mortgage be deemed conclusively to
be real estate and mortgaged hereby;

       

      (f)           all
of the Company’s right, title and interest to all plans and specifications for
the Real Property and the Improvements, all contracts with architects and
engineers responsible for the design of the Improvements, the preparation or
evaluation of any of such plans and specifications or the supervision of the
construction of any of the Improvements, all contracts to which the Company is
now or hereafter a party providing for the connection therewith or the
furnishing or installation of any Fixtures or other personal property in
connection therewith, all contracts to which the Company is now or hereafter a
party providing for the management of the construction of any of the
Improvements, all rights of the Company as a third party beneficiary under all
contracts and subcontracts pertaining to the Real Property or the Improvements
as to which the Company is not a party, all payment and performance bonds
relating to the Real Property or the Improvements and all other contracts and
agreements related to the design, management, construction, equipping and
development of the
Real Property or the Improvements (collectively, the “Construction
Documents”);

       


      
        
          
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      (g)           all
of the Company’s right, title and interest to all awards or payments, and any
interest paid or payable with respect thereto, that may be made with respect to
all or any portion of the Real Property, the Improvements or the Fixtures,
whether from the exercise of right of condemnation, eminent domain or similar
proceedings (including any transfer made in lieu of the exercise of said right),
or from any taking for public use, or for any other injury to or decrease in the
value of all or any portion of the Real Property, the Improvements or the
Fixtures, or as a result of the exercise by any governmental authority of any
right or option to purchase any of the Real Property, all of the foregoing to be
held, applied and paid in accordance with the provisions of this Mortgage
(collectively, the “Eminent Domain Awards”);

       

      (h)           all
of the Company’s right, title and interest to all proceeds of, and any unearned
premiums on, any insurance policies covering all or any portion of the Real
Property, the Improvements or the Rents (as hereinafter defined), including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to all or
any portion of the Real Property or the Improvements and any interest actually
paid with respect thereto, all of the foregoing to be held, applied and paid in
accordance with the provisions of this Mortgage (collectively, the “Insurance
Proceeds”);

       

      (i)           all
of the Company’s right, title and interest as lessor or landlord to all leases
and other agreements affecting the use or occupancy of any of the Real Property
or the Improvements now in effect or hereafter entered into (including, without
limitation, subleases (including subleases of the Lease, licenses, concessions,
tenancies and other occupancy agreements covering or encumbering all or any
portion of the Real Property or the Improvements), but excluding any licenses
and permits to the extent not assignable under applicable law, including without
limitation, liquor and gaming licenses, together with any modifications,
extensions or renewals of the same (collectively, excluding the Lease, the
“Space Leases”) and the rents, revenues, issues, income, products and profits of
the Real Property and the Improvements, including, without limitation, any
security deposits or other funds deposited with the Company pursuant to the
Space Leases (collectively, the “Rents”), together with any guarantees of the
Space Leases or Rents delivered to the Company from time to time, and any
modifications, extensions and renewals of any such guarantees, together with the
right, but not the obligation, to exercise options, to give consents and to
collect, receive and receipt for the Rents and apply the Rents to the payment of
the Secured Obligations and to demand, sue for and recover the Rents (when due
and payable), subject to a license in favor of the Company in respect thereof
prior to the occurrence of an Event of Default (as defined in Section 5.1
hereof); and

       


      
        
          
            LEGAL_US_W #
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      (j)           any
and all other, further or additional rights, title, estates and interests of the
Company in and to any of the Real Property or the Improvements or the Fixtures,
and all renewals, substitutions and replacements of and all additions and
appurtenances to any of the Real Property or the Improvements or the Fixtures or
constructed, assembled or placed on any of the Real Property or the
Improvements, and all conversions of the assemblage, placement or conversion, as
the case may be, and in each such case without any further mortgage, conveyance,
assignment or other act by the Company, shall become subject to the lien of this
Mortgage as fully and completely, and with the same effect, as though now owned
by the Company, the Company expressly agreeing that if the Company shall at any
time acquire any other right, title, estate or interest in and to any of the
Real Property, the Improvements or the Fixtures, the lien of this Mortgage shall
automatically attach to and encumber such other right, title, estate or interest
as a first lien thereon.

       

      AND,
as additional security, the Company hereby grants to Mortgagee, for the benefit
of the Lender Group, a continuing security interest in (a) the Fixtures, (b) the
Construction Documents, (c) the Insurance Proceeds, (d) the Eminent Domain
Awards, (e) the Space Leases, (f) the Rents, (g) all proceeds of the foregoing
and (h) all proceeds of any of the Real Property and the Improvements
(collectively, the “Security Interests Property”) and this Mortgage shall be
effective as a security agreement pursuant to the Uniform Commercial Code as
enacted and in effect in the state in which any of the Real Property is located
(the “Code”).

       

      HABENDUM

       

      TO
HAVE AND TO HOLD the Mortgaged Property, the rights and privileges hereby
conveyed or assigned, or intended so to be, unto Mortgagee and its successors
and assigns, for the benefit of the Lender Group, forever for the uses and
purposes and subject to the terms and conditions herein set forth.

       

      SUBJECT,
HOWEVER,  to Permitted Liens (as defined in the Loan
Agreement).

       

      PROVIDED
NEVERTHELESS, should Borrowers pay and perform all the Secured Obligations in
accordance with the Loan Agreement and the Security Documents, then these
presents will be of no further force and effect, and this Mortgage shall be
satisfied by Mortgagee, at the expense of the Company.

       

      The
Company FURTHER agrees as follows:

       

      ARTICLE
I

      COVENANTS

       

      Section
1.1                      Performance
of Obligations.  The Company shall pay and perform the Secured
Obligations.  Time is of the essence
hereof.

       

      Section
1.2                      Further
Assurances.  If Mortgagee requests in its Permitted Discretion,
the Company shall sign and deliver and cause to be recorded as Mortgagee shall
direct any further mortgages, instruments of further assurance, certificates and
other documents

       


      
        
          
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      as
Mortgagee may consider reasonably necessary or desirable in order to perform,
perfect, continue, and preserve the obligations of the Company under the
Transaction Documents.  The Company further agrees to pay to
Mortgagee, upon demand, all costs and expenses incurred by Mortgagee in
connection with the preparation, execution, recording, filing and refiling of
any such documents, including attorneys’ fees that are reasonable and title
opinion or title insurance costs.

       

      Section
1.3                      Operation
and Maintenance; Compliance with Laws.  The Company shall cause
the Mortgaged Property to be maintained in good working order and condition,
ordinary wear and tear excepted, and the Company shall make all necessary
repairs, renewals, replacements, additions, betterments and improvements
thereto, as shall be reasonably necessary for the proper conduct of the business
of the Company.  The Company shall comply or cause compliance with all
laws, ordinances and regulations of any governmental authority with reference to
the Mortgaged Property and the manner of using or operating the same, including
any Environmental Laws or Regulations and Accessibility Regulations, as
hereafter defined, and with any restrictive covenants affecting the title to the
Mortgaged Property, and with the terms of all insurance policies relating to the
Mortgaged Property, except where the non-compliance with which, individually or
in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change (as defined in the Loan
Agreement).

       

      Section
1.4                      Payment
of Utilities, Impositions, Liens.  The Company shall pay or
cause to be paid when due all charges or fees for utilities and services
supplied to the Mortgaged Property. The Company, at least five (5) days before
any penalty attaches thereto, shall pay and discharge, or cause to be paid and
discharged, all taxes, assessments and governmental charges or levies
(collectively, “Impositions”) imposed upon or against it, its income or profits,
the Mortgaged Property or rents therefrom, or upon or against the Secured
Obligations, or upon or against the interest of Mortgagee in the Mortgaged
Property or the Secured Obligations, except Impositions measured by the income
of Mortgagee or unless the subject of a Permitted Protest (as defined in the
Loan Agreement). The Company shall provide evidence of such payment at
Mortgagee’s request.  This Mortgage is and shall be maintained by the
Company as a valid first mortgage lien and first security interest in the
Mortgaged Property, subject only to the Permitted Liens (as defined in the Loan
Agreement).  Except as otherwise provided in the Loan Agreement, the
Company shall not, directly or indirectly, create or suffer, or permit to be
created or suffered, against the Mortgaged Property or any part thereof, and the
Company will promptly discharge any Lien (as defined in the Loan Agreement) or
other Imposition that may affect the Mortgaged Property or any part thereof, or
any interest therein, except the Permitted Liens.  If any Lien not
permitted hereunder is filed, the Company will cause the same to be discharged
promptly by payment or bonding or otherwise to the satisfaction of Mortgagee and
will exhibit to Mortgagee evidence of payment, discharge, bonding or other
disposition satisfactory to Mortgagee.

       

      Section
1.5                      Intentionally
omitted.

       

      Section
1.6                      Insurance.

       

      (a)           The
Company shall maintain insurance on the Mortgaged Property as specified in Section
6.8 of the Loan Agreement.

       


      
        
          
            LEGAL_US_W #
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      (b)           Subject
to the provisions of Section
3.1 hereof, nothing contained in this Section or elsewhere in this
Mortgage shall relieve the Company of its duty to maintain, repair, replace or
restore the Improvements or the Fixtures or rebuild the Improvements, from time
to time, in accordance with the applicable provisions of the Transaction
Documents, and nothing in this Section or elsewhere in this Mortgage shall
relieve the Company of its duty to pay the Secured Obligations, which shall be
absolute, regardless of the occurrence of damage to or destruction of or
condemnation of all or any portion of the Mortgaged Property.

