Document:

Exhibit 10.10

 

RECORDING REQUESTED BY,
AND

WHEN RECORDED RETURN TO:

 

Paul, Hastings, Janofsky &
Walker LLP

600 Peachtree Street, Suite 2400

Atlanta, Georgia 30308

Attention:  Douglas A. Park, Esq.

 

 

SUBORDINATION AGREEMENT

 

 

NOTICE:  THIS SUBORDINATION AGREEMENT RESULTS IN YOUR
SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

 

This
Subordination Agreement (this “Subordination Agreement”), dated as of July 12,
2005, is executed by Diamond Jo, LLC
(formerly known as Peninsula Gaming
Company, LLC), a Delaware limited liability company (“Borrower”),
and U.S. Bank National Association, as trustee under the Junior Indenture (as
hereinafter defined) (“Junior Beneficiary”), in favor of Wells Fargo Foothill, Inc., as agent for the Lenders (as defined in the
hereinafter defined Senior Loan Agreement) (“Senior
Beneficiary”), with reference to the following facts:

 

A.            Borrower is the owner of the real
property described in Exhibit “A” attached hereto and incorporated
herein by this reference, and is the sublessee of the real property described
in Exhibit ”B” attached hereto and incorporated herein by this
reference (collectively, the “Property”).

 

B.            Junior Beneficiary is the present
owner and holder of that certain Mortgage, Leasehold Mortgage, Assignment of
Rents, Security Agreement and Fixture Filing Statement made as of April 16,
2004, and effective as of the April 16, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the “Junior Mortgage”),
executed by Borrower in favor of Junior Beneficiary, for the benefit of the
holders of the Junior Notes (as hereinafter defined), encumbering the Property
and recorded April 20, 2004,  as
Instrument No. 6362-2004 in the Official Records of Dubuque County,
Iowa.  The Junior Mortgage secures (i) the
due and punctual payment

 

 

of the principal of, and interest on, those certain $233,000,000
aggregate principal amount of 8 3/4% Senior Secured Notes due 2012 of even date
therewith issued by Borrower and The Old Evangeline Downs Capital Corp., a
Delaware corporation (“OED Capital”), and such other securities as may
be issued from time to time under that certain Indenture as of even date
therewith among Borrower, Junior Beneficiary, OED Capital and certain
Subsidiary Guarantors (as defined in the hereinafter defined Junior Indenture)
with respect to the Junior Notes (as amended, restated, supplemented or
otherwise modified from time to time, the “Junior Indenture”) (collectively,
the “Junior Notes”), and (ii) the payment of any fees, expenses and
all other amounts at any time and from time to time payable by Borrower with
respect to the Junior Notes or under the Junior Indenture or any of the
Security Documents (as defined in the Junior Indenture) (items (i) and (ii) above,
collectively, the “Junior Obligations”). 
The Junior Mortgage, together with all other Security Documents now or
hereafter executed by Borrower as security for the Junior Obligations (each as
amended, restated, supplemented or otherwise modified from time to time), are
collectively referred to herein as the “Junior Security Documents”.  The Junior Notes, the Junior Indenture, the
Junior Security Documents, and any other documents heretofore or hereafter
executed with or in favor of Junior Beneficiary with respect to the Secured
Obligations, are collectively referred to herein as the “Junior Note
Documents”.

 

