Exhibit 10.1


 




 





 


MANAGEMENT SERVICES AGREEMENT


 


by and between


 


Diamond Jo Worth, LLC


 


and


 


Peninsula Gaming Partners, LLC


 


 


DATED:   As of July 19, 2005


 




 





 





















 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  	
  TERM AND APPOINTMENT OF
  OPERATOR

  	
   

  
	
   

  	
   

  	
   

  
	
  1.01.

  	
  Appointment and Term

  	
   

  
	
   

  	
   

  	
   

  
	
  1.02.

  	
  Management of the Business

  	
   

  
	
   

  	
   

  	
   

  
	
  1.03.

  	
  Relation of the Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  1.04.

  	
  Affiliates

  	
   

  
	
   

  	
   

  	
   

  
	
  1.05.

  	
  Consultation with Owner

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  PRE-OPENING PROGRAM

  	
   

  
	
   

  	
   

  	
   

  
	
  2.01.

  	
  Construction of the Facilities

  	
   

  
	
   

  	
   

  	
   

  
	
  2.02.

  	
  Pre-Opening Services

  	
   

  
	
   

  	
   

  	
   

  
	
  2.03.

  	
  Payment of Pre-Opening Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  2.04.

  	
  Compensation and Reimbursement of the Operator for
  Pre-Opening Services

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  OPERATION

  	
   

  
	
   

  	
   

  	
   

  
	
  4.01.

  	
  General

  	
   

  
	
   

  	
   

  	
   

  
	
  4.02.

  	
  Licenses, Permits, Reports and Accreditation

  	
   

  
	
   

  	
   

  	
   

  
	
  4.03.

  	
  Personnel

  	
   

  
	
   

  	
   

  	
   

  
	
  4.04.

  	
  Sales and Promotions

  	
   

  
	
   

  	
   

  	
   

  
	
  4.05.

  	
  Maintenance and Capital Replacement

  	
   

  
	
   

  	
   

  	
   

  
	
  4.06.

  	
  Contracts and Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.07.

  	
  Accounting Services

  	
   

  
	
   

  	
   

  	
   

  
	
  4.08.

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  4.09.

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.10.

  	
  Access, Review and Audit

  	
   

  
	
   

  	
   

  	
   

  
	
  4.11.

  	
  Bank Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
  4.12.

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  4.13.

  	
  Financial Management

  	
   

  
	
   

  	
   

  	
   

  
	
  4.14.

  	
  Annual Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  4.15.

  	
  Revisions to Annual Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.16.

  	
  Remittance to Owner

  	
   

  



 


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  4.17.

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  4.18.

  	
  Waiver of Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  4.19.

  	
  Legal Actions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  COMPENSATION OF THE
  OPERATOR

  	
   

  
	
   

  	
   

  	
   

  
	
  5.01.

  	
  Forms of Compensation

  	
   

  
	
   

  	
   

  	
   

  
	
  5.02.

  	
  Basic Management Fee

  	
   

  
	
   

  	
   

  	
   

  
	
  5.03.

  	
  Incentive Fee

  	
   

  
	
   

  	
   

  	
   

  
	
  5.04.

  	
  Collection of Management Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  5.05.

  	
  Allocation of
  Management Fees and Other Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  6.01.

  	
  Indemnification to the Operator

  	
   

  
	
   

  	
   

  	
   

  
	
  6.02.

  	
  Indemnification to Owner

  	
   

  
	
   

  	
   

  	
   

  
	
  6.03.

  	
  Claiming Procedure

  	
   

  
	
   

  	
   

  	
   

  
	
  6.04.

  	
  Mitigation

  	
   

  
	
   

  	
   

  	
   

  
	
  6.05.

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  DAMAGE TO, DESTRUCTION OF
  OR CONDEMNATION OF THE FACILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  7.01.

  	
  Damage to and Destruction of the Facilities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  8.01.

  	
  Sale/Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  8.02.

  	
  Effect of Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  9.01.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  9.02.

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  9.03.

  	
  Operator Responsibilities

  	
   

  
	
   

  	
   

  	
   

  
	
  9.04.

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  9.05.

  	
  Proprietary Information

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.01.

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  10.02.

  	
  Confidentiality

  	
   

  



 


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  10.03.

  	
  Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  10.04.

  	
  Conflicts of Interest; Non-Compete

  	
   

  
	
   

  	
   

  	
   

  
	
  10.05.

  	
  Best Evidence and Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  10.06.

  	
  Amendment or Modification

  	
   

  
	
   

  	
   

  	
   

  
	
  10.07.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  10.08.

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  10.09.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  10.10.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  10.11.

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  10.12.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  10.13.

  	
  Governing Document

  	
   

  
	
   

  	
   

  	
   

  
	
  10.14.

  	
  Inspection of Facilities

  	
   

  
	
   

  	
   

  	
   

  
	
  10.15.

  	
  Third-Party Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  10.16.

  	
  Regulatory Information

  	
   

  
	
   

  	
   

  	
   

  
	
  10.17.

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  10.18.

  	
  Dispute Resolution

  	
   

  
	
   

  	
   

  	
   

  
	
  10.19.

  	
  Operator;
  Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  10.20.

  	
  Effect of
  Amendment and Restatement

  	
   

  



 


iii





















 


MANAGEMENT SERVICES AGREEMENT


 


THIS MANAGEMENT SERVICES AGREEMENT
(this “Agreement”) is made and
entered into as of the 19th day of July, 2005, by and between Diamond Jo Worth, LLC., a Delaware limited
liability company (“Owner”) and Peninsula Gaming Partners, LLC, a Delaware
limited liability company (“PGP”, or the “Operator”).


 


W I T N E S S E T H:


 


WHEREAS, Owner desires
to develop a casino gaming operation located in Worth County, Iowa;


 


WHEREAS, Owner
desires to engage the Operator to manage the design, development, construction,
management and operations of the Facilities and provide certain pre-opening
services in connection therewith;


 


NOW, THEREFORE, in
consideration of the foregoing recitals and of the mutual promises,
representations, warranties, understandings, undertakings and covenants herein
contained, and intending to be legally bound thereby, Owner and the Operator
hereby agree that, effective as of July 19, 2005, their agreement be set
forth herein:


 


ARTICLE 1



TERM AND APPOINTMENT OF OPERATOR


 


1.01.                        Appointment and Term.  Owner hereby appoints and employs the
Operator to act as its exclusive agents for the supervision, direction and
control of the management of the Facilities on Owner’s behalf, upon the terms,
conditions and covenants hereinafter set forth. 
The Operator hereby accepts such appointment upon and subject to the
terms, conditions, covenants and provisions set forth herein.  The Operator agrees to execute their duties
hereunder in the best interest of Owner in good faith, subject to the budgetary
limitations imposed upon the Operator, any applicable Governmental Requirements
and any limitations or restrictions contained in any Related Contract, it being
understood that the Operator shall not be required to pay any amounts of money
except those amounts required by the terms of this Agreement.  Unless sooner terminated as provided in this
Agreement or extended by the mutual agreement of Owner and the Operator, this
Agreement shall terminate on the later of (i) the date that is eight (8) years
after the Opening Date and (ii) the date of sale of all of PGP’s direct or
indirect ownership interest in Owner (the “Term”).  Notwithstanding anything to the contrary in
this Agreement, the terms and provisions of this Agreement shall not become
effective (and the respective rights and obligations of the parties hereto
shall have no force and effect) unless and until this Agreement is approved by
the Iowa Racing and Gaming Commision.


 


1.02.        Management of the Business.  Subject to the terms of this Management
Agreement, the Operator shall have the authority to exclusively supervise and
direct the design, development, construction, management and operation of the
Facilities for the account of Owner.  The
Operator shall have the authority and responsibility (i) to determine
operating policy, 


 


1





















 


standards of operation, quality of service, the
maintenance and physical appearance of the Facilities and any other matters
affecting operations and maintenance; (ii) to supervise and direct all
phases of advertising, sales and business promotion for the Facilities; and (iii) to
carry out all programs contemplated by the Annual Plan.  Owner agrees that it will cooperate with the
Operator in every reasonable and proper way to permit and assist the Operator
to carry out its duties hereunder and comply with any conditions or restrictions,
if any, placed upon the Operator by any Gaming Authority.  The Operator shall take all actions which
may, in their sole discretion, be reasonably necessary or appropriate in
connection with the authority granted to it in accordance with the provisions
of this Agreement.


 


1.03.        Relation of the Parties.  In taking any action pursuant to this
Agreement, the Operator will be acting only as the appointed agents or
representatives of Owner, and nothing in this Agreement shall be construed as:  (i) creating a tenancy, partnership,
joint venture or any other relationship between the parties hereto, except that
of principal and agent or (ii) creating or vesting any right, title,
interest, estate, equity participation or beneficial ownership interest in favor
of the Operator in or to the Facilities except the contractual rights created
in the Operator by this Agreement and any and all rights and remedies arising
out of or in connection with the Operator’s direct or indirect ownership
interests in Owner.  All debts and
liabilities properly incurred by Operator in the course of its management and
operation of the Facilities hereunder shall be the debts and obligations of
Owner only, and Operator shall not be liable therefor and Operator shall be
fully indemnified against such debts and obligations, except as specifically
stated to the contrary herein.


 


1.04.        Affiliates.  Affiliates of Operator may provide services
to, provide loans and funds to, negotiate for, provide personnel to, and, from
time to time, take actions on behalf of or for the benefit of Operator by
direct dealings with Owner or those acting for it, provided that the costs of such services shall not be
charged to Owner or included in Operating Expenses without Owner’s written
consent; it being understood that by entering into this Agreement, Owner hereby
consents to all costs and services relating to the Jefferies Financing
(including, without limitation, any and all costs and expenses of Operator
related thereto).  Operator shall be
responsible to Owner under this Agreement for the acts of Affiliates in the
performance of services of Operator under this Agreement as if such Affiliates
were Operator’s employees or agents.


 


1.05.        Consultation with Owner.  The Operator agrees to furnish to Owner the monthly
financial statements and Annual Plans as set forth in Article 4. Owner
shall, at all times, have the right to enter the Facilities for the purpose of
inspecting same and reviewing the operations. 
Owner agrees that it and its representatives will, at no time, act in a
manner which is inconsistent with the authority granted to the Operator.


 


ARTICLE 2



PRE-OPENING PROGRAM


 


2.01.        Construction of the Facilities.  Owner hereby agrees to use its diligent good
faith efforts to facilitate the construction of the Facilities.  Notwithstanding any provision to the contrary
contained in this Agreement, (i) the Operator shall have the right to
supervise the 


 


2





















 


design, development and construction of the Facilities,
and (ii) Owner shall not, without the prior written consent of Operator,
agree or otherwise cause the Facilities to be subject to or otherwise bound by
any Governmental Requirement to the extent such Governmental Requirement
affects or otherwise impacts Operator’s ability to perform the Pre-Opening
Services or any of its other duties and responsibilities under this
Agreement.  The Operator will prepare a
construction budget and construction schedule with respect to the
completion of all phases of the construction and development of the Facilities.