       

      Section
1.7                      Books
and Records; Financial Information.  The Company shall (i) keep
complete and accurate books and records with respect to the Mortgaged Property;
(ii) permit Mortgagee to inspect such books and records during normal business
hours and make copies thereof at Mortgagee’s expense; and (iii) provide
Mortgagee such information as is required by Section 6.3 of the Loan
Agreement.

       

      Section
1.8                      Mortgage,
Sale, Lease of the Mortgaged Property.

       

      (a)           The
Company will not, now or in the future, mortgage, pledge or encumber or place
any Lien or encumbrance (or permit the same to exist) on the Mortgaged Property,
or any part thereof, without the prior written consent of Mortgagee, except for
Permitted Liens (including Liens that are replacements of Permitted Liens to the
extent that the original Indebtedness (as defined in the Loan Agreement) is
refinanced, renewed, or extended under Section
7.1(f) of the Loan Agreement and so long as the replacement Liens only
encumber those assets that secured the refinanced, renewed or extended
Indebtedness.

       

      (b)           The
Company shall not sell, convey, transfer or otherwise alienate in any manner,
whether directly or indirectly, any right, title or interest in the Mortgaged
Property, or any part thereof, without obtaining in each such instance the prior
written consent of Mortgagee, such consent not to be unreasonably withheld,
except as expressly permitted under the Loan Agreement.

       

      (c)           Except
as otherwise expressly permitted under the Transaction Documents or as otherwise
expressly permitted hereunder, the Company shall not, without Mortgagee’s prior
consent, which consent will not be unreasonably withheld, enter into any
agreement with or conveyance to any other person or entity permitting the use of
any excess development rights that might otherwise be used by the Company in
expanding, altering, reconstructing, replacing or otherwise improving the
Improvements or making any other improvements on the Mortgaged Property, or
otherwise permit or suffer any change of the zoning of the Mortgaged Property or
the use that may be made thereof.

       

      Section
1.9                      Environmental
- ADA.  The Company agrees:

       

      (a)           Except
for substances normally used for maintenance or operation of the Mortgaged
Property which are used, stored and disposed of in accordance with all
applicable Environmental Regulations, the Company shall not, nor shall it permit
others to, place, store, locate, generate, produce, create, process, treat,
handle, transport, incorporate, discharge, emit, spill, release, deposit or
dispose of any Hazardous Substance in, upon, under, over or from the Mortgaged
Property.  The Company shall cause all Hazardous Substances found on
or under the Mortgaged Property, which are not permitted under the foregoing
sentence, and

       


      
        
          
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      which
exist in quantities which violate applicable Environmental Laws or Regulations,
to be properly removed therefrom and properly disposed of at the Company’s cost
and expense.  The Company shall not install or permit to be installed
any underground storage tank on or under the Mortgaged Property.  If
Mortgagee shall reasonably request, the Company shall at its cost obtain and
deliver to Mortgagee an environmental review, audit, assessment and/or report
relating to the Mortgaged Property, or shall have any previously delivered
materials updated and/or amplified, in each case by an engineer or scientist
acceptable to Mortgagee; provided,
however,
that so long as no Default or Event of Default has occurred and is continuing,
the Company shall not be required to obtain and deliver to Mortgagee such
environmental review, audit, assessment and/or report relating to the Mortgaged
Property or have any previously delivered materials updated and/or amplified
more frequently than once per calendar year.

       

      (b)           the
Company shall comply in all material respects with all Accessibility Regulations
which are applicable to the Mortgaged Property.  If Mortgagee shall
reasonably request, the Company shall at its cost obtain and deliver to
Mortgagee an Accessibility Regulation compliance report relating to the
Mortgaged Property, or shall have any previously delivered materials updated
and/or amplified, in each case by a qualified consultant acceptable to
Mortgagee; provided,
however,
that so long as no Default or Event of Default has occurred and is continuing,
the Company shall not be required to obtain and deliver to Mortgagee such
Accessibility Regulation compliance report relating to the Mortgaged Property or
have any previously delivered materials updated and/or amplified more frequently
than once per calendar year.

       

      (c)           the
Company shall, promptly within 10 days after obtaining actual knowledge thereof,
give notice to Mortgagee of:  (i) any activity in violation of any
applicable Environmental Laws or Regulations relating to the Mortgaged Property;
(ii) any governmental or regulatory actions instituted or threatened under any
Environmental Laws or Regulations or any Accessibility Regulations affecting the
Mortgaged Property; (iii) all claims made or threatened by any third party
against the Mortgaged Property relating to any Hazardous Substance or a
violation of any Environmental Laws or Regulations or any Accessibility
Regulations; and (iv) any discovery by the Company of any occurrence or
condition on or under the Mortgaged Property or on or under any real property
adjoining or in the vicinity of the Mortgaged Property which could subject the
Company, Mortgagee or the Mortgaged Property to a claim under any Environmental
Laws or Regulations or Accessibility Regulations which reasonably could be
expected to result in a Material Adverse Change (as defined in the Loan
Agreement).  Any such notice shall include copies of any written
materials received by the Company.

       

      (d)           Any
investigation, remedial or corrective action taken with respect to the Mortgaged
Property shall be done under the supervision of a qualified consultant, engineer
or scientist acceptable to Mortgagee who shall, at the Company’s cost and at the
completion of such investigation or action, provide a written report of such
investigation or action to Mortgagee.

       

      (e)           If
the Mortgaged Property has, or is suspected to have, asbestos or asbestos
containing materials (“ACM”) which, due to its condition, location and/or
planned building renovation or demolition, is recommended to be abated by
repair, encapsulation, removal or other action, the Company shall promptly carry
out the recommended abatement action.  If the recommended abatement
includes removal of ACM, the Company shall cause the same to be removed
and

       


      
        
          
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      disposed
of offsite by a licensed and experienced asbestos removal contractor, all in
accordance with Environmental Laws or Regulations.  Upon completion of
the recommended abatement action, the Company shall deliver to Mortgagee a
certificate, signed by an officer of the Company and the consultant overseeing
the abatement action, certifying to Mortgagee that the work has been completed
in material compliance with all applicable laws, ordinances, codes and
regulations (including, without limitation, those regarding notification,
removal and disposal) and that no airborne fibers beyond permissible exposure
limits remain on site.  The Company shall maintain and keep in effect
at all times an Operations and Maintenance Program (as contemplated by
Environmental Protection Agency guidance document entitled “Managing Asbestos In
Place: A Building Owner’s Guide to Operations and Maintenance Programs for
Asbestos–Containing Materials”) for managing in place any ACM in the Mortgaged
Property.  The Company shall deliver a complete copy of such
Operations and Maintenance Program to Mortgagee and certify to Mortgagee that
such Program is in place and in effect.

       

      (f)           After
the occurrence and during the continuance of an Event of Default, or if at any
time there is a reasonable basis to believe that a violation of Environmental
Laws or Regulations may have occurred on the Mortgaged Property, Mortgagee shall
have the right, after ten (10) days’ prior written notice to the Company, to
have an environmental review, audit, assessment, testing program and/or report
with respect to the Mortgaged Property performed or prepared by an environmental
engineering firm selected by Mortgagee.  The Company shall reimburse
Mortgagee for the cost incurred for each such action within ten (10) days
following demand therefor by Mortgagee.  The amount shall accrue
interest at the Additional Interest Rate (as defined in Section
5.2) from and including the date of disbursement by Mortgagee through the
date of payment by the Company.

       

      For
purposes of this Mortgage, the following definitions shall apply:

       

      “Environmental
Laws or Regulations” means and includes the Federal Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA” or the Federal Superfund Act)
as amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”),
42 U.S.C. Sec.Sec. 9601 et seq.; the Federal Resource Conservation and Recovery
Act of 1976 (“RCRA”), 42 U.S.C. Sec.Sec. 6901 et seq.; Chapter 455B of the Iowa
Code; the Clean Water Act, 33 U.S.C. Sec.Sec. 1321 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Sec. 2601 et seq.; the Safe Drinking Water Act, 42
U.S.C. Sec. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
Sec. 2701 et seq.; the Emergency Planning and the Community Right-to-Know
Act of 1986, 42 U.S.C. Sec. 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. Sec. 1801 et seq.; the Occupational Safety
and Health Act, 29 U.S.C. Sec. 651 et seq. (to the extent it regulates
occupational exposure to Hazardous Substances); and the Clean Air Act, 42 U.S.C.
Sec.Sec. 7401 et seq., all as the same may be from time to time amended, and any
other federal, state, county, municipal, local or other statute, code, law,
ordinance, regulation, requirement or rule which may relate to or deal with
human health or the environment, including, without limitation, all regulations
promulgated by a regulatory body pursuant to any such statute, code, law or
ordinance.

       

      “Hazardous
Substances” means asbestos, asbestos containing materials, urea formaldehyde,
polychlorinated biphenyls, nuclear fuel or materials, chemical waste,
radioactive materials, explosives, known carcinogens, petroleum products
including but not limited to crude oil or any fraction thereof, natural gas,
natural gas liquids, gasoline or synthetic gas, and any other waste, material,
substance, pollutant or contaminant which would subject the owner of the
Mortgaged Property to any damages, penalties, liabilities, or obligations under
any applicable Environmental Laws or Regulations.