C.            Borrower has executed, or is about
to execute, that certain Mortgage, Leasehold Mortgage, Assignment of Rents,
Security Agreement and Fixture Financing Statement dated June 16, 2004, in
favor of Senior Beneficiary, for the benefit of the Lender Group (as defined in
the hereinafter defined Senior Loan Agreement) (as amended by that certain
First Amendment to Iowa Shore Mortgage dated as of November 10, 2004,
between DJO and Senior Beneficiary, as further amended by that certain Second
Amendment to Iowa Shore Mortgage dated as of July 12, 2005, between DJO
and Senior Beneficiary, and as otherwise amended, restated, supplemented or
otherwise modified from time to time, the “Senior Mortgage”),
encumbering the Property and securing various obligations more particularly
described therein, including, without limitation, Borrower’s obligations to the
Lender Group under that certain Loan and Security Agreement dated as of June 16,
2004, among Senior Beneficiary, the Lenders, Borrower, Diamond Jo Worth, LLC, a
Delaware limited liability company (“DJW”) and The Old Evangeline Downs,
L.L.C., a Louisiana limited liability company (“OED”) (as amended by
that certain First Amendment to Loan and Security Agreement dated as of November 10,
2004, among Borrower, OED, Senior Beneficiary and the Lenders party thereto, as
further amended by that certain Second Amendment to Loan and Security Agreement
dated as of July 12, 2005, among Borrower, DJW, OED, Senior Beneficiary
and the Lenders party thereto, as supplemented by that certain Borrower
Supplement No. 1 dated as of May 13, 2005, by DJW, and as otherwise amended,
restated, supplemented or otherwise modified from time to time, the “Senior
Loan Agreement”), with respect to loans (collectively, the “Senior Loan”)
in the aggregate principal amount of $64,666,667.  The Senior Mortgage, together with all other
security documents now or hereafter executed by Borrower as security for the
Senior Loan and other Secured Obligations (as defined in the Senior Mortgage)
(each as amended, restated, supplemented or otherwise modified from time to
time), are collectively referred to herein as the “Senior Security Documents”.  The Senior Loan Agreement, the Senior
Security Documents, and any other documents included within the definition of “Loan
Documents” under the Senior Loan Agreement, are collectively referred to herein
as the “Senior Loan Documents.” 
Capitalized terms used and not otherwise defined in this Subordination
Agreement have the meanings set forth for them in the Senior Loan Agreement.

 

2

 

D.            Junior Beneficiary and Senior
Beneficiary have executed that certain Intercreditor Agreement dated April 16,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, the “Intercreditor Agreement”), concerning their respective rights
with respect to, among other things, the priority of their respective security
interests in and liens on the Property and other now owned and hereafter
acquired assets of Borrower as described in the Junior Note Documents and the
Senior Loan Documents.  Pursuant to the
terms and conditions of the Intercreditor Agreement, it is a condition
precedent to induce Agent and Lenders to continue to make the financial
accommodations under the Senior Loan Documents that the Senior Mortgage shall
be and remain a lien upon the Property and such other assets prior to the lien
of the Junior Mortgage.

 

In
consideration of the foregoing, and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Junior Beneficiary
and Borrower hereby agree as hereinafter provided:

 

1.             Pursuant to the terms and
conditions of the Intercreditor Agreement, the liens and charges in favor of
Senior Beneficiary under the Senior Mortgage and the other Senior Security
Documents, and any renewals and extensions, amendments and other modifications
thereof, whether relating to real property, fixtures, personal property or any
combination thereof, shall unconditionally be and remain at all times a lien or
charge on the Property (and all other property, rights and assets of Borrower
which are encumbered by both the Senior Security Documents and the Junior
Security Documents) prior and superior to the lien and charge of the Junior
Mortgage and the other Junior Security Documents.

 

2.             If there is a conflict between
the terms and conditions of this Subordination Agreement and the Intercreditor
Agreement, the terms and conditions of the Intercreditor Agreement shall govern
and control.

 

3.             This Subordination Agreement
shall bind, and shall inure to the benefit of, the successors and assigns of
the parties.  This document may be
executed in counterparts with the same force and effect as if the parties had
executed one instrument, and each such counterpart shall constitute an original
hereof.  This Subordination Agreement
shall be governed by the laws of the State of Iowa.

 

NOTICE:  THIS SUBORDINATION AGREEMENT CONTAINS A
PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO
OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER THAN
IMPROVEMENT OF THE PROPERTY.

 

3

 

	
   

  	
  “Junior Beneficiary”

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, as trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Lori-Anne Rosenberg

  	
   

  
	
   

  	
  Name:

  	
  Lori-Anne Rosenberg

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Borrower”

  
	
   

  	
   

  
	
   

  	
  DIAMOND JO, LLC
  (formerly known as Peninsula

  Gaming Company, LLC), a Delaware limited liability

  company

  
	
   

  	
  By:

  	
  /s/ M.Brent Stevens

  	
   

  
	
   

  	
  Name:

  	
  M.Brent Stevens

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
									

 

 

	
  STATE OF Minnesota

  	
   

  	
  )

  	
   

  
	
   

  	
  )ss:

  
	
  COUNTY OF Ramsey

  	
   

  	
  )

  	
   

  
						

 

On
this 9th  day of  May , A.D., 2005, before me, a Notary Public
in and for the State of  Minnesota , personally appeared  Lori-Anne
Rosenberg , to me personally known, who being by me duly sworn did say
that the person is (a) (the)  Vice President  of  U.S. Bank National Association, a national
banking association, executing the foregoing instrument, that the instrument
was signed on behalf of the said banking association by authority of said
banking association and the said  Lori-Anne Rosenberg acknowledged the
execution of said instrument to be the voluntary act and deed of said banking
association by it voluntarily executed.