 


2.02.        Pre-Opening Services.  Prior to the Opening Date, the Operator, as
agent of Owner, shall use its diligent good faith efforts to perform or cause
others to perform all such services as the Operator deems necessary to
facilitate the opening of the Facilities on behalf of and for the account of
Owner (the “Pre-Opening Services”),
subject to compliance by Owner with its reimbursement and funding obligations
set forth in this Agreement, including the following.


 


(a)                                  preparation of a pre-opening marketing plan;


 


(b)                                 hiring of personnel in accordance with the provisions of
this Agreement;


 


(c)                                  coordination of initial inventories purchases;


 


(d)                                 establishment of operating policies and procedures;


 


(e)                                  establishment of security systems for assets, personnel and
patrons;


 


(f)                                    establishment of data processing hardware and software
requirements and systems;


 


(g)                                 establishment of accounting and internal control systems and
procedures;


 


(h)                                 establishment of a preventive maintenance program;


 


(i)                                     establishment of risk management policies and procedures;


 


(j)                                     training of all initial staff;


 


(k)                                  engage
and retain such architects, engineers, contractors, designers and other
specialists (the “Project Architects”)
as the Operator deems necessary to prepare all site plans, grading plans,
construction drawings, surveys, materials, specifications, architectural plans
and drawings, elevations, construction models, engineering plans and drawings,
approved plats and all other plans, drawings, studies or reports required for
the construction and/or outfitting of the Facilities (the “Plans and Specifications”) and for the
purchase and installation of the FF&E thereat (the “FF&E Specifications”);


 


(l)                                     purchase all pre-opening gaming supplies and equipment;


 


3





















 


(m)                               provide specific operational and functional criteria for the
Facilities for use by the Project Architects in the preparation of the Plans
and Specifications and the FF&E Specifications;


 


(n)                                 advise
and consult with the Project Architects in the development of schematic,
preliminary and working Plans and Specifications and in the selection and
specifications of FF&E, wall and floor coverings, design and color, wall
hangings, signage, art, accouterments, space planning requirements and
functional design criteria and all other aesthetic and operational elements of
design and other nonstructural elements of the Facilities;


 


(o)                                 advise
and consult with the Project Architects regarding various key systems,
including without limitation, mechanical, electrical, plumbing, life safety,
gaming and computer-related systems for the Facilities; and


 


(p)                                 determine all operational and all functional requirements of
the Facilities including without limitation, parking, recreational and gaming
areas, food facilities layout and equipment, and such other areas as management
information systems, energy, signage, lighting, sound, communications,
housekeeping, maintenance, personnel, data processing equipment and software,
point of sale systems, life safety systems, surveillance and security systems,
marketing and entertainment.


 


2.03.        Payment of Pre-Opening Expenses.


 


2.03.01  Source of
Funds.  All costs and expenses
reasonably incurred in connection with performance of the Pre-Opening Services
(the “Pre-Opening Expenses”), shall be paid from the Bank
Accounts.  Owner shall timely deposit
such sums in the Bank Accounts in accordance with the monthly schedules in the
construction budget.


 


2.03.02  Operator Advances.  The Operator may, but is not required to,
advance funds to pay Pre-Opening Expenses and Reimbursables on behalf of Owner
(any such advance, an “Operator Advance”).  All such Operator Advances that are advanced
by the Operator shall be itemized, scheduled and submitted to Owner and
reimbursement to the Operator shall be made by Owner either directly or by
Owner directing the Operator to withdraw such amounts from the Bank Accounts,
in each case subject to any limitations contained in any Loan Document entered
into by Owner and approved by Operator. 
All such Operator Advances shall be reimbursed upon the Operator’s
written request or accrued as a payable by Owner until paid, as applicable.


 


2.04.        Compensation and Reimbursement of the Operator for
Pre-Opening Services.  For
and in consideration of Operator providing the Pre-Opening Services, Owner
agrees to (i) pay Operator on the Target Date a Pre-Opening Services fee
(the “Pre-Opening Services Fee”) accruing at a rate of $40,000 per
month, commencing on the date hereof and terminating on the Target Date, and (ii) upon
the Operator’s written request, reimburse the Operator for all Operator
Advances.


 


4





















 


ARTICLE 3



NOTICES


 


Any and all written notices required by this Agreement
shall be either hand-delivered or mailed, certified mail, return receipt
requested, telexed, faxed, or sent via commercial courier, addressed to:


 


	
  TO
  PGP:

  	
   

  	
  Peninsula Gaming
  Partners, LLC

  	
   

  
	
   

  	
   

  	
  3rd
  Street Ice Harbor

  	
   

  
	
   

  	
   

  	
  P.O. Box
  1750

  	
   

  
	
   

  	
   

  	
  Dubuque, IA
  52001

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (563) 690-2190

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  - and -

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peninsula Gaming
  Partners, LLC

  	
   

  
	
   

  	
   

  	
  c/o Jefferies &
  Company, Inc.

  	
   

  
	
   

  	
   

  	
  11100 Santa
  Monica Blvd.

  	
   

  
	
   

  	
   

  	
  10th
  Floor

  	
   

  
	
   

  	
   

  	
  Los Angeles, CA
  90025

  	
   

  
	
   

  	
   

  	
  Attention: M.
  Brent Stevens

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (310) 515-5165

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  - and -

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peninsula Gaming
  Partners, LLC

  	
   

  
	
   

  	
   

  	
  c/o Cambridge
  Capital Advisors LLC

  	
   

  
	
   

  	
   

  	
  7173 Mission
  Hills Drive

  	
   

  
	
   

  	
   

  	
  Las Vegas, NV
  89113

  	
   

  
	
   

  	
   

  	
  Attention:
  Michael S. Luzich

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (702) 247-6822

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITH
  COPIES TO:

  	
   

  	
  Mayer, Brown,
  Rowe & Maw

  	
   

  
	
   

  	
   

  	
  1675 Broadway

  	
   

  
	
   

  	
   

  	
  New York, NY
  10019

  	
   

  
	
   

  	
   

  	
  Attn: Ronald S.
  Brody, Esq.

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (212)-262-1910

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TO
  OWNER:

  	
   

  	
  Diamond Jo
  Worth, LLC

  	
   

  
	
   

  	
   

  	
  3rd
  Street Ice Harbor

  	
   

  
	
   

  	
   

  	
  P.O. Box
  1750

  	
   

  
	
   

  	
   

  	
  Dubuque, IA
  52001

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (563) 690-2190

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  - and -

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Diamond Jo
  Worth, LLC

  	
   

  



 


5





















 


	
   

  	
   

  	
  c/o Jefferies &
  Company, Inc.

  	
   

  
	
   

  	
   

  	
  11100 Santa
  Monica Blvd.

  	
   

  
	
   

  	
   

  	
  10th
  Floor

  	
   

  
	
   

  	
   

  	
  Los Angeles, CA
  90025

  	
   

  
	
   

  	
   

  	
  Attention: M.
  Brent Stevens

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (310) 515-5165

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  - and -

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Diamond Jo
  Worth, LLC

  	
   

  
	
   

  	
   

  	
  c/o Cambridge
  Capital Advisors LLC

  	
   

  
	
   

  	
   

  	
  7173 Mission
  Hills Drive

  	
   

  
	
   

  	
   

  	
  Las Vegas, NV
  89113

  	
   

  
	
   

  	
   

  	
  Attention:
  Michael S. Luzich

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (702) 247-6822

  	
   

  



 


All notices hand-delivered shall be deemed delivered
as of the date actually delivered.  All
notices mailed shall be deemed delivered as of three (3) Business Days
after the date postmarked.  All notices
faxed shall be deemed delivered as of the Business Day immediately following
the date receipt of the facsimile is confirmed. 
All notices sent via commercial courier shall be deemed delivered as of
the Business Day immediately following the date the notice is entrusted to the
commercial courier service with directions for service within one (1) day.  Any changes in any of the addresses listed
herein shall be made by notice as provided in this Article 3.  Notwithstanding anything to the contrary
herein, the return receipt indicating the date upon which all notices were
received shall be prima facie evidence that such notices were received on the
date of the return receipt.


 


The addresses and addressees may be changed by giving
notice of such change in the manner provided herein for giving notice.  Unless and until such written notice is
received, the last address and addressee given shall be deemed to continue in
effect for all purposes.  No notice to
either Owner or the Operator shall be deemed given or received unless the
entity notice “With a copy to” is simultaneously delivered notice in the same
manner as any notice given to either Owner or the Operator.


 


ARTICLE 4



OPERATION


 


4.01.        General.


 


In order for the Operator to perform its duties
hereunder and to comply with any applicable Governmental Requirements, Owner hereby
agrees that subject to Owner’s rights and the Operator’s obligations in this
Agreement, (i) the Operator shall have uninterrupted control and operation
of the Facilities during the Term, free and clear from any disturbance of any
claims by Owner or any third party claiming by, through or under Owner, and (ii) Owner
will not unreasonably interfere or involve itself with the day-to-day operation
of the Facilities.


 


6





















 


The Operator shall perform or cause others to perform
all such services as the Operator deems necessary to operate and manage the
Facilities on behalf of and for the account of Owner, subject to compliance by
Owner with its reimbursement and funding obligations set forth in this
Agreement.


 


4.02.        Licenses, Permits, Reports and Accreditation.  The Operator and Owner shall timely apply
for, obtain and maintain all licenses and permits required to operate the
Business (other than gaming authority permits, licenses and approvals required
to be obtained by parties other than Owner or the Operator), at Owner’s
expense.


 


4.03.        Personnel.  All personnel of the Facilities shall be
personnel of Owner.  However, as agents
for Owner, the Operator shall have the sole and absolute discretion to hire,
supervise, direct the work of, discharge and determine the compensation and
other benefits of all personnel working in the Facilities.  Owner shall not interfere with or give orders
or instructions to personnel employed at the Facilities.  The Operator, in its sole and absolute
discretion, shall determine the fitness and qualifications of such
personnel.  The Operator shall in no way
be liable to said personnel or to Owner for any and all claims for wages,
compensation or other benefits (including, without limitation, severance,
pension, superannuation, retirement and termination pay) asserted by or on
behalf of such personnel.  The salaries,
other compensation and benefits of such personnel shall be an Operating Expense
paid by the Operator from the Bank Accounts.  The Operator shall in all respects comply with
all applicable federal and state employment laws and regulations, in connection
with the hiring, promoting, discharging, employment and payment of employees.