       


      
        
          
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      “Accessibility
Regulations” means any law ordinance or regulation relating to accessibility of
facility or property for disabled, handicapped and/or physically challenged
persons, including, without limitation, the Americans With Disabilities Act of
1991, as amended.

       

      Section
1.10                      The
Lease.  With respect to the Lease, the Company hereby covenants
and agrees that:

       

      (a)           The
Company will promptly pay when due and payable the rentals, additional rents and
other charges mentioned in and payable under the Lease within the grace and cure
periods provided in the Lease.

       

      (b)           The
Company will promptly perform and observe all of the terms, covenants and
conditions required to be performed and observed by the Company, as lessee under
the Lease, within the grace and cure periods provided in the Lease, and will do
all things reasonably necessary to preserve and to keep unimpaired its rights
under the Lease.  The Company will enforce or cause to be enforced the
obligations of the lessor under the Lease, to the end that the Company may enjoy
all of the material rights granted to it as lessee under the Lease.

       

      (c)           The
Company will promptly notify the Mortgagee of any material default by the
Company in the performance or observance of any of the terms, covenants or
conditions on the part of the Company to be performed or observed under the
Lease.

       

      (d)           The
Company will (i) promptly notify the Mortgagee of the receipt by the Company of
any notice from the lessor under the Lease of a default by the Company in the
performance or observance of any of the terms, covenants or conditions on the
part of the Company to be performed or observed under the Lease, (ii) promptly
notify the Mortgagee of the receipt by the Company of any notice from the lessor
under the Lease to the Company of termination of the Lease pursuant to the
provisions thereof and (iii) promptly cause a copy of each such notice received
by the Company from the lessor under the Lease to be delivered to the
Mortgagee.

       

      (e)           Except
as otherwise expressly permitted under the Transaction Documents or as otherwise
expressly permitted hereunder, the Company will not, without the prior consent
of the Mortgagee (i) terminate, cancel, modify, supplement or surrender or
suffer or permit any termination, modification or surrender of the Lease, (ii)
fail or refuse to take timely and appropriate action to renew the Lease pursuant
to the applicable provisions thereof, (iii) consent or refuse to consent to any
action taken or to be taken by the lessor or anyone else under the Lease, the
result of which would materially diminish or impair the security of this
Mortgage (as determined by the Mortgagee), (iv) further encumber the Leasehold
Interest, notwithstanding any such right given to the Company under the Lease,
or (v) subordinate or consent to the subordination of the Lease to any mortgage
on the lessor’s interest in the premises demised by the Lease.

       


      
        
          
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           (f)          Supplementing the provisions of
subparagraph (e) above, if the Lease is rejected or disaffirmed by the lessor
thereunder (or by any receiver, trustee, custodian or other party who succeeds
to the rights of such lessor, such receiver, trustee, custodian or other party
being collectively, the “acting lessor”) pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law (any such law hereinafter collectively
referred to as a “Bankruptcy Law”), the Company covenants that it will not elect
to treat the Lease as terminated under 11 U.S.C. Sec.365(h) or any similar or
successor law or right, and hereby assigns to the Mortgagee the sole and
exclusive right to make or refrain from making any such election, and the
Company agrees that any such election, if made by the Company, shall be void and
of no force or effect.

       

      (g)           If
the lessor or acting lessor under the Lease rejects or disaffirms the Lease
pursuant to any Bankruptcy Law and the Mortgagee elects to have the Company
remain in possession under any legal right the Company may have to occupy the
premises leased pursuant to the Lease, then (i) the Company shall remain in such
possession and shall perform all acts necessary for the Company to retain its
right to remain in such possession for the unexpired term of the Lease
(including all renewals thereof) whether such acts are required under the then
existing terms and provisions of the Lease or otherwise, and (ii) all of the
terms and provisions of this Mortgage and the lien created hereby shall remain
in full force and effect and shall be extended automatically to such possession,
occupancy and interest of the Company.

       

      (h)           The
Company will from time to time, after demand of the Company, use reasonable
efforts to obtain and deliver to the Mortgagee a written statement from the
lessor under the Lease, duly acknowledged, and certifying to the Company (i)
that the Lease is then in full force and effect and has not been modified (or,
if modified, setting forth all modifications), (ii) the date to which the rent,
additional rent and other charges thereunder have been paid, (iii) whether or
not, to the best knowledge of lessor under the Lease, the Company is in default
under the Lease, and, if the Company is in default, the specific nature of all
such defaults and (iv) as to any other matters reasonably requested by the
Mortgagee and reasonably related to the Lease.

       

      (i)           The
Company shall deliver to the Mortgagee an original Non Disturbance and
Attornment Agreement from the holder of any mortgage encumbering the fee
interest in the real property affected by the Leasehold Interest, in a form
previously agreed to by the Mortgagee.

       

      ARTICLE
II

       

      REPRESENTATIONS
AND WARRANTIES

       

      The
Company makes the following representations and warranties:

       

      Section
2.1                      Existence
and Powers. The Company is a limited liability company duly created and
validly existing and in good standing under the laws of the State of
Delaware.  The Company has the power to own its property and to carry
on its business and to execute and perform the Transaction
Documents.  The Company has obtained all material licenses and permits
necessary to conduct its business in the manner presently
conducted.

       

      Section
2.2                      Ownership,
Liens, Compliance with Laws.  The Company owns the Mortgaged
Property free from all Liens and encumbrances except for the Permitted Liens and
except for defects in title that do not interfere in any material respect with
its ability to conduct its business or to utilize the Mortgaged Property for its
intended purpose.  All applicable zoning

       


      
        
          
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      and
environmental, land use, subdivision, building, fire, safety or health laws,
ordinances and regulations affecting the Mortgaged Property permit the current
use and occupancy thereof, and the Company has obtained all necessary consents,
permits and licenses required for such use.  The Company will comply
with and satisfy all applicable formalities and provisions of the laws and
regulations of the United States of America and the laws of the State of Iowa in
order to perfect, establish and maintain this Mortgage, and any supplement or
amendment hereto.

       

      Section
2.3                      Authority,
Consents.  The execution, delivery and performance of the
Transaction Documents have been duly authorized by all necessary action of the
Company.  Except for consents and approvals previously obtained, no
consent or approval of, or exemption by, any person or entity, governmental or
private, is required to authorize the execution, delivery and performance of the
Transaction Documents or the validity thereof.

       

      Section
2.4                      Binding
Agreement.  The Transaction Documents are the valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except to the extent limited by equitable
principles or bankruptcy, insolvency or similar laws affecting the rights of
creditors generally.

       

      Section
2.5                      No
Conflict, Default.  The execution, delivery and performance by
the Company of the Transaction Documents will not violate or cause default under
or permit acceleration of any material agreement to which the Company is a party
or by which it or the Mortgaged Property is bound.  To the Company’s
best knowledge, it is not in default (beyond any applicable grace period) in the
performance of any agreement, order, writ, injunction, decree or demand to which
it is a party or by which it is bound.

       

      Section
2.6                      Litigation.  Except
as otherwise disclosed in the Loan Agreement, there is no litigation,
arbitration or other proceeding in process or to the Company’s best knowledge
pending or threatened against the Mortgaged Property or the Company except for
(a) matters that are fully covered by insurance (subject to customary
deductibles), and (b) matters arising after the date hereof that if decided
adversely to the Company, reasonably could not be expected to have a materially
adverse effect on the ability of the Company to fulfill its obligations under
the Transaction Documents or on the condition, financial or otherwise, of the
Company’s business, properties or assets.

       

      Section
2.7                      Use.  The
Mortgaged Property is not homestead property nor is it agricultural property in
agricultural use.

       

      Section
2.8                      Utilities.  The
Mortgaged Property is serviced by all necessary public utilities, and all such
utilities are operational and have sufficient
capacity.

       

      Section
2.9                      Environmental.  To
the Company’s best knowledge, except as set forth in the Loan Agreement and
except with respect to any other matters that individually or in the aggregate
could not reasonably be expected to result in a Material Adverse Change (as
defined in the Loan Agreement):

       

      (a)           There
is not located on, in, about, or under the Mortgaged Property any Hazardous
Substances except for Hazardous Substances of the type ordinarily used, stored,
or manufactured  in connection with the ownership or operation of
the
Mortgaged Property as it is presently operated and such existing Hazardous
Substances have been used, stored and manufactured in compliance with all
Environmental Laws or Regulations.

       


      
        
          
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      (b)           The
Mortgaged Property is not presently used, and has not in the past been used as a
landfill, dump, disposal facility, gasoline station or for the storage,
generation, production, manufacture, processing, treatment, disposal, handling,
transportation, or deposit of any Hazardous Substances, where such production,
storage, generation, manufacturing, processing, treatment, disposal, handling,
transportation or deposit was in violation, in any material respect, of
applicable Environmental Law.

       

      (c)           There
has not in the past been, and no present threat now exists of, a spill,
discharge, emission or release of a Hazardous Substance in, upon, under, over or
from the Mortgaged Property or from any other property which would have an
impact on the Mortgaged Property.

       

      (d)           There
are no past or present investigations, administrative proceedings, litigation,
regulatory hearings or other action completed, proposed, threatened or pending,
alleging noncompliance with or violation of any Environmental Laws or
Regulations respecting the Mortgaged Property, or relating to any required
environmental permits covering the Mortgaged Property.