 

	
   

  	
  /s/Nancy Savage

  	
   

  
	
   

  
	
   

  	
  Notary Public in the
  State of MN

  	
   

  
					

 

	
  STATE OF California

  	
   

  	
  )

  	
   

  
	
   

  	
  )ss:

  
	
  COUNTY OF Los Angeles

  	
   

  	
  )

  	
   

  
						

 

On
this 8th day of June, A.D., 2005, before me, a Notary Public in and for the
State of California, personally appeared M. Brent Stevens, to me personally
known, who being by me duly sworn did say that the person is (a) (the) Chief
Executive Officer of  Diamond Jo, LLC
(formerly known as Peninsula Gaming Company, LLC), a Delaware limited liability
company, executing the foregoing instrument, that the instrument was signed on
behalf of the said limited liability company by authority of the limited
liability company and the said M. Brent Stevens acknowledged the execution of
said instrument to be the voluntary act and deed of said limited liability
company by it voluntarily executed.

 

	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  Notary Public in the
  State of 

  	
   

  	
   

  
						

 

 

EXHIBIT “A”

(Description of Property)

 

 

PARCEL A

 

Lot
3 of Adams Company’s 2nd Addition in the City of Dubuque, Dubuque
County, Iowa, according to the recorded plat thereof.

 

PARCEL B

 

Lots
7 and 8 of Ice Harbor Development, in the City of Dubuque, Dubuque County,
Iowa, according to the recorded plat thereof. 
Together with:

 

(a)                                  A perpetual, non-exclusive fifteen
(15) foot wide maintenance easement over and across Lot 6 in Ice Harbor
Development for maintenance of Lots 7 and 8 in Ice Harbor Development.

 

(b)                                 A perpetual, non-exclusive easement
for ingress and egress to and from Lots 7 and 8 in Ice Harbor Development over
and across the “Ingress-Egress Easement” abutting the Southern terminus of Bell
Street.

 

(c)                                  A perpetual, non-exclusive easement
for ingress and egress to Lots 7 and 8 in Ice Harbor Development over and
across Lots 6 and 10 in Ice Harbor Development, all as shown on the final plat
of Ice Harbor Development, in the City of Dubuque, Iowa, filed as Instrument No. 6167-95
in the office of the Dubuque County Recorder.

 

PARCEL C

 

Lot
1 of Adams Company’s 1st Addition in the City of Dubuque, Dubuque
County, Iowa, according to the recorded plat thereof.

 

PARCEL D

 

Lot
1 in Adams Company’s 3rd Addition in the City of Dubuque, Dubuque County, Iowa,
according to the recorded plat thereof.

 

 

EXHIBIT “B”

 

(The Leases and the Real Property

Subject to Leasehold Interests)

 

Lots 5 and 6 of Ice Harbor Development in the City of
Dubuque, Iowa.Exhibit 10.11

 

THIS INSTRUMENT WAS PREPARED BY, AND WHEN RECORDED SHOULD BE RETURNED
TO:  Shannon C. Baxter, Esq., Paul,
Hastings, Janofsky & Walker LLP, 600 Peachtree Street, Suite 2400,
Atlanta, Georgia 30308 (404) 815-2150

 

 

	
  SPACE ABOVE THIS LINE

  	
   

  
	
  FOR RECORDER

  	
   

  

 

 

MORTGAGE,

ASSIGNMENT OF RENTS,

SECURITY AGREEMENT

AND

FIXTURE FINANCING STATEMENT

FROM

DIAMOND JO WORTH, LLC

TO

WELLS FARGO FOOTHILL, INC.,

AS AGENT

 

 

NOTICE:  This Mortgage secures credit in the maximum
principal amount of $72,166,667.  Loans
and advances up to this amount, together with interest, are senior to
indebtedness to other creditors under subordinated or subsequently recorded and
filed mortgages and liens.

 

This
Mortgage contains an after-acquired property clause.

 

 

This Mortgage (this
“Shore Mortgage”) is made as of May 13, 2005, by Diamond Jo Worth, LLC, a
Delaware limited liability company (the “Company”), in favor of Wells Fargo
Foothill, Inc., a California corporation, as agent (“Agent”; Agent,
together with its successors and assigns, is referred to herein as “Mortgagee”)
for the Lenders (as defined in the hereinafter defined Loan Agreement) under
that certain Loan and Security Agreement dated as of June 16, 2004 (as
amended, restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”) among the Company, Diamond Jo, LLC (formerly known as Peninsula
Gaming Company, LLC), a Delaware limited liability company (“DJL”), The Old
Evangeline Downs, L.L.C., a Louisiana limited liability company (“OED,”
together with DJL and the Company, collectively, “Borrowers,” and each, a “Borrower”),
Mortgagee and Lenders.