 


4.04.        Sales and Promotions.  The Operator may, at its sole discretion,
cause the Facilities to participate in sales and promotional campaigns and, as
appropriate, activities involving complimentary items to hotels, travel agents,
tourist officials and airline representatives and other hospitality industry
representatives.  The Operator shall have
the sole right to entitle employees to grant complimentary items when the same
is customary in the travel, hospitality or gaming industry or in the Operator’
standard practice or policy.


 


4.05.        Maintenance and Capital Replacement.  Owner shall be responsible for maintaining
the property utilized in the Business in good repair and condition.  To implement Owner’s responsibility, the
Operator shall, on behalf of Owner, and at Owner’s expense, make or cause to be
made, all repairs, replacements, corrections and maintenance items as shall be
required in the normal and ordinary course of operation of the Business.  Owner recognizes the necessity of capital
improvements and shall expend such amount for capital improvements as shall be
required in the normal and ordinary course of operation of the Business in
conformity with the amounts approved as part of the Annual Plan.


 


4.06.        Contracts and Agreements.  The Operator, as agent of Owner, is
authorized to make and enter into such contracts and agreements as the Operator
may deem necessary for the proper operation of the Facilities.  Unless this Agreement expressly provides for
an item or service to be at the Operator’s expense, all costs and expenses
incurred by the Operator or an Affiliate of Operator in accordance with this
Agreement and/or an Annual Plan shall be for and on behalf of Owner and for
Owner’s account.


 


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4.07.        Accounting Services.  The Operator shall establish and maintain an
accounting system, internal controls and reporting systems in that are (i) consistent
in all material respects with customary policies and procedures used by the
Operator or its Affiliates engaged in such businesses, (ii) reasonably
adequate to provide Owner and the Operator with the necessary information about
the Business and to safeguard Owner’s assets, (iii) in compliance with all
Gaming Laws and in substantial compliance with all Governmental Requirements
and (iv) approved by all Governmental Authorities which are required to be
obtained.  The establishment of such
systems shall constitute Pre-Opening Expenses and the maintenance of such
systems shall constitute Operating Expenses. 
Upon the request of Owner, the Operator shall make available for
inspection by Owner any managerial reports produced by the Operator regarding
the Business in the ordinary course of business.


 


4.08.        Books and Records.  The Operator shall maintain, or cause to be
maintained, at Owner’s expense, full and complete books of account and such
other records as are necessary to reflect the operating results of the
Facilities (“Books and Records”).  The Books and Records shall be kept in a
manner so that the Financial Statements may be prepared in accordance with
Generally Accepted Accounting Principles consistently applied.  The Operator shall keep all Books and
Records, including without limitation, current vendor invoices, payroll
records, general ledgers, credit transactions and other records relating to the
Business at the Facilities or such other location as shall be approved by Owner
in writing, subject to such record retention and storage policies and access
rights required by any Lender or any applicable Governmental Requirements or
Gaming Laws.  All such Books and Records
shall at all times be the property of Owner and shall not be removed by
Operator from the approved location without Owner’s written approval except as
required by applicable Laws.  Upon any
termination of this Agreement, all Books and Records shall immediately be
turned over to Owner to ensure the orderly continuance of the operation of the
Business, but such Books and Records shall be available to the Operator for a
period of five (5) years at all reasonable times and upon prior written
request to Owner for inspection, audit, examination, transcription and copying
of particulars relating to the period in which the Operator managed the
Business.  The Operator shall also
prepare and file for Owner, at Owner’s expense, all informational and/or tax returns
which may be required by any Governmental Authority.


 


4.09.        Financial Statements.  Commencing with the first full calendar month
after the Opening Date, the Operator shall provide Owner (i) unaudited
Financial Statements of the Business for each calendar month within 20 days
after the end of each calendar month, (ii) quarterly Financial Statements
of the Business for each fiscal quarter within 45 days after the end of each
fiscal quarter and (iii) annual Financial Statements of the Business
within 90 days after the end of each Fiscal Year.


 


4.10.        Access, Review and Audit.  Owner, any Gaming Authority and Lender (or
their respective duly appointed agents) shall have the right at reasonable
times and during normal business hours, after reasonable written notice to the
Operator, to examine, audit, inspect and transcribe the Books and Records.  With respect to such reviews, Owner, any
Lender and their respective agents shall be subject to the confidentiality
covenants in Section 10.02. 
The annual Financial Statements shall be audited by the Auditors at
Owner’s expense.


 


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4.11.        Bank Accounts.  The Operator shall establish at financial
institution(s) designated by the Operator such bank accounts (“Bank Accounts”) as the Operator deems
necessary for the operation of the Facilities. 
All Bank Accounts for the Facilities shall be in the name of Operator,
as agent for Owner.  Owner and the Operator
shall agree on the procedures for withdrawals and deposits of funds.  The Operator shall have the right to
designate individuals to disburse funds from the business bank accounts to pay
all costs and expenses of managing, operating and maintaining the business and
its properties, including authorized capital expenditures and management fees
due to Operator.  Owner agrees that at
all times during the term of this Agreement, a bank
balance as approved in the Annual Plan shall be maintained in an amount
necessary to provide sufficient working capital to assure the uninterrupted and
efficient operation of the business. 
Notwithstanding any provision to the contrary in this Agreement, all
Bank Accounts required to be established under this Agreement shall be subject
to any requirements imposed by any Loan Documents entered into by Owner and
approved by Operator.


 


4.12.        Expenses.


 


(a)           All
costs, expenses, funding of operating deficits and working capital, and other
obligations and liabilities hereunder including costs incurred by Operator
under this Agreement or in connection with the transactions contemplated hereby
(“Owner’s Financial Obligations”)
shall be the sole and exclusive responsibility and obligation of Owner, except
for those instances herein where it is expressly and specifically stated that
such item shall be for the account of the Operator.  The Operator shall allocate to Owner the direct expense of employees of the
Operator (including compensation
expenses) to the extent that such employees provide dedicated services for the
benefit of the Business.  Owner shall have
no obligation for any other corporate overhead of Operator.  It is understood that statements herein
indicating that the Operator shall “furnish”, “provide” or otherwise supply,
present or contribute items or services hereunder shall not be interpreted or
construed to mean that Operator is liable or responsible to fund or pay for
such items or services, except in those specific instances mentioned above.


 


(b)           With
respect to Owner’s Financial Obligations, the same shall be funded and/or paid
for as follows:  (i) first, from
monies which may be available in the Bank Accounts maintained by the Operator
hereunder; and (ii) second, if such Bank Accounts maintained by the
Operator hereunder do not contain monies sufficient to fund and/or pay Owner’s
Financial Obligations, from monies which shall be deposited by Owner in such
Bank Accounts within three (3) days after request therefor by the Operator
in writing.


 


(c)           It
is understood and agreed that the Operator shall have no obligation or duty to
fund and/or pay for any of Owner’s Financial Obligations.


 


4.13.        Financial Management.  The Operator shall be responsible for the
management of the day-to-day financial affairs of the Business.


 


4.14.        Annual Plans.


 


4.14.01  Submission of
Annual Plans.  No later than thirty
(30) days prior to the end of the 2007 Fiscal Year and each Fiscal Year
thereafter, the Operator shall submit to Owner 


 


9





















 


for
Owner’s approval, an annual plan for the operation of the Business for the forthcoming
Fiscal Year (each such annual plan is referred to herein as an “Annual Plan”).  Each proposed Annual Plan shall consist of
the following:


 


(a)           An annual
marketing plan (“Annual Marketing Plan”);


 


(b)           An annual
line item operating budget (“Annual Operating
Budget”);


 


(c)           An annual
estimate of key operating statistics;


 


(d)           An annual
projection of sources and uses of cash by month; and


 


(e)           An annual
capital expenditures budget regarding capital expenditures (“Annual Capital Expenditures Budget”) which
shall include the proposed schedule for effecting such repairs and/or
improvements.


 


Each proposed Annual Plan shall be prepared in such
form and containing such detail as Owner may reasonably require.


 


4.14.02  Preparation of
Annual Plan.  Each proposed Annual
Plan shall be prepared by the Operator with Owner’s assistance based on, among
other things, the actual and projected results of the current Fiscal Year, the
standard of maintaining and operating the Facilities in accordance with this
Agreement, information with respect to possible occurrences which may impact
the marketing and/or operation of the Business in the future, changes from the
previous Fiscal Year’s results, reasonable expectations for the future and such
other information and assumptions that shall be reasonably requested under the
circumstances.


 


4.14.03  Review and
Approval.  In connection with the
preparation and submission of a proposed Annual Plan, Owner will meet with the
Operator within fifteen (15) days after delivery of the proposed Annual Plan
for an in-depth review, including a discussion of the marketing strategy,
operations format and rationale for proposed expenditures embodied in the
proposed Annual Plan.  Owner shall be
required, by giving written notice to the Operator, to approve or disapprove
each proposed Annual Plan within fifteen (15) days after the date Owner and the
Operator last meet to discuss the proposed Annual Plan.  The parties shall use all reasonable efforts
to complete the review of the proposed Annual Plan no later than forty-five
(45) days after the initial delivery of the proposed Annual Plan to Owner.  Any notice that disapproves a proposed Annual
Plan must contain reasonably detailed specific objections along with
suggestions as to what corrective measures can be taken to make such proposed
Annual Plan acceptable to Owner.


 


4.14.04  Disagreements
Regarding Annual Plan.  If Owner
fails to provide written notice to the Operator of its objections within
fifteen (15) days after the last meeting between Owner and the Operator, such
proposed Annual Plan shall be deemed to be approved as submitted, subject to
any changes upon which Owner and the Operator have previously agreed.  If Owner disapproves or objects to any items
contained in the proposed Annual Plan or any revisions thereto, Owner and the
Operator shall cooperate with each other in good faith to attempt to
expeditiously resolve the disputed or objectionable proposed items.  If Owner and the Operator are unable to reach
a mutually acceptable agreement concerning the disputed or 


 


10





















 


objectionable
items within fifteen (15) days after the date Owner advises the Operator of its
objections as aforesaid, either party shall be entitled to submit the dispute
to arbitration in accordance with Section 10.18.  If Owner’s objections relate only to certain
portions of the proposed Annual Plan or a Budget contained therein, the
undisputed portions of the proposed Annual Plan shall be deemed to be adopted
and approved and only those Budgets under dispute shall be submitted to
arbitration.