       

      (e)           The
Company has disclosed to Mortgagee all reports and investigations commissioned
by the Company and relating to Hazardous Substances and the Land and the
Improvements.

       

      (f)           There
are not now, nor have there ever been, any above ground or underground storage
tanks located in or under the Mortgaged Property.   There are no
wells on or under the Mortgaged Property.

       

      Section
2.10                      First
Mortgage Lien.  This Mortgage constitutes a valid mortgage and,
upon proper recording hereof, will constitute a valid and perfected first
priority mortgage lien, and security interest in the Mortgaged Property (subject
only to the Permitted Liens and any mortgage filed pursuant to the provisions of
the Intercreditor Agreement (as defined in the Loan Agreement)), and there are
no defenses or offsets to the Company’s obligations pursuant to this Mortgage or
the other Transaction Documents, including without limitation, the Company’s
applicable obligations to pay and perform the Secured
Obligations.

       

      Section
2.11                      Tax
Liens; Bankruptcy.  There
are no federal, state or local tax claims or liens assessed or filed against the
Company or the Mortgaged Property for taxes which are due and payable,
unsatisfied of record or docketed in any court of the state in which the Real
Property is located or in any other court located in the United States, and no
petition in bankruptcy has ever been filed by the Company, or, to the Company’s
knowledge, against the Company, and the Company has never made any assignment
for the benefit of creditors or taken advantage of any insolvency act or any act
for the benefit of debtors.

       

      Section
2.12                      Damage;
Eminent
Domain Proceedings.  The Mortgaged Property has not been
damaged or destroyed by fire or other casualty, and no condemnation or eminent
domain proceedings have been commenced and none are pending with respect to the
Mortgaged Property, and, to the Company’s best knowledge, no such condemnation
or eminent domain proceedings are about to be
commenced.

       


      
        
          
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      Section
2.13                      Lease.  The
Lease is now a valid and subsisting lease and is in full force and effect in
accordance with the terms thereof and has not been modified, and all of the
rental, additional rental and other charges payable under the Lease prior to the
execution hereof have been paid, and all of the material terms, conditions and
agreements contained in the Lease have been performed by the Company, and no
material default exists under the Lease.  To the best of the Company’s
knowledge, the lessor under the Lease is not in default under any of the terms
or provisions of the Lease on the part of the lessor to be observed or
performed.  This Mortgage is lawfully executed and delivered in
conformity with the Lease and is and will be kept a valid lien on and collateral
assignment of the interest of the Company therein.

       

      ARTICLE
III

      CASUALTY–CONDEMNATION

       

      Section
3.1                      Damage
or Destruction.  During the period the indebtedness remains
outstanding, in the event that the Real Property, the Improvements, or the
Fixtures shall be damaged or destroyed in whole or in part, by fire or other
casualty covered by insurance, the Company shall give prompt written notice
thereof to Mortgagee.  At such time as such damage, destruction or
casualty shall occur, the Insurance Proceeds shall be payable to Mortgagee and
applied in accordance with Sections
2.4(b)(i) and 6.8(b) of the Loan Agreement, as
applicable.  Upon the occurrence of an Event of Default which has not
been waived in writing by Mortgagee, Mortgagee shall have the right to apply
such Insurance Proceeds in accordance with Section
2.4(b)(i) of the Loan Agreement.

       

      Section
3.2                      Condemnation.

       

      (a)           During
the period the indebtedness remains outstanding, in the event that the Mortgaged
Property, or any part thereof, shall be taken in condemnation proceedings or by
exercise of the right of eminent domain, or by conveyance in lieu of
condemnation, or as a result of the exercise by any governmental authority of
any right or option to purchase (hereinafter collectively called “Proceedings”),
Mortgagee shall have the right to participate in any such Proceedings at the
Company’s expense, including reasonable attorneys’ fees and disbursements, and
any Eminent Domain Awards that may be made or any proceeds thereof shall be
deposited with Mortgagee and held in trust by Mortgagee and distributed in the
manner herein set forth.  The parties agree to execute any and all
further documents that may be required in order to facilitate collection of any
Eminent Domain Award and the making of any such deposit.

       

      (b)           During
the period the indebtedness remains outstanding, if there occurs a Proceeding,
any Eminent Domain Awards payable in connection therewith shall be payable to
Mortgagee and applied in accordance with Section
6.8(b) of the Loan Agreement.

       


      
        
          
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      (c)           Upon
the occurrence of an Event of Default which has not been waived in writing by
Mortgagee, Mortgagee shall have the right to apply such Eminent Domain Awards in
accordance with Section
2.4(b)(i) of the Loan Agreement.

       

      ARTICLE
IV

       

      LEASES
AND RENTS

       

      Section
4.1                      Space
Leases, Rents and Cash Collateral.

       

      (a)           As
additional collateral security for payment of the Secured Obligations, and as
cumulative of any and all rights and remedies herein provided, the Company
hereby bargains, sells, transfers, assigns and sets over to Mortgagee, for the
benefit of the Lender Group, any and all Space Leases and Rents and any and all
cash collateral to be derived from the Mortgaged Property, or the use and
occupation thereof, or under any contract or bond relating to the construction
or reconstruction of the Mortgaged Property, including all Rents, royalties,
revenues rights, deposits (including security deposits) and benefits accruing to
the Company under all Space Leases, and the right to receive the same and apply
them against the Secured Obligations or against the Company’s other obligations
hereunder or Borrowers’ obligations under the Transaction Documents, together
with all Space Leases, contracts, bonds, leases and other documents evidencing
the same now or hereafter in effect and all right of the Company
thereunder.  Nothing contained in the preceding sentence shall be
construed to bind Mortgagee to the performance of any of the provisions of any
such Space Lease, contract, bond, lease or other documents or otherwise impose
any obligation upon Mortgagee, except that Mortgagee shall be accountable for
any money actually received pursuant to such assignment to the extent of its
disposition thereof in a manner inconsistent with this Mortgage or the
Transaction Documents.  The Company shall deliver to Mortgagee upon
Mortgagee’s request an executed counterpart of each such Space Lease, contract,
bond or other documents.  The assignment of said Space Leases, Rents,
income profits, proceeds and cash collateral, and any of the aforesaid rights
with respect thereto and to the contracts, bonds, leases and other documents
evidencing the same, is intended to be and is an absolute present assignment
from the Company to Mortgagee and not merely the passing of a security
interest.

       

      (b)           So
long as there shall exist no Event of Default hereunder which has not been
waived in writing by Mortgagee, the Company shall have the right and license to
exercise all rights, options and privileges extended to the lessor under the
terms of the Space Leases, including, without limitation, the right to collect
all Rents.  The Company agrees to hold the same in trust and to use
the same, first, in payment of the Secured Obligations, second, the Taxes and
insurance premiums payable hereunder and all other charges on or against the
Mortgaged Property and, third, to the expenses of the Company’s business in or
on the Mortgaged Property.

       

      (c)           In
the event of any such Event of Default which has not been so waived, the right
and license set forth in subparagraph (b) of this Section shall be automatically
revoked, and, thereafter, Mortgagee shall have the right and

       


      
        
          
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      authority
to exercise any of the rights or remedies referred to or set forth
herein.  In addition, upon such an Event of Default, the Company shall
promptly pay to Mortgagee  all rent prepayments and security or other
deposits paid to the Company pursuant to any Space Leases and (ii) all charges
for services or facilities or for escalations which were paid pursuant to any
Space Leases to the extent allocable to any period from and after such Event of
Default and any such sums received by Mortgagee shall be applied by Mortgagee in
accordance with Section 2.4(b)(i) of the Loan Agreement.

       

      (d)           If
the Company is not required to surrender possession of the Mortgaged Property
hereunder in the event of any such Event of Default which has not been so
waived, the Company will pay monthly in advance to Mortgagee, or to any receiver
appointed to collect same, the income, profits or proceeds received by the
Company under any of the Space Leases.

       

      (e)           The
Company will upon Mortgagee’s request execute, acknowledge and deliver to
Mortgagee, in form approved by Mortgagee, one or more general or specific
assignments of the lessor’s interest under any Space Lease (which are consistent
with the foregoing provisions).  The Company will, on demand, pay to
Mortgagee, or reimburse Mortgagee for the payment of, all reasonable costs or
expenses incurred in connection with the preparation or recording of any such
assignment.

       

      (f)           The
Company will (i) perform or cause to be performed the lessor’s obligations under
any Space Lease, (ii) enforce the performance by the lessee under its respective
Space Lease of all of said lessee’s material obligations thereunder and (iii)
give Mortgagee prompt notice and a copy of any notice of default, event of
default, termination or cancellation sent or received by the
Company.

       

      (g)           Except
to the extent expressly permitted herein or under the other Transaction
Documents, the Company will not, without Mortgagee’s written consent, (i)
assign, mortgage, pledge or otherwise transfer, dispose of or encumber, whether
by operation of law or otherwise, any Space Lease or the Rents or other income
thereunder or therefrom, (ii) accept or permit the acceptance of a prepayment of
any Rents for more than one month in advance of the due dates therefor, (iii)
amend, modify, or otherwise alter any Space Lease, or (iv) cancel, terminate or
accept a surrender of any Space Lease.  The Company will from time to
time, promptly upon Mortgagee’s reasonable request, prepare and deliver to
Mortgagee such information concerning the Space Leases as Mortgagee shall
request.