 

RECITALS

 

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

 

WHEREAS, pursuant to the
Loan Agreement, Lenders have agreed to loan Borrowers the maximum principal amount
of $72,166,667, subject to the terms and conditions in the Loan Agreement and
maturing on June 15, 2008.  The Loan
Agreement provides that to secure performance by Borrowers of their obligations
under the Loan Agreement, the Company will execute and deliver this Mortgage to
Mortgagee for the benefit of the Lender Group (as defined in the Loan
Agreement).  The Loan Agreement, this
Mortgage, the other Loan Documents (as defined in the Loan Agreement) and any
other document referred to in or made with reference to the Loan Documents are
hereby incorporated by reference, and are sometimes collectively referred to as
“Transaction Documents”.

 

GRANTING CLAUSES

 

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

 

(i)            the payment when due of indebtedness
evidenced by the Loan Agreement in the maximum principal sum of $72,166,667,
bearing interest as set forth in the Loan Agreement and maturing on June 15,
2008, such date being the “Maturity Date,” including, without limitation, all
accrued and unpaid interest thereon, and premiums and penalties, if any,
thereon, including late payment charges and Additional Interest (as defined in Section 5.2
hereof),

 

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

 

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

 

1

 

property herein mentioned or in obtaining possession of said lands and
premises and other property after any sale that may be made as hereinafter
provided,

 

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

 

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

 

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

 

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

 

(a)           the
Real Property and all tenements, hereditaments, appurtenances, estates and
rights in and to any of the Real Property and all component parts of the Real
Property;

 

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

 

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

 

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

 

(e)           all
of the Company’s right, title and interest, to all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever now or hereafter located upon any of the Real Property or the
Improvements, and all component parts of any building or other construction
located on any of the Real Property or appurtenances thereto, and used in
connection with the operation and occupancy of any of the Real Property or the
Improvements, and all building equipment, material and supplies of any nature

 

2

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

4

 

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

 

HABENDUM

 

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

 

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

 

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

 

The Company
FURTHER agrees as follows:

 

ARTICLE I

COVENANTS

 

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

 

Section
1.2             Further
Assurances.  If Mortgagee requests in
its Permitted Discretion, the Company shall sign and deliver and cause to be
recorded as Mortgagee shall direct any further mortgages, instruments of
further assurance, certificates and other documents as Mortgagee may consider
reasonably necessary or desirable in order to perform, perfect, continue, and
preserve the obligations of the Company under the Transaction Documents.  The Company further agrees to pay to
Mortgagee, upon demand, all costs and expenses incurred by Mortgagee in connection
with the preparation, execution, recording, filing and refiling of any such
documents, including attorneys’ fees that are reasonable and title opinion or
title insurance costs.

 

Section
1.3             Operation and
Maintenance; Compliance with Laws. 
The Company shall cause the Mortgaged Property to be maintained in good
working order and condition, ordinary wear and tear excepted, and the Company
shall make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto, as shall be reasonably necessary for the
proper conduct of the business of the Company. 
The Company shall comply or cause compliance with all laws, ordinances
and regulations of any governmental authority with reference to the Mortgaged
Property and the manner of using or operating the same, including any
Environmental Laws or Regulations and Accessibility Regulations, as hereafter
defined, and

 

5

 

with any restrictive covenants affecting the title to the Mortgaged Property,
and with the terms of all insurance policies relating to the Mortgaged
Property, except where the non-compliance with which, individually or in the
aggregate, would not result in and reasonably could not be expected to result
in a Material Adverse Change (as defined in the Loan Agreement).

 

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

 

Section
1.5             Intentionally
omitted.

 

Section
1.6             Insurance.

 

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

 

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

 

Section
1.7             Books and
Records; Financial Information.  The
Company shall (i) keep complete and accurate books and records with respect to
the Mortgaged Property; (ii) permit Mortgagee to inspect such books and records
during normal business hours and make

 

6

 

copies thereof at Mortgagee’s expense; and (iii) provide Mortgagee
such information as is required by Section 6.3 of the Loan Agreement.