 


4.14.05  Disagreements
Regarding Annual Operating Budgets. 
With respect to objectionable items in any Annual Operating Budget, but
only until and to the extent that any dispute concerning such objectionable
items are not resolved, the corresponding item contained in the Annual
Operating Budget for the preceding Fiscal Year shall be substituted in lieu of
the disputed portions of the proposed Annual Operating Budget, excluding,
however, line items in the previous Annual Operating Budget for extraordinary
expenses or revenues.  In any instance
where a portion of an Annual Operating Budget from a preceding Fiscal Year is
deemed to be applicable to the Annual Operating Budget in effect until a new
Annual Operating Budget is fully approved, corresponding items contained in the
Annual Operating Budget for the preceding Fiscal Year shall be automatically
adjusted by a percentage equal to the percentage change in the Consumer Price
Index during the preceding Fiscal Year. 
Such calculation of percentage change in the Consumer Price Index shall
be made by the Operator based upon the then most recently published Consumer
Price Index data at the time the calculation is made.


 


4.14.06  Disagreements
Regarding Annual Capital Expenditures Budgets.  If Owner and the Operator are unable to agree
on the amount of any item in an Annual Capital Expenditures Budget, only those
capital expenditures with respect to which Owner and the Operator have reached
an agreement (or the undisputed portion of an amount in dispute) that are
approved by Owner or are required to be made by Lender or any Governmental
Authority shall be made until Owner and the Operator otherwise agree on the
terms of such Annual Capital Expenditures Budget or the matter is decided by
arbitration; provided, however, that until and
to the extent that any dispute concerning objectionable items is not resolved,
the corresponding item contained in the Annual Capital Expenditures Budget for
the preceding Fiscal Year shall be substituted in lieu of the disputed portions
of the proposed Annual Capital Expenditures Budget, excluding, however, line
items in the previous Annual Capital Expenditures Budget for extraordinary
expenses or revenues.  The applicable
Annual Plan will be appropriately adjusted to reflect the effect of any delay
in capital expenditures.


 


4.14.07  Operator
Discretion Regarding Budgets.  In the
event that Operating Expenses in any fiscal year would in the aggregate exceed
the Operating Expenses provided in the Annual Operating Budget for such fiscal
year by more than 10%, the Operator shall revise the Annual Plan and submit to
Owner for Owner’s approval as set forth in Section 4.15.


 


4.14.08  Operator’s
Disclaimer.  Notwithstanding the provisions
of this Section 4.14 and all other provisions of this Agreement,
Owner recognizes that Operator is not, nor is it intended to be, a guarantor of
the Annual Operating Budget.  Owner
acknowledges that notwithstanding the Operator’s experience in the operation of
gaming facilities, the projections contained in each Operating Budget submitted
from time to time to Owner by the Operator are mere estimates and are subject
to and may be affected by changes in financial, economic and other conditions
and circumstances beyond the Operator’s reasonable control, and the giving of


 


11





















 


such
projections or the making of such Annual Operating Budgets shall never be
construed as a guarantee or warranty by the Operator to Owner that such
projections or pro formas will, in fact, occur.


 


4.15.        Revisions to Annual Plan.  If, in the Operator’s sole judgment,
revisions to all or any portion of the Annual Plan are appropriate, the
Operator shall revise the Annual Plan and submit such revised Annual Plan to
Owner for approval in accordance with the provisions set forth in Section 4.14.


 


4.16.        Remittance to Owner.  Contemporaneously with furnishing the
Financial Statements for each calendar month to Owner pursuant to Section 4.09,
the Operator shall remit to Owner, subject to applicable Laws and the Related
Contracts, from the Bank Accounts, an amount by which the total funds in the
Bank Accounts exceed the sum of working capital and the current amount on
deposit in the Capital Expenditures Fund.


 


4.17.        Insurance.  Owner, for the benefit of both Owner and the
Operator, shall maintain adequate insurance during the term of this Agreement,
including any insurance of the Operator which may be required.  The Operator shall procure all insurance on
behalf of Owner and the carrier, type and amount of coverage shall be
designated by the Operator in their sole discretion.


 


4.18.        Waiver of Liability.  To the extent covered by insurance, each
Operator and Owner each waives, releases and discharges the other from all
claims or demands which each may have or acquire against the other, or against
each other’s directors, officers, agents, employees or partners, with respect
to any claim for any losses, damages, liability or expenses (including attorneys’
fees) incurred or sustained by either of them on account of injury to persons
or damage to property or business arising out of the ownership, management,
operation and maintenance of the Business, regardless whether any such claim or
demand may arise because of the fault or negligence of the other party or its
officers, partners, agents or employees. 
Except to the extent a loss, damage or expense is a result of the other
party’s gross negligence, bad faith or willful misconduct, in the event of any
such loss, damage, liability or expense, Owner and Operator each shall look to
the insurance maintained with respect to the Business or otherwise by such
party and shall not make any claim or seek any recovery against the other
party.  Each policy of insurance
maintained with respect to the Business shall contain a specific waiver of
subrogation reflecting the provisions of this Section 4.18, or a
provision to the effect that the existence of the preceding waiver shall not
affect the validity of any such policy or the obligation of the insurer to pay
the full amount of any covered loss sustained.


 


4.19.        Legal Actions.  Subject to Section 6.03, all
matters of a legal nature involving the Business or the Facilities or any
portion thereof shall be handled by legal counsel selected by the Operator and
reasonably acceptable to Owner (such legal counsel which shall include but not
be limited to Mayer, Brown, Rowe & Maw, is
hereinafter referred to as “Approved Legal
Counsel”).  The Operator shall
notify Owner of the commencement of any legal action or proceeding concerning
the Business or the Facilities or any portion thereof as soon as practicable
after the Operator receive actual notice of the commencement of such legal
action unless such action is for money damages only and such damages are
reasonably anticipated to be either fully covered by insurance or not in excess
of $500,000.  Except with respect to
those legal matters in 


 


12





















 


which
Owner advises the Operator that it desires to be directly involved, the
Operator shall be responsible for directing on behalf of Owner the Approved
Legal Counsel to take any reasonable or necessary legal actions to protect
Owner’s assets and to ensure compliance with the contractual obligations of
others and all Governmental Requirements. 
In any legal action or proceeding in which Owner is to be the plaintiff
or complainant, then the Operator may not commence such legal action or
proceeding without first obtaining the prior consent of Owner.


 


ARTICLE 5



COMPENSATION OF THE OPERATOR


 


5.01.        Forms of Compensation.  For and in consideration of the services
rendered by the Operator pursuant to this Agreement, other than Pre-Opening
Services for which Owner agrees to pay the Operator the Pre-Opening Services
Fee, Owner agrees to pay to the Operator compensation in the form of (i) the
Basic Management Fee, (ii) the Incentive Fee, and (iii) all
Reimbursables.


 


5.02.        Basic Management Fee.  The “Basic Management Fee” shall be an amount
equal to one and seventy five one hundredths percent (1.75%) of Net Revenue
(excluding food and beverage revenue). 
The Basic Management Fee shall be due and payable monthly in arrears on
the date the monthly Financial Statements are delivered to Owner.  The Basic Management Fee shall be adjusted
quarterly based on actual results reported for each such Fiscal Quarter and, if
necessary, annually based on actual results reported for each Fiscal Year.  A partial Fiscal Year at the beginning and
end of the Term shall be treated as a Fiscal Year for purposes of this Section 5.02.


 


5.03.        Incentive Fee.  The “Incentive Fee” shall be an amount equal
to (i) three percent (3%) of the first $25 million of EBITDA; (ii) four
percent (4%) of EBITDA in excess of $25 million but less than $30 million of
EBITDA; and (iii) five percent (5%) of EBITDA in excess of $30
million.  The Incentive Fee shall be due
and payable monthly in arrears on the date the monthly Financial Statements are
delivered to Owner.  The Incentive Fee
shall be adjusted quarterly based on annual forecasts and annually based on
actual results reported in the Financial Statements for each Fiscal Year.  A partial Fiscal Year at the beginning and
end of the Term shall be treated as a Fiscal Year for purposes of this Section 5.03.


 


5.04.        Collection of Management Fees.  Subject to Section 2.03.02, the
Operator shall have the right to collect for themselves the Management Fees and
Reimbursables from any of the Bank Accounts at the time such amounts are
payable.  If at any time the payment, in
whole or in part, of the Management Fees or any Reimbursables is not permitted
or is otherwise subject to any restriction against payment by any Loan
Document, until such time as such payments are permitted to be made in full to
the Operator, such unpaid amounts shall accrue interest from the date such
payments are required to be made until the date such payments are actually made
at a rate per annum equal to 11%, compounded daily and calculated on the basis
of a 360-day year.


 


13





















 


ARTICLE 6



INDEMNITY


 


6.01.        Indemnification to the Operator.  Owner agrees to indemnify and hold Operator
and each Operator Indemnified Person harmless from and against all loss,
liability or cost (including reasonable attorneys’ fees and expenses) that is
not covered by insurance proceeds and which Operator and any Operator
Indemnified Person may sustain, incur or assume as a result of any Claims which
may be alleged, made, instituted or maintained against Operator, any
Indemnified Person or Owner, jointly or severally, arising out of, resulting
from or based upon (i) any breach by Owner of any of its representations,
warranties, covenants or agreements contained in this Agreement, (ii) the
ownership, condition or use of the Facilities, (iii) the management or
operation of the Business, including, without limitation, obligations or
liabilities arising out of or relating to (A) any federal, state or local
tax or duty of any kind, (B) indebtedness of Owner or other obligations or
liabilities of Owner necessary to operate the Business, including but not
limited to the Jefferies Financing and the Operating Expenses, (C) employee
or labor relations matters including, but not limited to, employee benefit or
similar plans, medical benefits, life insurance, severance, workers’
compensation, (D) any claim, proceeding or other litigation involving the
Business, including, without limitation, 
injury to person(s) and damage to property or business by reason of any
cause whatsoever in and about the Facilities, whether caused, wholly or
partially, by the negligence of Operator or its members, officers, employees
agents or Affiliates, (E) the failure of the Business to comply in any
respect with applicable Gaming Laws, Governmental Requirements, Environmental
Requirements, or other applicable laws, statutes, rules or regulations to
which either Owner, Operator or the Business is subject, or (F) the
failure by Owner, Operator or any other Person to consummate the Jefferies
Financing; provided, however, Owner shall not be
liable to indemnify and hold Operator or any Operator Indemnified Person
harmless from any such uninsured loss, liability or cost (including costs of
defense) solely to the extent it is the result of gross negligence or willful
misconduct or criminal conduct of the party seeking indemnification hereunder.