       

      ARTICLE
V

      DEFAULTS
AND REMEDIES

       

      Section
5.1                      Events
of Default.  Each of the following shall constitute an Event of
Default hereunder:

       

      (a)           the
occurrence of an “Event of Default” as defined in Article 8 of the Loan
Agreement; or

       

      (b)           the
failure of the Company to observe and perform any covenant, condition or
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      (other
than an occurrence which may sooner constitute an “Event of Default” under the
Loan Agreement) including, without limitation, the covenants contained in
Article I herein for a period of thirty (30) days after written notice
specifying such failure and requesting that it be remedied, given to the Company
by Mortgagee, unless Mortgagee agrees in writing to an extension of such time
prior to its expiration.

       

      Section
5.2                      Remedies.  Upon
the occurrence of an Event of Default, all Secured Obligations, at the option of
Mortgagee, shall be accelerated and become immediately due and payable upon
notice to the Company.  The outstanding principal amount and the
interest accrued thereon of the Secured Obligations shall be due and payable
without presentment, demand or further notice of any kind, all of which are
hereby expressly waived by the Company.  The Company will pay to
Mortgagee the entire Secured Obligations or portions thereof, as applicable, and
to the extent permitted by law, the premiums and penalties, if any, provided in
this Mortgage and each other Transaction Document, as applicable, and such
payment shall be applied in accordance with Section 2.4(b)(i) of the Loan
Agreement.

       

      In
the event of any Event of Default, whether or not an acceleration shall occur,
Mortgagee shall have the right to proceed to protect and enforce its rights by
one or more of the following remedies:

       

      (a)           MORTGAGEE
SHALL HAVE THE RIGHT TO BRING SUIT either for damages, specific performance of
any agreement contained in any Transaction Document, or for the foreclosure of
this Mortgage, or for the enforcement of any other appropriate legal or
equitable remedy.

       

      (b)           MORTGAGEE
SHALL HAVE THE RIGHT TO OBTAIN A RECEIVER at any time after an Event of Default,
whether or not an action for foreclosure has been commenced. Any court having
jurisdiction shall at the request of Mortgagee following an Event of Default
appoint a receiver to take immediate possession of the Mortgaged Property and to
rent or operate the same as he may deem best for the interest of all parties
concerned, and such receiver shall be liable to account to the Company only for
the net profits, after application of rents, issues and profits upon the costs
and expenses of the receivership and upon the Secured Obligations.

       

      (c)           MORTGAGEE
SHALL HAVE THE RIGHT, AT ANY TIME, TO ADVANCE MONEY TO THE RECEIVER to pay any
part or all of the items which the receiver should otherwise pay if cash were
available from the Mortgaged Property and sums so advanced, with interest
(“Additional Interest”) at the per annum rate equal to the Default Rate (as
defined in the Loan Agreement) (the “Additional Interest Rate”), shall be
secured hereby, or if advanced during the period of redemption shall be a part
of the sum required to be paid to redeem from the sale.

       

      (d)           MORTGAGEE
SHALL HAVE THE RIGHT TO COLLECT THE RENTS from the Mortgaged Property and apply
the same in the manner hereinbefore provided with respect to a
receiver.  For that purpose, Mortgagee may enter and take possession
of the Mortgaged Property and manage and operate the same and take any action
which, in Mortgagee’s judgment, is necessary or proper to collect the Rents and
to conserve the value of the Mortgaged Property.  Mortgagee may also
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      the
Security Interests Property.  The expense (including any receiver’s
fees, attorneys’ fees, costs and agent’s compensation) incurred pursuant to the
powers herein contained shall be secured by this Mortgage.  Mortgagee
shall not be liable to account to the Company for any action taken pursuant
hereto other than to account for any Rents actually received by
Mortgagee.  Enforcement hereof shall not cause Mortgagee to be deemed
a trustee in possession unless Mortgagee elects in writing to be a trustee in
possession.

       

      (e)           MORTGAGEE
SHALL HAVE THE RIGHT TO ENTER AND TAKE POSSESSION of the Mortgaged Property and
manage and operate the same in conformity with all applicable laws and take any
action which, in Mortgagee’s judgment, is necessary or proper to conserve the
value of the Mortgaged Property.

       

      (f)           MORTGAGEE
SHALL HAVE ALL OF THE RIGHTS AND REMEDIES PROVIDED IN THE IOWA UNIFORM
COMMERCIAL CODE, Iowa Code Chapter 554, including the right to proceed under the
Iowa Uniform Commercial Code provisions governing default as to any Security
Interests Property separately from the real estate included within the Mortgaged
Property, or to proceed as to all of the Mortgaged Property in accordance with
its rights and remedies in respect of said real estate.  If Mortgagee
should elect to proceed separately as to such Security Interests Property, the
Company agrees to make such Security Interests Property available to Mortgagee
at a place or places acceptable to Mortgagee, and if any notification of
intended disposition of any of such Security Interests Property is required by
law, such notification shall be deemed reasonably and properly given if given at
least ten (10) days before such disposition in the manner hereinafter
provided.

       

      (g)           MORTGAGEE
SHALL HAVE THE RIGHT TO FILE PROOF OF CLAIM and other documents as may be
necessary or advisable in order to have its claims allowed in any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceedings affecting the Company, its creditors or its property,
for the entire amount due and payable by the Company under the Secured
Obligations, this Mortgage and any other instrument securing the Secured
Obligations, at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable by the Company after such
date.

       

      Each
remedy herein specifically given shall be in addition to every other right now
or hereafter given or existing at law or in equity, and each and every right may
be exercised from time to time and as often and in such order as may be deemed
expedient by Mortgagee and the exercise or the beginning of the exercise of one
right shall not be deemed a waiver of the right to exercise at the same time or
thereafter any other right.  Mortgagee shall have all rights and
remedies available under the law in effect now and/or at the time such rights
and remedies are sought to be enforced, whether or not they are available under
the law in effect on the date hereof.

       

      Section
5.3                      Expenses
of Exercising Rights, Powers and Remedies.  The reasonable
expense (including any receiver’s fees, attorneys’ fees, appraisers’ fees,
environmental engineers’ and/or consultants’ fees, costs incurred for
documentary and expert evidence, stenographers’ charges, publication costs,
costs (which may be estimated as to items to be expended after entry of the
decree of foreclosure) of procuring all abstracts of title, continuations of
abstracts of title, title searches and examinations, title insurance policies
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      commitments
and extensions therefor, Torrens duplicate certificates of title, Uniform
Commercial Code and chattel lien searches, and similar data and assurances with
respect to title as Mortgagee may deem reasonably necessary either to prosecute
any foreclosure action or to evidence to bidders at any sale which may be had
pursuant to any foreclosure decree the true condition of the title to or the
value of the Mortgaged Property, and Mortgagee’s compensation) incurred by
Mortgagee after the occurrence of any Event of Default under this Mortgage
and/or in pursuing the rights, powers and remedies contained in this Mortgage
shall be immediately due and payable by the Company, with interest thereon at
the Additional Interest Rate, and shall be added to the indebtedness secured by
this Mortgage.

       

      Section
5.4                      Restoration
of Position.  In case Mortgagee shall have proceeded to enforce
any right under this Mortgage by foreclosure, sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely, then, and in every such case, the Company and
Mortgagee shall be restored to their former positions and rights hereunder with
respect to the Mortgaged Property subject to the lien
hereof.

       

      Section
5.5                      Marshalling.  The
Company, for itself and on behalf of all persons, parties and entities which may
claim under the Company, hereby waives all requirements of law relating to the
marshalling of assets, if any, which would be applicable in connection with the
enforcement by Mortgagee of its remedies for an Event of Default hereunder,
absent this waiver.  Mortgagee shall not be required to sell or
realize upon any portion of the Mortgaged Property before selling or
realizing  upon any other portion thereof.

       

      Section
5.6                      Waivers.  No
waiver of any provision hereof shall be implied from the conduct of the
parties.  Any such waiver must be in writing and must be signed by the
party against which such waiver is sought to be enforced.  The waiver
or release of any breach of the provisions set forth herein to be kept and
performed shall not be a waiver or release of any preceding or subsequent breach
of the same or any other provision.  No receipt of partial payment
after acceleration of any of the Secured Obligations shall waive the
acceleration.  No payment by the Company or receipt by Mortgagee of a
lesser amount than the full amount secured hereby shall be deemed to be other
than on account of the sums due and payable hereunder, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment be
deemed an accord and satisfaction, and Mortgagee may accept any check or payment
without prejudice to Mortgagee’s right to recover the balance of such sums or to
pursue any other remedy provided in this Mortgage.  The consent by
Mortgagee to any matter or event requiring such consent shall not constitute a
waiver of the necessity for such consent to any subsequent matter or
event.