 

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

 

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

 

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

 

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

 

Section
1.9             Environmental -
ADA.  The Company agrees:

 

(a)           Except
for substances normally used for maintenance or operation of the Mortgaged
Property which are used, stored and disposed of in accordance with all
applicable Environmental Regulations, the Company shall not, nor shall it
permit others to, place, store, locate, generate, produce, create, process,
treat, handle, transport, incorporate, discharge, emit, spill, release, deposit
or dispose of any Hazardous Substance in, upon, under, over or from the
Mortgaged Property.  The Company shall
cause all Hazardous Substances found on or under the Mortgaged Property, which
are not permitted under the foregoing sentence, and which exist in quantities
which violate applicable Environmental Laws or Regulations, to be properly
removed therefrom and properly disposed of at the Company’s cost and
expense.  The Company shall not install
or permit to be installed any underground storage tank on or under the
Mortgaged Property.  If Mortgagee shall
reasonably request, the Company shall at its cost obtain and deliver to Mortgagee
an environmental review, audit, assessment and/or report relating to the
Mortgaged Property, or shall have any previously delivered

 

7

 

materials updated and/or amplified, in each case by an engineer or
scientist acceptable to Mortgagee; provided, however, that so
long as no Default or Event of Default has occurred and is continuing, the
Company shall not be required to obtain and deliver to Mortgagee such
environmental review, audit, assessment and/or report relating to the Mortgaged
Property or have any previously delivered materials updated and/or amplified
more frequently than once per calendar year.

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

regulations promulgated by a regulatory body pursuant to any such
statute, code, law or ordinance.

 

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

 

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

 

Section
1.10           [Intentionally
Omitted].

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

The Company makes
the following representations and warranties:

 

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

 

Section
2.2             Ownership,
Liens, Compliance with Laws.  The
Company owns the Mortgaged Property free from all Liens and encumbrances except
for the Permitted Liens and except for defects in title that do not interfere
in any material respect with its ability to conduct its business or to utilize
the Mortgaged Property for its intended purpose.  All applicable zoning and environmental, land
use, subdivision, building, fire, safety or health laws, ordinances and
regulations affecting the Mortgaged Property permit the current use and
occupancy thereof, and the Company has obtained all necessary consents, permits
and licenses required for such use.  The
Company will comply with and satisfy all applicable formalities and provisions
of the laws and regulations of the United States of America and the laws of the
State of Iowa in order to perfect, establish and maintain this Mortgage, and
any supplement or amendment hereto.

 

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

 

Section
2.4             Binding
Agreement.  The Transaction Documents
are the valid and legally binding obligations of the Company enforceable
against the Company in accordance with

 

10

 

their respective terms, except to the extent limited by equitable
principles or bankruptcy, insolvency or similar laws affecting the rights of
creditors generally.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)           There
has not in the past been, and no present threat now exists of, a spill,
discharge, emission or release of a Hazardous Substance in, upon, under,

 

11

 

over or from the Mortgaged Property or from any other property which
would have an impact on the Mortgaged Property.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
2.13           [Intentionally
Omitted].

 

ARTICLE III

CASUALTY–CONDEMNATION

 

Section
3.1             Damage or
Destruction.  During the period the
indebtedness remains outstanding, in the event that the Real Property, the
Improvements, or the Fixtures shall be damaged or destroyed in whole or in
part, by fire or other casualty covered by insurance, the Company shall give
prompt written notice thereof to Mortgagee. 
At such time as such damage,

 

12

 

destruction or casualty shall occur, the Insurance Proceeds shall be
payable to Mortgagee and applied in accordance with Sections 2.4(b)(i) and
6.8(b) of the Loan Agreement, as applicable.  Upon the occurrence of an Event of Default
which has not been waived in writing by Mortgagee, Mortgagee shall have the
right to apply such Insurance Proceeds in accordance with Section 2.4(b)(i) of
the Loan Agreement.

 

Section
3.2             Condemnation.

 

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

 

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

 

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

 

ARTICLE IV

LEASES AND RENTS

 

Section
4.1             Space Leases,
Rents and Cash Collateral.