 


6.02.        Indemnification to Owner.  Operator agrees to indemnify and hold Owner
and each Owner Indemnified Person free and harmless from all loss, liability or
cost (including reasonable attorneys’ fees) that is not covered by insurance
proceeds and which Owner and any Owner Indemnified Person may sustain, incur or
assume as a result of any Claims which may be alleged, made, instituted or
maintained against Owner, Operator or any Indemnified Person, jointly or
severally, arising out of or based upon (i) the operation, condition or
use of the Facilities by Operator, or (ii) the operation or management of
the Business by Operator, including, without limitation, injury to person(s)
and damage to property or business by reason of any cause whatsoever in and
about the Facilities or elsewhere, and any requirement or award relating to
course of employment, working conditions, wages and/or compensation of
employees or former employees at the Facilities, in each case solely to the
extent any such injury or damage is caused by the gross negligence or willful
misconduct or criminal conduct of Operator or any of its respective employees.


 


6.03.        Claiming Procedure.


 


6.03.01  Notice.  Promptly after the assertion of any Claim by a
third party which may give rise to a claim for indemnification from an
indemnitor under this Agreement, an Indemnified Person shall notify the
indemnitor in writing of such Claim and advise the indemnitor whether the
Indemnified Person intends to contest such Claim.  Failure to notify an indemnitor shall not
relieve such indemnitor from any ability hereunder to the extent indemnitor 


 


14





















 


is
not materially prejudiced as a result thereof and in any event shall not
relieve indemnitor from any liability which indemnitor may have otherwise than
on account of this Agreement.


 


6.03.02  Contest and
Defend.  The Indemnified Person shall
permit the indemnitor to contest and defend against such Claim, at the
indemnitor’s expense, if the indemnitor has confirmed to the Indemnified Person
in writing that it agrees that the Indemnified Person is entitled to
indemnification hereunder in respect of such Claim, unless the conduct of its
defense by the indemnitor could be reasonably likely to prejudice such
Indemnified Person due to the nature of the Claims presented or by virtue of a
conflict between the interests of such Indemnified Person and such indemnitor
and another Indemnified Person whose defense has been assumed by the
indemnitor.  Notwithstanding a
determination by the indemnitor to contest such Claim, the Indemnified Person
shall have the right to be represented by its own counsel and accountants at
its own expense except as set forth above. 
In any case, the Indemnified Person shall make available to the
indemnitor and its attorneys and accountants, at all reasonable times during
normal business hours, all books, records, and other documents in its
possession relating to such Claim.  The
party contesting any such Claim shall be furnished all reasonable assistance in
connection therewith by the other party (with reimbursement of reasonable
expenses by the indemnitor).  If the
indemnitor fails to undertake the defense of or to settle or pay any such
third-party Claim within fifteen (15) days after the Indemnified Person has
given written notice to the indemnitor advising the indemnitor of such Claim,
or if the indemnitor, after having given notice to the Indemnified Person that
it intends to undertake the defense, fails forthwith to defend, settle or pay
such Claim, then the Indemnified Person may take any and all necessary action
to dispose of such Claim including, without limitation, the settlement or full
payment thereof upon such terms as it shall deem appropriate, in its sole
discretion, subject to the following with respect to any proposed settlement
thereof.


 


6.03.03  Compromise or
Settlement.  The indemnitor shall not
consent to the terms of any compromise or settlement of any third-party Claim
defended by the indemnitor in accordance herewith (other than terms related
solely to the payment of money damages and only after the indemnitor has
furnished the Indemnified Person with such evidence as the Indemnified Person may
reasonably request of the indemnitor’s ability (financial and otherwise) to pay
promptly the amount of such money damages at such times as provided in the
compromise or settlement and so long as any such settlement does not include
any statement as to or an admission of fault, culpability or failure to act by
or on behalf of any Indemnified Person) without the prior written consent of
the Indemnified Person.


 


6.03.04  Notice.  Any claim for indemnification under this
Agreement which does not result from the assertion of a Claim by a third party
shall be asserted by written notice given by the Indemnified Person to the
indemnitor.  Such indemnitor shall have a
period of thirty (30) days within which to respond thereto.  If such indemnitor does not respond within
such thirty (30) day period, such indemnitor shall be deemed to have accepted
responsibility to make payment, and shall have no further right to contest the
validity of such Claim.  If the
indemnitor does respond within such 30-day period and rejects such Claim in
whole or in part, such Indemnified Person shall be free to pursue such remedies
as may be available to such party under applicable Law, including through
arbitration as provided for in Section 10.18 hereof (it being 


 


15





















 


understood
that any such rejection shall not limit in any way such Indemnified Person’s
right to indemnification under this Agreement).


 


6.04.        Mitigation.  Each indemnitor and Indemnified Person shall
use reasonable efforts and shall consult and cooperate with each other with a
view towards mitigating Claims that may give rise to claims for indemnification
under Sections 6.01 and 6.02;


 


6.05.        Payment.  Each indemnitor agrees to pay amounts due
hereunder (i) within ten (10) days of written notice in respect of
its indemnity obligations which it has accepted pursuant to Section 6.03.02
or which it has been deemed to accept pursuant to Section 6.03.04,
and (ii) within five (5) days of any final adjudication of any
indemnity obligations as to which it has not so accepted.


 


ARTICLE 7



DAMAGE TO, DESTRUCTION OF OR CONDEMNATION OF THE FACILITIES


 


7.01.        Damage to and Destruction of the Facilities.


 


In the event of a fire or other property loss
resulting in damage to, or impairment or destruction of, the Facilities, if
Owner fails to repair, restore, rebuild or replace any damage within sixty (60)
days after the date of Owner’s settlement with the insurance company with
respect to the fire or other casualty or shall fail to complete the same
diligently, the Operator, at their election, may terminate this Agreement.


 


7.02.        Condemnation.


 


If the whole of the Facilities shall be taken or
condemned in any eminent domain, condemnation, compulsory acquisition or like
proceeding by any competent authority for any public or quasi-public use or
purpose, or transferred or conveyed to any competent authority in anticipation
of such eminent domain, condemnation, compulsory acquisition or like
proceeding, or if such a portion thereof shall be taken or condemned or
conveyed as to have a Material Adverse Effect or otherwise make it imprudent or
unreasonable to use the remaining portion in a manner satisfactory to Owner, in
Owner’s reasonable judgment, then in any of such events this Agreement shall
cease and terminate as of the date of such taking or condemnation.


 


ARTICLE 8



ASSIGNMENT


 


8.01.        Sale/Assignment.


 


8.01.01  Owner Transfer.  Owner shall have no right to Transfer its
interests in this Agreement without the prior written consent of the Operator; provided that Owner may terminate this
Agreement if the Operator does not consent to any such Transfer.


 


16





















 


8.01.02  Operator
Transfer.  Operator shall not have
the right to Transfer its interest in this Agreement without the prior written
consent of Owner; provided that
Operator may assign this agreement to any wholly-owned Subsidiary of Peninsula
Gaming Partners, LLC.


 


8.02.        Effect of Assignment.  In the event the necessary consent to any
assignment of this Agreement is given by Owner or the Operator, no further
assignment that is restricted by Section 8.01 shall be made without
the express written consent of Owner or the Operator.  An assignment to which Owner or the Operator
has expressly consented in writing shall relieve the assignor of its
obligations under this Agreement after the effective date of such assignment
provided that the assignee specifically assumes all of the assignor’s
obligations and duties recited herein after the effective date of such assignment
pursuant to a written assignment.


 


ARTICLE 9



TERMINATION


 


9.01.        Termination.  This Agreement shall terminate upon the
occurrence of any of the following events:


 


9.01.01  Expiration.  The expiration of the stated Term including
any extensions in accordance with the terms hereof;


 


9.01.02  Mutual
Agreement.  Agreement by Owner and
each Operator in writing to terminate this Agreement;


 


9.01.03  Owner Default.  At the sole discretion of the Operator, upon (i) the
failure by Owner to make any monetary payment required hereunder on or before
the due date and such failure continues for ten (10) Business Days after
receipt by the Operator of a written notice from Owner specifying such failure
or (ii) the failure by Owner to perform its material obligations in this
Agreement and such failure has a material adverse effect on the financial
condition or results of operations of the Business and such failure shall
continue for a period of thirty (30) days after written notice thereof from the
Operator to Owner specifying in reasonable detail the nature of such failure;


 


9.01.04  Operator
Default.  At the sole discretion of
Owner, upon the failure by the Operator to perform its material obligations
contained in this Agreement and such failure has a material adverse effect on
the financial condition or results of operations of the Business and such
failure shall continue for a period of thirty (30) days after written notice
thereof from Owner to the Operator specifying in reasonable detail the nature
of such failure;


 


9.01.05  Operator
License.  At the sole discretion of
Owner, if the Operator shall have been found unsuitable to provide the services
contemplated by this Agreement by the Gaming Authorities and no appeal or other
remedy is available or undertaken; and


 


9.01.06  Termination
Rights.  The exercise of any other
termination right expressly granted under this Agreement pursuant to Section 7.01,
7.02 or 8.01.


 


17





















 


9.02.        Effect of Termination.  Upon termination of this Agreement, all sums
owed by Owner to the Operator or by the Operator to Owner shall be paid within
thirty (30) days of the termination date. 
In the event of any termination of this Agreement, Owner shall, notwithstanding
such termination, be liable to the Operator for the fees earned and
Reimbursables incurred by the Operator hereunder prior to such termination as
follows:  (i) unpaid accrued and
payable Management Fees, Pre-Opening Services Fees (including that pro rata
portion thereof earned through the date of termination but for which payment
was accrued pursuant to Section 2.04) and Operator Advances
(including any unpaid accrued interest thereon), if any, (ii) the present
value (calculated based on projections at the time of termination and based on
a discount rate of 8%) of the projected Management Fees remaining unpaid during
the eight (8) year period immediately subsequent to the Opening Date, (iii) all
Reimbursables incurred prior to termination hereunder, plus (iv) a
termination fee equal to $5.0 million plus an amount computed like interest at
the rate of eight percent (8%) per annum (compounded semi-annually as of June 30
and December 31 of each calendar year) on such $5.0 million to the date of
payment thereof; provided, however,
that the amounts specified in clause (ii) above shall not be payable if
the termination is made by Owner pursuant to Section 9.01.04 or 9.01.05.  Owner shall pay the Operator the amounts owed
the Operator described in clauses (i) through (iii) above through the
date of termination, after deducting therefrom any amounts owed by the Operator
to Owner and not disputed by the Operator, within 10 days after such
termination.  Owner shall pay the
Operator the amounts owed the Operator described in clause (iv) above
on the date that PGP no longer owns, directly or indireclty, any equity
interests of Owner.


 


9.03.        Operator Responsibilities.  In the event of termination of this
Agreement, the Operator will relinquish control of (i) all Bank Accounts
and (ii) all funds in or accounts in Operator’s control which relate to
the Business, subject to the Operator’ rights set forth under Section 9.02.