       

      Section
5.7                      Mortgagee’s
Right to Cure Defaults.  If the Company shall fail to comply
with any of the terms hereof with respect to the procuring of insurance, the
payment of taxes, assessments and other charges, the keeping of the Mortgaged
Property in repair, the payment and satisfaction of Liens and encumbrances
against the Mortgaged Property, the payment or performance of the Lease, the
payment of any other sum or deposit required under this Mortgage, or any other
term herein contained, Mortgagee may make advances or take other actions to
perform the same without releasing the Company from any Secured Obligations and
may enter upon the Mortgaged Property for any such purpose and take all such
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      Mortgagee
or any of its duly appointed agents may deem necessary or appropriate
therefor.  The Company agrees to repay upon demand all sums so
advanced and all sums expended by Mortgagee in connection with such performance,
including, without limitation, reasonable attorneys’ fees, with Additional
Interest at the Additional Interest Rate from the dates such advances are made,
and all sums so advanced and/or expenses incurred, with Additional Interest at
the Additional Interest Rate, shall be secured hereby as Secured Obligations,
but no such advance and/or incurring of expense by Mortgagee, shall be deemed to
relieve the Company from any default hereunder, or to release the Company from
any Secured Obligations.  Mortgagee shall not be bound to inquire into
the validity of any Imposition or Lien which the Company fails to pay as and
when required by this Mortgage and which the Company does not contest in strict
accordance with the terms of this Mortgage and the other Transaction
Documents.

       

      Section
5.8                      Suits
and Proceedings.  Mortgagee shall have the power and authority,
upon prior notice to the Company to institute and maintain any suits and
proceedings as Mortgagee may deem advisable to (i) prevent any impairment of the
Mortgaged Property by any acts which may be unlawful or any violation of this
Mortgage, (ii) preserve or protect its interest in the Mortgaged Property,
or (iii) restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid, if, in the Permitted Discretion (as defined in the Loan Agreement) of
Mortgagee, the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to Mortgagee’s
interest.

       

      Section
5.9                      Waiver
of Redemption Rights; Alternative Foreclosure Procedures.  It
is agreed that if this Mortgage covers any parcel of less than ten (10) acres of
land, and in the event of the foreclosure of this Mortgage and sale of the
property by sheriff’s sale in such foreclosure proceedings, the time of one (1)
year for redemption from said sale provided by the statutes of the State of Iowa
with respect to such parcel shall be reduced to six (6) months provided
Mortgagee in such action files an election to waive any deficiency judgment
against the Company which may arise out of the foreclosure proceedings; all to
be consistent with the provisions of Chapter 628 of the Iowa
Code.

       

      It
is further agreed that the period of redemption after a foreclosure of this
Mortgage shall be reduced to sixty (60) days if all of the three following
contingencies develop with respect to any parcel of real estate included in the
Mortgaged Property: (1) the real estate is less than ten (10) acres in size; (2)
the court finds affirmatively that the said real estate has been abandoned by
the owners and those persons personally liable under this Mortgage at the time
of such foreclosure; and (3) Mortgagee in such action files an election to waive
any deficiency judgment against the Company or its successor in interest in such
action. Entry of appearance by pleading or docket entry by or on behalf of the
Company shall create a presumption that the property is not
abandoned.  Any such redemption period shall be consistent with all of
the provisions of Chapter 628 of the Code of Iowa.

       

      This
Section shall not be construed to limit or otherwise affect any other redemption
provisions contained in Chapter 628 of the Iowa Code.  This Section
also shall not be construed to limit Mortgagee’s right to elect foreclosure
without redemption or to elect foreclosure by nonjudicial procedure as set forth
in Chapters 654 and 655A of the Iowa Code.  The Company agrees
that, in the event of a foreclosure of the Mortgage, under any provision of Iowa
law, Mortgagee shall be entitled to sole possession and use of the Mortgaged
Property during any redemption period.

       


      
        
          
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      Section
5.10                      Application
of Proceeds.  The proceeds from the foreclosure, sale or lease
or any recovery pursuant to Iowa Code Chapter 554 or hereunder shall be
applied to the payment of the Secured Obligations in accordance with the Loan
Agreement if such Secured Obligations have been deemed due and payable upon the
Event of Default.  Any surplus of the proceeds shall be paid to the
Company.

       

      Section
5.11                      Personal
Property.  Any limitation on recovery contained in this
Mortgage shall not be construed to extend to and shall not limit recovery under
any other instrument or Loan Document that grants a security interest in
personal property that is also conveyed or encumbered pursuant to this
Mortgage.

       

      ARTICLE
VI

      MISCELLANEOUS

       

      Section
6.1                      Binding
Effect; Survival; Number; Gender.  This Mortgage shall be
binding on the Company and its successors and assigns and inure to the benefit
of Mortgagee and its successors and assigns for the benefit of the Lender
Group.  All representations and warranties contained herein or
otherwise heretofore made by the Company to Mortgagee shall survive the
execution, delivery and foreclosure hereof.  The singular of all terms
used herein shall include the plural, the plural shall include the singular, and
the use of any gender herein shall include all other genders, where the context
so requires or permits.

       

      Section
6.2                      Severability.  The
unenforceability or invalidity of any provision of this Mortgage as to any
persons or circumstances shall not render that provision unenforceable or
invalid as to any other persons or circumstances and shall not affect the
enforceability of the remaining provisions hereof.

       

      Section
6.3                      Notices.   All
notices and demands required or permitted to be given to or made upon any party
hereto under any Transaction Document shall be in writing and shall be
personally delivered or sent by certified mail, postage prepaid, return receipt
requested or by a nationally recognized courier, or by telecopier, and shall be
deemed to be given for purposes of this Mortgage on the day that such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section.  Notices shall be given to or made upon
the respective parties hereto at their respective addresses set forth
below:

       

      If
to the Company:

       

      Diamond
Jo Worth, LLC

      c/o
Peninsula Gaming Partners, LLC

      400
E. Third Street, P.O. Box 1750

      Dubuque,
Iowa 52004

      Attn:  Natalie
Schramm

      Fax
No.  (563) 690-2190

       


      
        
          
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      If
to Mortgagee:

       

      Wells
Fargo Foothill, Inc..

      2450
Colorado Avenue, Suite 3000 West

      Los
Angeles, California 90404

      Attention:
Business Finance Division Manager

       

      Either
party may change the address for notices by a notice given not less than five
(5) business days prior to the effective date of the change.

       

      Section
6.4                      Survival
of Warranties, Etc.  All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Mortgage.

       

      Section
6.5                      Applicable
Law.  The Company and Mortgagee agree that the rights and
obligations under this Mortgage 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 Mortgage shall be governed by
the laws of the State of New York, without regard to principles of conflict of
laws.  In the event that any provisions or clause of this Mortgage
conflict with applicable laws, such conflict shall not affect other provisions
of this Mortgage which can be given effect without the conflicting provision,
and to this end the provisions of this Mortgage are declared to be
severable.

       

      Section
6.6                      Waiver
of Jury Trial.  EACH OF THE COMPANY AND MORTGAGEE, BY ITS
ACCEPTANCE OF THIS MORTGAGE, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE AND ANY
OF THE OTHER SECURITY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

       

      Section
6.7                      Effect.  This
Mortgage is in addition to and not in substitution for any other guaranties,
covenants, obligations or other rights now or hereafter held by Mortgagee from
any other person or entity in connection with the Secured
Obligations.

       

      Section
6.8                      Assignability.  Mortgagee
shall have the right to assign this Mortgage, in whole or in part or sell
participation interests herein, to any person obtaining an interest in the
Secured Obligations.

       

      Section
6.9                      Headings.  Headings
of the Sections of this Mortgage are inserted for convenience only and shall not
be deemed to constitute a part hereof.

       

      Section
6.10                      Security
Interest.

       

      (a)           An
express security interest is hereby granted to Mortgagee in respect to any part
of the Mortgaged Property which under Iowa law might now or hereafter be
construed or considered as personal property or fixtures, or otherwise be
considered collateral subject to the Iowa Uniform Commercial Code, including,
without limitation, the collateral described in granting clauses (e) hereof, and
this Mortgage shall constitute a security agreement in respect
thereto.

       


      
        
          
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          (b)           Upon
the occurrence of an Event of Default hereunder in addition to the other rights
and remedies available to it, Mortgagee may exercise all other rights and
remedies with respect to such property that are available to a secured party
under the Iowa Uniform Commercial Code.  The Company agrees to pay any
reasonable attorney fees and legal expenses incurred by Mortgagee in enforcing
or protecting its rights under the security interest created
hereunder.  In the event notice of intended disposition of such
property is required by law in any particular instance, the Company agrees that
notice given in the manner and place provided in Section 6.3 hereunder and sent
ten (10) days prior to a disposition of collateral is commercially reasonable
notification within the meaning of the Iowa Uniform Commercial
Code.  Information concerning the security interests may be obtained
from the Secured Party (Mortgagee) at the address set forth in Section 6.3
hereof and the mailing address of the Debtor (Company) is also set forth in
Section 6.3 hereof.

       

      (c)           The
Company warrants and agrees that no financing statement or security agreement
covering any of the Mortgaged Property is or will be placed on file in any
public office or delivered to any secured party except pursuant hereto, except
for Permitted Encumbrances and Permitted Liens.

       

      Section
6.11                      Fixture
Filing.  From the date of its recording, this Mortgage shall be
effective as a financing statement filed as a fixture filing with respect to the
collateral described in the Granting Clauses hereof which are fixtures within
the meaning of the Iowa Uniform Commercial Code, and for this purpose the name
and address of the Debtor is the name and address of the Company, as set out in
Section 6.3 herein, and the name and address of the Secured Party is the name
and address of Mortgagee, as set out in Section 6.3 hereof.  Pursuant
to the provisions of Section 554.9403 subparagraph 6 of the Iowa Code, such
fixture filing remains in effect until this Mortgage is released or satisfied of
record or its effectiveness otherwise terminates as to the
Land.

       

      Section
6.12                      Defined
Terms. All capitalized terms used in this Mortgage and not defined herein
shall have the meanings ascribed to them in the Loan
Agreement.

       

      Section
6.13                      Discharge
of Lien.  In accordance with the Loan Agreement and upon the
observance and performance of each and every covenant and condition set forth
herein and in the Loan Agreement, then and in that case all property, rights and
interest hereby conveyed or assigned or pledged shall revert to the Company, and
the estate, right, title and interest of Mortgagee therein shall thereupon
cease, terminate and become void; and this Mortgage, and the covenants of the
Company contained herein, shall be discharged and Mortgagee in such case on
demand of the Company and at the Company’s cost and expense, shall execute and
deliver to the Company a proper instrument or proper instruments acknowledging
the satisfaction and termination of this Mortgage, and shall convey, assign and
transfer or cause to be conveyed, assigned or transferred, and shall deliver or
cause to be delivered, to the Mortgagor, all property, including money, then
held by Mortgagee hereunder.

       

      Section
6.14                      Conflicts
with Loan Agreement.  In the event of a conflict between the
provisions of the security agreement contained in the Loan Agreement and the
provisions of this Mortgage, this Mortgage shall govern in all matters relating
to the validity and enforceability of the Lien created hereby on the Real
Property, the Improvements, the Fixtures, the Lease and the Rents and (except as
expressly set forth to the contrary herein or in the security agreement
contained in the Loan Agreement) the security agreement in the Loan Agreement
shall govern in all other respects.

       

      Section
6.15                      Mortgage
Absolute.  The obligations of the Company under this Mortgage
are independent of the obligations of Company under the other Transaction
Documents, and a separate action or actions may be brought and prosecuted
against Company to enforce this Mortgage, irrespective of whether any action is
brought against Company under such other Transaction Documents.  All
rights of Mortgagee and the mortgage, assignment and security interest
hereunder, and all obligations of Company hereunder, shall be absolute and
unconditional, irrespective of:

       


      
        
          
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      (a)           any
lack of validity or enforceability of any other Transaction Document or any
other agreement or instrument relating thereto;

       

      (b)           any
change in the time, manner or place of payment of, or in any other term of, all
or any of the obligations of Company under the other Transaction Documents or
any other amendment or waiver of or any consent to any departure from the other
Transaction Documents, including, without limitation, any increase in such
obligations resulting from the extension of additional credit to the Company or
otherwise;

       

      (c)           any
taking, exchange, release or non-perfection of any other collateral, or any
taking, release or amendment or waiver of or consent to departure from any
guaranty, for all or any other of the obligations of the Company under the other
Transaction Documents;

       

      (d)           any
manner of application of collateral, or proceeds thereof, to all or any of the
obligations of Company under the other Transaction Documents, or any manner of
sale or other disposition of any collateral for all or any of such obligations
or any other assets of the Company;

       

      (e)           any
change, restructuring or termination of the corporate restructure or existence
of the Company; or

       

      (f)           any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, the Company or a third party the Company of a security interest or
mortgage.

       

      Section
6.16                      Interaction
with Loan Agreement.  All terms, covenants, conditions,
provisions and requirements of the Loan Agreement are incorporated by reference
in this Mortgage.  Notwithstanding any other provision of this
Mortgage, the terms and provisions of this Mortgage shall be subject and
subordinate to the terms of the Loan Agreement.  To the extent that
the Loan Agreement provides the Company with a particular cure or notice period,
or establishes any limitations or conditions on Mortgagee’s actions with regard
to a particular set of facts, the Company shall be entitled to the same cure
periods and notice periods, and Mortgagee shall be subject to the same
limitations and conditions, under this Mortgage, as under the Loan Agreement, in
place of the cure periods, notice periods, limitations and conditions provided
for under this Mortgage; provided,
however,
that such cure periods, notice periods, limitations and conditions shall not be
cumulative as between the Loan Agreement and this Mortgage.  In the
event of any conflict or inconsistency between the provisions of this Mortgage
and those of the Loan Agreement, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of the Loan Agreement shall govern.

       


      
        
          
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      Section
6.17                      Indemnity.  The
Company hereby agrees to indemnify, defend and hold Mortgagee (and its
directors, officers, agents and employees) harmless from and against any and all
loss, liability, damage, claim, judgment or expense (including reasonable
attorneys’ fees and expenses, bond expenses, printing and automated document
preparation and retention expenses and other ordinary litigation expenses)
incurred by it (or such director, officer, agent or employee) in connection with
the acceptance or administration of Mortgagee’s duties under this Mortgage, any
action or proceeding to foreclose this Mortgage or in or to which Mortgagee may
be made a party due to the existence of this Mortgage or the other Transaction
Documents or to which action or proceeding Mortgagee may become a party for the
purpose of protecting the lien of this Mortgage.  All sums paid by
Mortgagee to prosecute or defend the rights herein set forth shall be deemed a
part of the Secured Obligations and shall be paid by the Company to Mortgagee
within ten (10) days after written demand, and if not paid within that period,
shall accrue interest from and including the date of disbursement or advance by
Mortgagee to and including the date of payment by the Company at the Additional
Interest Rate.

       

      Section
6.18                      Mortgagee
as Agent; Successor Agents.

       

      (a)           Agent
has been appointed to act as Agent hereunder by the Lender
Group.  Agent shall have the right hereunder to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of the Mortgaged Property) in accordance with the terms of the Loan
Agreement, any related agency agreement among Agent and the Lender Group
(collectively, as amended, supplemented or otherwise modified or replaced from
time to time, the “Agency Documents”) and this Mortgage.  The Company
and all other persons shall be entitled to rely on releases, waivers, consents,
approvals, notifications and other acts of Agent, without inquiry into the
existence of required consents or approvals of the Lender Group
therefor.

       

      (b)           Mortgagee
shall at all times be the same Person that is Agent under the Agency
Documents.  Written notice of resignation by Agent pursuant to the
Agency Documents shall also constitute notice of resignation as Agent under this
Mortgage.  Removal of Agent pursuant to any provision of the Agency
Documents shall also constitute removal as Agent under this
Mortgage.  Appointment of a successor Agent pursuant to the Agency
Documents shall also constitute appointment of a successor Agent under this
Mortgage.  Upon the acceptance of any appointment as Agent by a
successor Agent under the Agency Documents, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Agent as Mortgagee under this Mortgage, and the
retiring or removed Agent shall promptly (i) assign and transfer to such
successor Agent all of its right, title and interest in and to this Mortgage and
the Mortgaged Property, and (ii) execute and deliver to such successor Agent
such assignments and amendments and take such other actions, as may be necessary
or appropriate in connection with the assignment to such successor Agent of the
liens and security interests created hereunder, whereupon such retiring or
removed Agent shall be discharged from its duties and obligations under this
Mortgage.  After any retiring or removed

       


      
        
          
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      Agent’s
resignation or removal hereunder as Agent, the provisions of this Mortgage and
the Agency Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Mortgage while it was Mortgagee
hereunder.

       

      (c)           Each
reference herein to any right granted to, benefit conferred upon or power
exercisable, exercised or action taken by “Mortgagee” shall be deemed to be a
reference to or be deemed to have been so taken, as the case may be, by
Mortgagee in its capacity as Agent pursuant to the Loan Agreement for the
benefit of the Lender Group, all as more fully set forth in the Loan
Agreement.

       

      ARTICLE
VII

       

      LOCAL
LAW PROVISIONS

       

      Section
7.1                      Copy.  The
Company hereby acknowledges the receipt of a copy of this Mortgage, together
with a copy of all other documents executed by the Company in connection
herewith.

       

      Section
7.2                      Business
Purpose.  The Company warrants that the Mortgaged Property is
not used for agricultural purposes as defined in Iowa Code Section 535.13 and
that the Mortgaged Property is not agricultural land as defined in Iowa Code
Section 9H.1.  Further, the Shore Mortgagor warrants that the
Mortgaged Property is not a one-family or two-family dwelling and that the
Indebtedness secured by this Mortgage does not constitute a consumer credit
transaction as defined in Iowa Code Section
537.1301(ii).

       

      Section
7.3                      Purchase
Money Mortgage.  This Mortgage is a purchase money mortgage as
defined by Iowa Code Section 654.12B.

       


      
        
          
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      IN
WITNESS WHEREOF, the Company has executed this Mortgage as of the date first
written above.

       

      IMPORTANT:  READ
BEFORE SIGNING.  THE TERMS OF THIS MORTGAGE 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 MORTGAGE ONLY BY ANOTHER
WRITTEN AGREEMENT.  THIS NOTICE APPLIES TO ALL AGREEMENTS ENTERED INTO
TO WHICH THE COMPANY AND MORTGAGEE ARE PARTIES.

       

      
        
          	 	DIAMOND JO WORTH,
      LLC	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Natalie
      Schramm	 
	 	 	Name: 
      Natalie Schramm	 
	 	 	Title: 
      CFO	 
	 	 	 	 


        

      

       

       

      Attest:

       

       

      /s/Dustin
Manternach                                                              

      Dustin Manternach

      (No
Seal)

       

       


      
        
          
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      STATE
OF                                           )

                         )ss:

      COUNTY
OF                                                 )

       

      On
this     6th    
day of   August       ,
A.D., 2009, 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 Worth, 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         CFO          
acknowledged the execution of said instrument to be the voluntary act and deed
of said limited liability company by it voluntarily executed.