 


9.04.        Survival.  Notwithstanding anything contained herein to
the contrary, the parties acknowledge that: 
(i) the provisions of Article 6, Section 9.02,
Section 9.03, Section 9.05, Section 10.02
and Section 10.04 and (ii) the obligations of either party for
all amounts due and payable from the Operator to Owner or from Owner to the
Operator shall survive the termination or expiration of this Agreement.


 


9.05.        Proprietary Information.  In the event of termination of this
Agreement, the Operator will relinquish to Owner all of the Books and Records
and the marketing, credit and customer data contained in operating records of
the Business and which are generated by the Operator in connection with its
duties hereunder.  As of the termination
of this Agreement, the Operator shall not have the right to copy such records
prior to relinquishing control over them to Owner, except as provided in Section 4.08.  Upon termination of this Agreement for any
reason, the Operator’s marketing, credit and customer data and proprietary
computer programs generated prior to the date hereof shall remain the sole
property of the Operator, and shall not be used or disclosed to other Persons
by Owner or its agents or Affiliates provided that the Operator’s records
indicate that such information and programs were complied and/or developed
prior to the date hereof.  Owner and the
Operator acknowledge that pursuant to the sharing of information by and among
Owner, the Operator and the Operator’s Affiliates, Owner, the Operator and the
Operator’s Affiliates will have information and copies of records from the
Business prior to 


 


18





















 


termination
and nothing herein shall prevent the use of such information so obtained for
the purposes contemplated hereunder and subject to the limitations contained
herein.


 


ARTICLE 10

GENERAL PROVISIONS


 


10.01.      Entire Agreement.  This Agreement embodies the entire agreement
and understanding of Owner and the Operator relating to the subject matter
hereof and supersedes all prior representations, agreements and understandings,
oral or written, relating to such subject matter.


 


10.02.      Confidentiality.  Both parties shall maintain confidentiality
with respect to material developments in the course of development of the
Facilities and operation of the Business, subject to Governmental Requirements
and applicable Law.  Except as required
by any Law (including, without limitation, federal securities and stock
exchange or National Association of Securities Dealers, Inc. requirements)
and Gaming Authorities, material confidential information shall be made
available only to such of Owner’s or the Operator’s employees and consultants
as are required to have access to the same in order for the recipient party to
adequately use such information for the purposes for which it was
furnished.  Any Person to whom such
information is disclosed shall be informed of its confidential nature and the
party disclosing such information shall obtain a confidentiality agreement from
such Person the terms of which shall be consistent with the provisions of this Section 10.02.  Information provided by one party to the
other shall be presumed confidential unless the information is (a) published
or in the public domain other than as a result of any action by the recipient
thereof, (b) disclosed to the recipient by a third party not known by the
recipient to be subject to an agreement of confidentiality or (c) presented
to the recipient under circumstances which clearly and directly indicate the
delivering party does not intend such information to be confidential.


 


10.03.      Approvals.  Any consent or approval referred to herein
(by whatever words used) of either party hereto shall not be unreasonably
withheld, delayed or conditioned, except in those situations in which this
Agreement explicitly gives the party absolute or sole discretion to give or
withhold such approval or consent.  Except
as otherwise expressly provided herein, whenever any party has called upon the
other to execute and deliver a consent or approval in accordance with the terms
of this Agreement, the failure of such party to expressly disapprove within ten
(10) Business Days after written request therefor in accordance with the
terms of Article 3, or such other period as specifically set forth
herein is given, shall be deemed to be a consent or approval.  In the event that any party refuses to give
its consent or approval to any request by another party, such refusing party
shall indicate by written notice to the other the reason for such refusal in
sufficient detail for the party requesting such consent or approval to
understand the exact basis for withholding such consent or approval.


 


10.04.      Conflicts of Interest; Non-Compete.


 


10.04.01  Conflicts of
Interest.  Owner acknowledges and
agrees that the Operator may have and may distribute promotional materials for
the Operator’s Affiliates’ facilities, 


 


19





















 


including
casinos, at the Facilities if reciprocal arrangements are made in favor of the
Business at Operator’s Affiliates’ facilities.


 


10.04.02  Covenant Not
to Compete of Owner; Non-Solicitation. 
Owner agrees that during the Term, except for the Facilities, it will
not either directly or indirectly: (i) own, manage or operate a casino in
any jurisdiction in which Operator or any of its Affiliates own, manage or
operate a casino or conduct other gaming activities, now or in the future,
whether as a proprietor, partner, stockholder, advisor, consultant or in any
other capacity, or (ii) provide technical, marketing or other assistance
to any casino or casino operator in any jurisdiction where Operator or any of
its Affiliates own, manage or operate a casino or conduct other gaming
activities.  Owner acknowledges that the
foregoing restriction is reasonable in scope, duration and geographic area and
is properly required to protect the legitimate business needs of the Operator.  Additionally, Owner agrees that during the
Term and for a period of two (2) years thereafter, without the prior
written consent of the Operator, neither Owner nor any of its Affiliates shall,
directly or indirectly, (i) in any manner induce or attempt to induce any
employee, customer or supplier of the Business or any employee, customer or
supplier of Operator or any of its Affiliates with respect to any gaming
operations conducted by them at such time to leave or cease doing business with
Operator or any of its Affiliates, as applicable, or in any way interfere with
the relationship between them and Operator or any of its Affiliates, as
applicable, or (ii) hire or solicit for employment any employee of
Operator or any of its Affiliates (other than Owner) with respect to any gaming
operations conducted by them; provided, however,
that the preceding clause (ii) shall not prohibit Owner from hiring (but
not soliciting) any employee of Operator or any of its Affiliates to the extent
such employee is employed by Owner in a business that is not, directly or
indirectly, in competition with any gaming operations then conducted by
Operator or any of its Affiliates.  The
term “solicitation” as used in the preceding sentence includes, without
limitation, offering any employee employed by Operator or any of its Affiliates
employment commencing after the non-solicitation period.  The Operator shall not solicit for employment
any employee of the Business for a period of six months after termination of
this Agreement.


 


10.04.03  Right of First
Offer to Future Business.  If, during
the Term, Owner or its Affiliates constructs, develops or owns any casino,
other than the Business, located in Iowa for which Owner or its Affiliates is
seeking to engage a third party to manage and operate such casino, Owner shall
offer to the Operator a right of first offer to manage and operate such
casino.  Owner shall provide to the
Operator written notice of Owner’s or its Affiliates’ intent to construct,
develop or own such casino.  Upon the
Operator’s receipt of such written notice, Owner and the Operator shall, for a
period of ninety (90) days, commence good faith negotiations and enter into a
management services agreement for the Operator management of such casino on
terms and conditions similar to those contained in this Agreement and
acceptable to Owner and the Operator. 
If:  (i) Owner and the
Operator, each acting in good faith, do not execute a management services
agreement for such casino within the ninety (90) day period and (2) such 90-day
period is not extended, in writing, by Owner and the Operator, then Owner shall
have the right to enter into negotiations with and execute a management
services agreement for such casino with casino operators other than the
Operator.


 


10.05.      Best Evidence and Counterparts.  This Agreement shall be executed in original
and photostatic copies and each copy bearing original
signatures of the parties hereto in ink shall 


 


20





















 


be
deemed an original.  This Agreement may
be executed in several counterparts and all so executed shall constitute one
agreement, binding on all parties hereto, notwithstanding that all of the
parties are not signatory to the same counterpart.


 


10.06.      Amendment or Modification.  This Agreement may not be amended or modified
except by a writing signed by all parties hereto.


 


10.07.      Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of New York.  This Agreement shall be deemed to contain all
provisions required by Gaming Laws and is subject to any approvals required
under the Gaming Laws.  To the extent any
provision in this Agreement is inconsistent with the Gaming Laws, the Gaming
Laws shall govern.  Should any provision
of this Agreement require judicial interpretation or as to any arbitration
under this Agreement, it is agreed that the court or arbitrators interpreting
or considering such provision shall not apply the presumption that the terms
hereof shall be more strictly construed against a party by reason of the rule or
conclusion that a document should be construed more strictly against the party
who itself or through its agent prepared the same.  It is agreed and stipulated that all parties
hereto have participated equally in the preparation of this Agreement and that
legal counsel was consulted by each party before the execution of this
Agreement.


 


10.08.      Interpretation.  The preamble recitals of this Agreement are
incorporated into and made a part of this Agreement; titles of Sections and
Articles are for convenience only and are not to be considered a part of this
Agreement.  All references to years shall
mean a year commencing as of the first day of January of each year.  All references to the singular shall include
the plural and all references to gender shall, as appropriate, include other
genders.


 


10.09.      Severability.  Except as expressly provided to the contrary
herein, each section, part, term or provision of this Agreement shall be
considered severable, and if for any reason any section, part, term or
provision herein is determined to be invalid and contrary to or in conflict
with any existing or future law or regulation by a court or governmental agency
having valid jurisdiction, such determination shall not impair the operation of
or have any other effect on other sections, parts, terms or provisions of this
Agreement as may otherwise remain enforceable and intelligible, and the latter
shall continue to be given full force and effect and bind the parties hereto
unless such survival vitiates the intent of the parties hereto, and said
invalid sections, parts, terms or provisions shall not be deemed to be a part
of this Agreement.  If any provisions are
void or unenforceable if enforced to their maximum extent, the provisions in question
shall be enforced to the maximum extent such provisions are enforceable.


 


10.10.      Force Majeure.  The provisions of this Section 10.10
shall be applicable if there shall occur during the Term any strike, boycott,
lockout or other labor trouble; storm, fire, earthquake or Act of God; any
riot, civil disturbance, or any act of war, terrorism or of the public enemy;
the shortage, unavailability or disruption in the supply of labor, materials,
fuels or the disruption of postal, electrical, telephone or other utility
service; any future governmental law, ordinance, order rule or regulation;
delay attributable to the failure to obtain any Operating Permit or any
Approval for reasons that are not the fault of or beyond the reasonable control
of the party obligated to obtain such Permit or Approval or any other cause or
contingency beyond the respective parties’ control, but only during such time
as such party is unable due to a 


 


21





















 


specified
reason herein to perform its obligations hereunder.  If the Operator or Owner shall, as the result
of any of the above-described events, fail to timely perform any of its
obligations under this Agreement, then, upon written notice to the other within
five (5) Business Days of such event, such failure shall be excused and
not be a breach of this Agreement by the party claiming Force Majeure, but only
to the extent occasioned by such event. 
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 10.10 shall not be applicable to the
Operator’s or Owner’s obligation to make any payments to the other pursuant to
the terms of this Agreement.


 


10.11.      Waiver. 
None of the terms of this Agreement, including this Section 10.11,
or any term, right or remedy hereunder shall be deemed waived unless such
waiver is in writing and signed by the party to be charged therewith and in no
event by reason of any failure to assert or delay in asserting any such term,
right or remedy or similar term, right or remedy hereunder.


 


10.12.      Definitions.  All capitalized terms referenced or used in
this Agreement and not specifically defined herein shall have the meaning set
forth on Exhibit ”A”, which is attached hereto and incorporated
herein by this reference.


 


10.13.      Governing Document.  This Agreement shall govern in the event of
any inconsistency between this Agreement and any of the Exhibits attached
hereto.


 


10.14.      Inspection of Facilities.  Owner shall have the right, at any time
during the Term, to enter upon the Facilities or any portion thereof, to
inspect same.


 


10.15.      Third-Party Beneficiaries.  There shall be no third-party beneficiaries
with respect to this Agreement.


 


10.16.      Regulatory Information.  Owner and the Operator shall each provide to
the other parties all information pertaining to this arrangement and the
Business and as to their ownership structure, corporate structure, officers and
directors, stockholders’ and partners’ identity, financing, transfers of
interest, etc., as shall be required by any regulatory authority with
jurisdiction over the other or with respect to any federal or state security
law requirement.


 


10.17.      Successors and Assigns.  This Agreement and the rights of Owner and
the Operator evidenced hereby shall inure to the benefit of and be binding upon
the successors and, to the extent permitted hereunder, assigns of Owner and
Operator.


 


10.18.      Dispute Resolution.  The
parties hereto hereby agree that any controversy, dispute or claim arising out
of or relating to this Agreement or any breach of this Agreement shall be
resolved in accordance with the terms and provisions of this Section 10.18.


 


(a)           Agreement
to Negotiate.  Before submitting any
controversy, dispute or claim arising out of or relating to this Agreement or
any breach of this Agreement to arbitration, the following procedures shall be
followed:


 


i.                                          The
party desiring to submit any such controversy, dispute or claim to arbitration
(“Claimant”) first shall give written notice thereof to the other 


 


22





















 


party
(“Recipient”) setting forth in detail the pertinent facts and
circumstances relating to such controversy, dispute or claim;


 


ii.                                       Recipient
shall have a period of fifteen (15) days in which to consider the controversy,
dispute or claim that is the subject of the notice and to furnish in writing to
Claimant a written statement of Recipient’s position with respect thereto;


 


iii.                                    Within
seven (7) days of Claimant’s receipt of Recipient’s written statement,
Claimant and Recipient shall meet with a mediator, whose identity shall be
mutually agreed upon by Claimant and Recipient, in an effort to resolve
amicably any difference that may exist between the respective positions of
Claimant and Recipient, and, if such resolution is not achieved, either or both
of Claimant and Recipient shall have the right to submit the matter to
arbitration.


 


(b)           Procedure
for Arbitration.  Any controversy,
dispute or claim arising out of or relating to this Agreement or any breach of
this Agreement, including any dispute concerning the termination of this
Agreement, that has not been resolved in accordance with Section 10.18(a) shall
be settled by arbitration in Denver, Colorado in accordance with the commercial
arbitration rules of the American Arbitration Association then
existing.  In arbitration, this Agreement
(including this provision providing for arbitration in the event of any
controversy, dispute or claim arising out of or relating to this Agreement or
any breach of this Agreement that has not been resolved in accordance with Section 10.18(a))
shall be specifically enforceable. 
Judgment upon any award rendered by an arbitrator may be entered in any
court having jurisdiction.  The
prevailing party to an arbitration proceeding commenced hereunder shall be
entitled as a part of the arbitration award to the costs and expenses
(including reasonable attorneys’ fees) of investigating, preparing and pursuing
an arbitration claim as such costs and expenses are awarded by the arbitrator.


 


*         *          *         
*          *


 


23





















 


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


 


	
   

  	
  OWNER:

  
	
   

  	
   

  	
   

  
	
   

  	
  DIAMOND JO WORTH, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ M.
  Brent Stevens

  
	
   

  	
  By:

  	
  M. Brent
  Stevens

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPERATOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  PENINSULA GAMING PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ M. Brent Stevens

  
	
   

  	
  By:

  	
  M.
  Brent Stevens

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
				



 


24





















 


EXHIBIT ”A”


 


Definitions


 


All capitalized terms referenced or used in the
Agreement and not specifically defined therein shall have the meaning set forth
below in this “Exhibit A”. 
The article, section and paragraph and exhibit references herein
refer to the Articles, Sections and Exhibits in and to the Agreement.


 


Affiliate.  The term “Affiliate” shall mean a Person that
directly or indirectly, or through one or more intermediaries, Controls, is
Controlled by, or is under common Control with the Person in question and any
stockholder or partner of any Person referred to in the preceding clause owning
more than twenty-five percent (25%) or more of (i) such Person if such
Person is a publicly traded corporation or (ii) an ownership or beneficial
interest in any other Person.


 


Agreement.  The term “Agreement” shall have the meaning
set forth in the preamble.


 


Annual
Plan.  The
term “Annual Plan” shall have the meaning set forth in Section 4.14.


 


Approval.  The term Approval means any license
(including the License), finding of suitability, qualification, approval or
permit by or from any Gaming Authority.


 


Auditors.  The term “Auditors” shall mean a nationally
recognized independent certified public accounting firm in the United States
selected by Owner to prepare the audited annual Financial Statements, unless
otherwise agreed by Owner and the Operator.


 


Bank
Accounts. 
The term “Bank Accounts” shall have the meaning set forth in Section 4.11.


 


Basic
Management Fee. 
The term “Basic Management Fee” shall have the meaning set forth in Section 5.02.


 


Books
and Records. 
The term “Books and Records” shall have the meaning set forth in Section 4.08.


 


Budget.  The term “Budget” means any budget
contemplated by the Agreement that has been approved by Owner or has been
arbitrated as set forth in the Agreement.


 


Business.  The term “Business” shall mean the conduct of
all business operations at the Facilities, including Gaming Activities, food
service, entertainment and parking activities.


 


Business
Days.  The
term “Business Days” shall mean all weekdays except those that are official
holidays of the State of Louisiana or the U.S. government.  Unless specifically stated as “Business Days,”
a reference to “days” means calendar days.


 


A-1





















 


Cash
Collateral and Disbursement Agreement.  The term “Cash Collateral and Disbursement
Agreement” shall mean that certain Cash Collateral and Disbursement Agreement,
dated as of July [  ], 2005, among
Owner and U.S. Bank National Association.


 


Claim.  The term “Claim” shall mean any allegation,
claim, civil or criminal action, proceeding, charge or prosecution which may be
alleged, made, instituted or maintained against Operator, Owner, or their
respective Indemnified Persons, jointly and severally, or individually, as the
case may be, arising out of or based upon the ownership, condition or use of
the Facilities or the operation or management of the Business, including,
without limitation, injury to person(s) and damage to property or business by
reason of any cause whatsoever in and about the Facilities or elsewhere, and
any requirement or award relating to course of employment, working conditions,
wages and/or compensation of employees or former employees at the Facilities.


 


Control.  The term “Control” (including derivations
such as “Controlled” and “Controlling”) means with respect to a Person, the
ownership of more than fifty percent (50%) or more of the beneficial interest
or voting power of such Person.


 


Debt
Service. 
The term “Debt Service” shall mean payments (including without
limitation, principal, interest and expense reimbursement) with respect to (i) capitalized
leases, as defined in accordance with Generally Accepted Accounting Principles,
and (ii) all third party borrowed funds related to the Business.


 


EBITDA.  The term “EBITDA” shall mean the earnings of
the Business before interest, income taxes, depreciation and amortization; provided, however, that in calculating
earnings hereunder, Management Fees payable under this Agreement shall not be
deducted.


 


Employee.  The term “Employee” shall mean any employee
of Owner engaged by the Operator to work in or about the Facilities in
connection with the conduct of the Business.


 


Environmental
Requirements. 
The term “Environmental Requirements” means all applicable present and
future statues, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, plans, authorizations, concessions, franchises and similar
items, of all governmental agencies, departments, commissions, boards, bureaus,
or instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial, administrative, and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including without limitation: 
(i) all requirements, including but not limited to those pertaining
to reporting, licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature; and (ii) all
requirements pertaining to the protection of the health and safety of employees
or the public.


 


Facilities.  The term “Facilities” shall
mean the casino to be developed by Owner in Northwood, Worth County, Iowa after
the date hereof.


 


A-2





















 


FF&E.  The term “FF&E” shall mean all furniture,
furnishings, equipment, and fixtures, including gaming equipment, computers,
housekeeping and maintenance equipment, and other items necessary or
appropriate to operate the Facilities.


 


Financial
Statements. 
The term “Financial Statements” shall mean an income statement, balance
sheet and a sources and uses of cash statement, all prepared in conformity with
Generally Accepted Accounting Principles and on a basis consistent in all
material respects with that of the preceding period (except as to those changes
or exceptions disclosed in such Financial Statements).


 


Fiscal
Quarter. 
The term “Fiscal Quarter” shall mean the four (4) quarters
corresponding to the Fiscal Year commencing on January 1, April 1, July 1
and October 1 of each Fiscal Year. 
In the event the Business opens on a date other than the first day of a
Fiscal Quarter, “Fiscal Quarter” also shall refer to the period commencing on
the Opening Date and ending on the last day of the calendar quarter (e.g., March 31,
June 30, September 30 or December 31) in which the Opening Date
occurs.


 


Fiscal
Year.  The
term “Fiscal Year” shall mean a period beginning and ending on January 1
and December 31, respectively.  In
the event the Opening Date occurs on a date other than the first day of a
Fiscal Year, “Fiscal Year” shall also refer to the period commencing on the
Opening Date and ending on the last day of the calendar year in which the
Opening Date occurs.  In the event this
Agreement terminates on a date other than the last day of a calendar year, the
term “Fiscal Year” shall include the period from the first day of the Fiscal
Year during which this Agreement terminates to and including the date of such
termination.


 


Force
Majeure. 
The term “Force Majeure” shall have the meaning set forth in Section 10.10.


 


Gaming
Activities. 
The term “Gaming Activities” shall mean the coin-operated machines and
other casino-type games conducted by the Operator at the Facilities.


 


Gaming
Authorities. 
The term “Gaming Authorities” or “Authority” shall mean all agencies,
authorities and instrumentalities of any state, nation or other governmental
entity, or any subdivision thereof, regulating gaming or related activities in
the United States and having jurisdiction over the Facilities or the Business.