       

       

       

         /s/Karen
M.
Beetem                                                            

       

      Notary Public in the
State of    Iowa             


      
        
          
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      EXHIBIT
A

       

      Legal
Description of Fee Simple Interests

       

      THE
LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF WORTH, STATE OF IOWA
AND IS DESCRIBED AS FOLLOWS:

       

      PARCEL
1:

       

      Lots
1, 2, 3, 4, 5 and 6 in Block 1 and Lot 5 in Block 2, Top of Iowa Addition, Worth
County, Iowa, according to the recorded Plat thereof,  and vacated
472nd Street and that  portion of vacated Heather Lane lying North of
471st Street in Section  29, Township 100N, Range 21W,

       

      EXCEPT
that part of said Lots 4, 5 and 6 in Block 1, deeded to Worth County, Iowa by
that certain Warranty Deed dated August 21, 2006, recorded August 25, 2006 as
Document No. 20061974, and described as follows:

       

      Commencing
at the intersection of the Easterly extension of the South line of 471st Street
and the Easterly line of Heather Lane as platted in said Top of Iowa Plat;
thence North 30 degrees 00 minutes 00 seconds East (assumed bearing) along the
Easterly line of Heather Lane 9.40 feet to the Point of Beginning; thence
continuing North 30 degrees 00 minutes 00 seconds East along said Easterly line
40.41 feet; thence East 88.52 feet; thence South 00 degrees 09 minutes 47
seconds West 61.03 feet;

      thence
South 89 degrees 50 minutes 13 seconds East 42.50 feet; thence South 27 degrees
52 minutes 38 seconds West 307.76 feet; thence North 62 degrees 07 minutes 22
seconds West 125.00 feet;

      thence
North 27 degrees 52 minutes 38 seconds East 276.93 feet; thence North 00 degrees
09 minutes 47 seconds East 70.59 feet; thence South 89 degrees 50 minutes 13
seconds East 57.50 feet;

      thence
North 00 degrees 09 minutes 47 seconds East  64.96 feet; thence West
83.63 feet to the Point of Beginning.

       

       

      PARCEL
2:

       

      All
that part of the East Half of the Northwest Quarter of Section 32, Township 100
North, Range 21, West of the 5th P.M., Worth County, Iowa, described as
follows:

       

      Commencing
at the Northwest corner of the Northeast Quarter of the Northwest Quarter of
said Section 32; thence South 89 degrees 41 minutes 18 seconds East, a distance
of 196.25 feet, on an assumed bearing on the North line of said Northwest
Quarter; thence South 00 degrees 18 minutes 42 seconds West, a distance of 50.82
feet, to the South right-of-way line of County Road No. 105, which is the Point
of Beginning; thence South 42 degrees 23 minutes 30 seconds West, a distance of
200.92 feet on the Easterly right-of-way line of County Road S-28; thence South
00 degrees 00 minutes 01 West, a distance of 86.40 feet, on the Easterly
right-of-way line of said County Road

      S-28;
thence Southeasterly a distance of 618.46 feet, on the Easterly right-of-way
line of said County Road S-28, on a tangential curve concave to the Northeast,
with a radius of 758.47 feet and a central

      angle
of 46 degrees 43 minutes 10 seconds; thence South 46 degrees 43 minutes 09
seconds East, a distance of 427.40 feet, on the Easterly right-of-way line of
County Road S-28, on a tangential line; thence North 43 degrees 16 minutes 51
seconds East, a distance of 648.76 feet, to a point on


      
        
          
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6257936.4

          

           


        

        
           


          
            

          

        

        
           


        

      


      the
Westerly right-of-way line of Interstate Highway No. 35 Ramp C; thence North 28
degrees 40 minutes 15 seconds West, a distance of 510.73 feet, on the Westerly
right-of-way line of said Ramp C; thence North 57 degrees 06 minutes 01 seconds
West, a distance of 290.59 feet, on the Westerly right-of-way line of said Ramp
C, to a point on the South right-of-way line of said County Road

      No.
105; thence North 89 degrees 43 minutes 59 seconds West, a distance of 369.92
feet, on the South right-of-way line of said County Road No. 105, to the Point
of Beginning, EXCEPT that part of said property deeded to Xenia Rural Water
District, by that certain Warranty Deed dated October 1, 2008, recorded October
21, 2008 as Document No. 20082263.

       

       

      PARCEL
3:

       

      Lots
1 through 4, Block 2, Top of Iowa Addition, Worth County, Iowa, according to the
recorded Plat thereof, EXCEPT that part of said lots being deeded to Worth
County, Iowa, by that certain Warranty Deed dated August, 4, 2005, recorded
September 8, 2005 as Document No. 20052136, and described as
follows:

       

      Part
of Lots 2 and 3 and all of Lot 4, Block 2 in the Top of Iowa Plat, Worth County,
Iowa described as follows:

       

      Beginning
at the Northeast corner of said Lot 4; thence South (assumed bearing) along the
East line of said Lot 4, a distance of 272.24 feet to the South line of said Lot
4; thence West along said South line 150.00 feet to the West line of said Lot 4;
thence North along said West line, 167.29 feet; thence North 59 degrees 49
minutes 52 seconds West, 208.84 feet to the North line of said Lot 2; thence
East along said North line and the North line of Lots 3 and 4, a distance of
330.55 feet to the point of beginning.

       

       

      PARCEL
4:

       

      Part
of Lots 2 and 3 and all of Lot 4, Block 2 in the Top of Iowa Plat, Worth County,
Iowa , according to the recorded Plat thereof, described as
follows:

       

      Beginning
at the Northeast corner of said Lot 4; thence South (assumed bearing) along the
East line of said Lot 4, a distance of 272.24 feet to the South line of said Lot
4; thence West along said South line 150.00 feet to the West line of said Lot 4;
thence North along said West line, 167.29 feet; thence North 59 degrees 49
minutes 52 seconds West, 208.84 feet to the North line of said Lot 2; thence
East along said North line and the North line of Lots 3 and 4, a distance of
330.55 feet to the point of beginning.

       

       

      PARCEL
5:

       

      That
part of said Lots 4, 5 and 6 in Block 1, Top of Iowa Addition, Worth County,
Iowa, according to the recorded Plat thereof, described as follows:

       

      Commencing
at the intersection of the Easterly extension of the South line of 471st Street
and the Easterly line of Heather Lane as platted in said Top of Iowa Plat;
thence North 30 degrees 00 minutes 00 seconds East (assumed bearing) along the
Easterly line of Heather Lane 9.40 feet to the Point of Beginning; thence
continuing North 30 degrees 00 minutes 00 seconds East along said Easterly line
40.41 feet; thence East 88.52 feet; thence South 00 degrees 09 minutes
47


      
        
          
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      seconds
West 61.03 feet;

      thence
South 89 degrees 50 minutes 13 seconds East 42.50 feet; thence South 27 degrees
52 minutes 38 seconds West 307.76 feet; thence North 62 degrees 07 minutes 22
seconds West 125.00 feet;

      thence
North 27 degrees 52 minutes 38 seconds East 276.93 feet; thence North 00 degrees
09 minutes 47 seconds East 70.59 feet; thence South 89 degrees 50 minutes 13
seconds East 57.50 feet;

      thence
North 00 degrees 09 minutes 47 seconds East  64.96 feet; thence West
83.63 feet to the Point of Beginning.

       

       

       

       

       


      
        
          
            LEGAL_US_W #
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      EXHIBIT
B

       

      The
Lease

       

      Real
Estate Ground Lease dated as of June 13, 2006 by and between Diamond Jo Worth,
LLC, an Iowa limited liability company, and Julseth Farm, LLC, a __________
limited liability company, as successor in interest to Truman and Lorraine
Julseth, as evidenced by that certain Memorandum of Lease and Purchase Option
dated as of June 13, 2006, and recorded as Document No. 20091550, Official
Records of Worth County, Iowa.

       

       

       

      Real
Property subject to the Lease

       

      Parcel A:  That part of the East Half of
Southwest Quarter of Section 29, Township 100 North, Range 21, West of the 5th
P.M., Worth County, Iowa, described as follows:

      
         

         

        Commencing
at the northwest corner of the East Half of the Southwest Quarter of said
Section 29; Thence South  (assumed bearing) along the West line of the
East Half of the Southwest Quarter of said Section 29 a distance of 971.55 feet
to the point of beginning; Thence North 89 degrees 35 minutes  18
seconds East  1,278.64 feet to the West line of Interstate Highway 35;
Thence South 01 degrees 24 minutes 06 seconds East along said West line 331.69
feet; Thence Southerly 7.95 feet along said West line along a nontangential
curve concave to the West, having a central angle of 00 degrees  17
minutes 37 seconds, a radius of 1,552.10 feet, and a chord bearing of South 03
degrees 44 minutes 08 seconds West to the North line of the Top of
Iowa  Plat to Worth County, Iowa; Thence South 89 degrees 35 minutes
18 seconds West along said North line 1,286.24 feet to the West line of the East
Half of said Southwest Quarter; Thence North along said West line 339.58 feet to
the point of beginning.

      

       

       


      
        
          
            LEGAL_US_W #
6257936.4