 


Gaming
Laws.  The
term “Gaming Laws” shall mean any statute, ordinance, promulgation, law, rule,
regulation, code, judicial or administrative precedent or order of any court or
other body of the State of Iowa or agency or subdivision thereof which
regulates the conduct of the Gaming Activities.


 


Generally
Accepted Accounting Principles.  The term “Generally Accepted Accounting
Principles” shall mean generally accepted accounting principles as established
from time to time by the American Institute of Certified Public Accountants.


 


Governmental
Authorities. 
The term “Governmental Authorities” or “Authority” means the United
States, the State of Iowa or any other political subdivision in which the
Facilities are located, and any court or political subdivision, agency,
commission, board or 


 


A-3





















 


instrumentality
or officer thereof, whether federal, state, or local, having or exercising
jurisdiction over Owner, the Operator or the Facilities, including without
limitation, any Gaming Authority.


 


Governmental
Requirements. 
The term “Governmental Requirements” means all Laws and agreements with
any Governmental Authority that are applicable to the acquisition, development,
construction and/or renovation of the Facilities or the management or operation
of the Facilities or the business including without limitation, all Required
Contracts, Approvals and any rules, guidelines or restrictions created or
imposed by Governmental Authorities.


 


Gross
Revenue. 
The term “Gross Revenue” means all of the revenue from the operation of
the Business computed on an accrual basis from all business conducted upon,
related to or from the Business in accordance with Generally Accepted
Accounting Principles and shall include but not be limited to (i) the net
win from gaming activities (which is the difference between gaming wins and
losses), and (ii) the amount of all sales of food, beverages, goods,
wares, services, or merchandise at or from the Facilities, less (a) fifty
percent (50%) of any complimentaries and (b) deposits made in respect of
progressive and other similar games except to the extent such deposits are
allocable to expenses.  Gross Revenue
shall not include:


 


(a)                                  Any gratuities, or
service charges added to a customer’s bill or statement in lieu of gratuities,
which are payable to Facilities employees;


 


(b)                                 An amount equal to all
credits or refunds made to customers, guests or patrons;


 


(c)                                  All sums and credits
received in settlement of claims for loss or damage of FF&E or to the
physical plant of the Facilities, to the extent such sums and credits are in
excess of the actual amount spent or owed to remediate such loss or damage;


 


(d)                                 All sales taxes,
excise taxes, gross receipt taxes, admission taxes, entertainment taxes,
tourist taxes or charges collected from casino customers or collected by
tenants or concessionaires of Owner at the Facilities;


 


(e)                                  Any and all income
from the sale of FF&E outside the ordinary course of business;


 


(f)                                    Any uninsured
compensation payments for claims against third parties arising out of or during
the course of the operation of the Facilities (net of actual damages incurred);


 


(g)                                 Income and revenue of
tenants, licensees and concessionaires of the Operator or Owner from the
Facilities or any part thereof; provided, however,
that all fees, rents, commissions, percentages or other payments received from
any tenant, licensee or concessionaire shall be included in Gross Revenue;


 


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(h)                                 Proceeds of financing,
refinancing or sale of all or a portion of the business or the Facilities or
any personal property contained therein outside the ordinary course of
business;


 


(i)                                     Proceeds paid as a
result of an insurable loss (unless paid for the loss or interruption of
business and representing payment for damage for loss of income and profits of
the Business) after deducting any expenses of adjustment and collection;


 


(j)                                     Operator Advances
and any funds advanced or investments made by the Operator;


 


(k)                                  Proceeds of
condemnation and eminent domain awards, net of fees and expenses thereunder;
and


 


(l)                                     Interest.


 


Hazardous
Material. 
The term “Hazardous Material” means any substance:  (i) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law; or (ii) which
is or becomes defined as a “hazardous waste,” “hazardous substance,” pollutant
or contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto, including without the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et  seq.), and/or the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et  seq.); or (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of Louisiana or any political
subdivision thereof; or (iv) the presence of which on or about the
Facilities causes or threatens to cause a nuisance upon the Facilities or to
adjacent properties or poses or threatens to pose a hazard to the health or
safety of persons on or about the Facilities; or (v) the presence of which
on adjacent properties could constitute a trespass by Owner or Operator; or (vi) without
limitation which contains gasoline, diesel fuel or other petroleum
hydrocarbons, or any “regulated substance” as defined under the Underground
Storage Tank Regulations, 40 C.F.R. §280.12; or (vii) without limitation
which contains polychlorinated bipheynols (PCBs), asbestos or urea formaldehyde
foam insulation.


 


Incentive
Fee.  The
term “Incentive Fee” shall have the meaning set forth in Section 5.03.


 


Indemnified
Person.  The
term “Indemnified Person” means as to either Owner or the Operator indemnified
under Section 6.01 or Section 6.02, respectively, such
party and any Affiliate of such party, and any agents, attorneys, officers,
members, directors, stockholders, consultants or employees of such party or
such Affiliate, and each person, if any, who controls such party within the
meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20
of the Securities Exchange Act of 1934.


 


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Jefferies
Financing.  The
term “Jefferies Financing” shall mean the securities to be placed by Jefferies &
Company, Inc. for the purpose of developing the Facilities.


 


Law.  The term “Law” means any statute, ordinance,
promulgation, law, treaty, rule, regulation, code, judicial or administrative
precedent, code, order, judgment, writ, injunction, decree, or award of any
court or any other Governmental Authority, as well as the orders or
requirements of any local board of fire underwriters or any other body which
may exercise similar functions.


 


Lender.  The term “Lender” shall mean any Person that
has extended credit to Owner secured by, among other things, a mortgage
encumbering the Facilities.


 


Loan
Documents. 
The term “Loan Documents” means all of the documents evidencing,
securing and relating to any indebtedness at any time (including indebtedness
evidenced by the securities issued by Owner to effect the Jefferies Financing)
owing by Owner to Lender, including without limitation, all promissory notes,
loan agreements, mortgages, pledges, assignments, certificates, indemnities and
other agreements.


 


Management
Fees.  The
term “Management Fees” shall mean the Basic Management Fee and the Incentive
Fee and the Reimbursables.


 


Material
Adverse Effect. 
The term “Material Adverse Effect” shall mean any event, condition or
occurrence reasonably expected to have a material adverse effect on (i) the
condition (financial or otherwise), prospects, assets or properties of the
Business, including the suspension of or material limitation on the operation
thereof or (ii) this Agreement or the ability of the parties to consummate
the transactions contemplated hereby.


 


Net
Revenue. 
The term “Net Revenue” shall mean the difference of (i) Gross
Revenue, minus (ii) promotional
expenses incurred in connection with the operation of the Business.


 


Opening
Date.  The
term “Opening Date” shall mean the first date a revenue-paying customer is
admitted to the Facilities to participate in Gaming Activities.


 


Operating
Expenses. 
The term “Operating Expenses” shall mean those necessary or reasonable
operating expenses, including without limitation, gaming and other taxes and
governmental charges, costs of Operating Supplies, payroll and benefits,
marketing, administration, maintenance, energy and all costs and expenses of
licensing Owner’s or the Operator’ employees, incurred on behalf of Owner after
the Opening Date in connection with conducting the Business and operating the
Facilities, computed on an accrual basis, deductible under Generally Accepted
Accounting Principles in determining “Operating Income” (as defined in casino
industry practice) for purpose of preparing a statement of operations for the
Business; provided, however, Operating Expenses
shall not include depreciation or amortization with respect to the Facilities
or the FF&E or Debt Service.


 


Operating
Permits. 
The term “Operating Permits” shall mean Operator Operating Permits and
Owner Operating Permits.


 


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Operating
Supplies. 
The term “Operating Supplies” shall mean gaming supplies, paper
supplies, cleaning materials, food and beverage, fuel, marketing materials,
maintenance supplies, linen, china, glassware, silverware, kitchen utensils,
uniforms and all other consumable supplies and materials used in the operation
of the Facilities.


 


Operator
Advances.  The term
“Operator Advances” shall have the meaning set forth in Section 2.03.02.


 


Operator
Operating Permits. 
The term “Operator Operating Permits” shall mean all licenses, permits,
approvals, consents and authorizations which the Operator are required to
obtain from any Governmental Authority to perform and carry out their
obligations under this Agreement, including any permits or licenses the
Operator are required by Law to obtain specifically related to the operation of
a casino gaming operation.


 


Operator.  The term “Operator” shall have the meaning
set forth in the preamble.


 


Owner.  The
term “Owner” shall have the meaning set forth in the preamble.


 


Owner
Operating Permits. 
The term “Owner Operating Permits” shall mean all licenses, permits,
approvals, consents and authorizations from Governmental Authorities that are
necessary to own, open and occupy the Facilities and operate the Business,
including any permits or licenses Owner is required by Law to obtain and have
in effect specifically related to the operation of casino gaming facilities
with respect thereto.


 


Owner’s
Financial Obligations. 
The term “Owner’s Financial Obligations” shall have the meaning set
forth in Section 4.12(a).


 


Person.  The term “Person” shall mean any individual,
partnership, corporation, association or other entity, including but not
limited to, any government or agency or subdivision thereof, and the heirs,
executors, administrators, legal representatives, successors and assigns of
such Person where the context so admits.


 


Pre-Opening
Expenses. 
The term “Pre-Opening Expenses” shall have the meaning set forth in Section 2.03.01.


 


Pre-Opening
Services. 
The term “Pre-Opening Services” shall have the meaning set forth in Section 2.02.


 


Pre-Opening
Services Fee. 
The term “Pre-Opening Services Fee” shall have the meaning set forth in Section 2.04.


 


Reimbursables.  The term “Reimbursables” shall mean all (i) reasonable
and documented out-of-pocket developmental, legal, licensure and other
out-of-pocket costs and expenses incurred by Operator under this Agreement, and
(ii) all reasonable and documented out-of-pocket tax preparation,
accounting, legal and administrative fees and expenses incurred by Operator in
connection with its direct or indirect ownership of Owner.


 


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Related
Contracts. 
The term “Related Contracts” shall mean any agreements, contractual
arrangements or Loan Documents between Owner and any Person that relate to the
Facilities or the Business.


 


Target
Date.  The
term “Target Date” shall mean the earlier to occur of (y) the first date on
which the casino to be developed at the Facilities shall be Operating (as such
term is defined in the Cash Collateral and Disbursement Agreement), and (z) the
Operating Deadline applicable to the casino (as such term is defined in the
Cash Collateral and Disbursement Agreement).


 


Term.  The term “Term” shall have the meaning set
forth in Section 1.01.


 


Transfer.  The term “Transfer” shall mean any sale,
transfer, or assignment of an interest in the Business, made directly or
indirectly.


 


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