 

(a)           As
additional collateral security for payment of the Secured Obligations, and as
cumulative of any and all rights and remedies herein provided, the Company
hereby bargains, sells, transfers, assigns and sets over to Mortgagee, for the
benefit of the Lender Group, any and all Space Leases and Rents and any and all
cash collateral to be derived from the Mortgaged Property, or the use and occupation
thereof, or under any contract or bond relating to the construction or
reconstruction of the Mortgaged Property, including all Rents, royalties,
revenues rights, deposits (including security deposits) and benefits accruing
to the Company under all Space Leases, and the right to receive the same and
apply them against the Secured Obligations or against the Company’s other
obligations hereunder or Borrowers’ obligations under the Transaction
Documents, together

 

13

 

with all Space Leases, contracts, bonds, leases and other documents
evidencing the same now or hereafter in effect and all right of the Company
thereunder.  Nothing contained in the
preceding sentence shall be construed to bind Mortgagee to the performance of
any of the provisions of any such Space Lease, contract, bond, lease or other
documents or otherwise impose any obligation upon Mortgagee, except that
Mortgagee shall be accountable for any money actually received pursuant to such
assignment to the extent of its disposition thereof in a manner inconsistent
with this Mortgage or the Transaction Documents.  The Company shall deliver to Mortgagee upon
Mortgagee’s request an executed counterpart of each such Space Lease, contract,
bond or other documents.  The assignment
of said Space Leases, Rents, income profits, proceeds and cash collateral, and
any of the aforesaid rights with respect thereto and to the contracts, bonds,
leases and other documents evidencing the same, is intended to be and is an
absolute present assignment from the Company to Mortgagee and not merely the
passing of a security interest.

 

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

 

(c)           In
the event of any such Event of Default which has not been so waived, the right
and license set forth in subparagraph (b) of this Section shall be
automatically revoked, and, thereafter, Mortgagee shall have the right and
authority to exercise any of the rights or remedies referred to or set forth
herein.  In addition, upon such an Event
of Default, the Company shall promptly pay to Mortgagee (a) all rent
prepayments and security or other deposits paid to the Company pursuant to any
Space Leases and (ii) all charges for services or facilities or for
escalations which were paid pursuant to any Space Leases to the extent
allocable to any period from and after such Event of Default and any such sums
received by Mortgagee shall be applied by Mortgagee in accordance with Section 2.4(b)(i) of
the Loan Agreement.

 

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

 

(e)           The
Company will upon Mortgagee’s request execute, acknowledge and deliver to
Mortgagee, in form approved by Mortgagee, one or more general or specific
assignments of the lessor’s interest under any Space

 

14

 

Lease (which are consistent with the foregoing provisions).  The Company will, on demand, pay to Mortgagee,
or reimburse Mortgagee for the payment of, all reasonable costs or expenses
incurred in connection with the preparation or recording of any such
assignment.

 

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

 

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

 

ARTICLE V

DEFAULTS AND REMEDIES

 

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

 

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

 

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

 

Section
5.2             Remedies.  Upon the occurrence of an Event of Default,
all Secured Obligations, at the option of Mortgagee, shall be accelerated and
become immediately due and payable upon notice to the Company.  The outstanding principal amount and the
interest accrued thereon of the Secured Obligations shall be due and payable
without presentment, demand or further notice of any kind, all of which are
hereby expressly waived by the Company.

 

15

 

The Company will pay to Mortgagee the entire Secured Obligations or
portions thereof, as applicable, and to the extent permitted by law, the
premiums and penalties, if any, provided in this Mortgage and each other
Transaction Document, as applicable, and such payment shall be applied in
accordance with Section 2.4(b)(i) of the Loan Agreement.

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

Section
5.3             Expenses of
Exercising Rights, Powers and Remedies. 
The reasonable expense (including any receiver’s fees, attorneys’ fees,
appraisers’ fees, environmental engineers’ and/or consultants’ fees, costs incurred
for documentary and expert evidence, stenographers’ charges, publication costs,
costs (which may be estimated as to items to be expended after entry of the
decree of foreclosure) of procuring all abstracts of title, continuations of
abstracts of title, title searches and examinations, title insurance policies
and commitments and extensions therefor, Torrens duplicate certificates of
title, Uniform Commercial Code and chattel lien searches, and similar data and
assurances with respect to title as Mortgagee may deem reasonably necessary
either to prosecute any foreclosure action or to

 

17

 

evidence to bidders at any sale which may be had pursuant to any
foreclosure decree the true condition of the title to or the value of the
Mortgaged Property, and Mortgagee’s compensation) incurred by Mortgagee after
the occurrence of any Event of Default under this Mortgage and/or in pursuing
the rights, powers and remedies contained in this Mortgage shall be immediately
due and payable by the Company, with interest thereon at the Additional
Interest Rate, and shall be added to the indebtedness secured by this Mortgage.

 

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

 

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

 

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

 

Section
5.7             Mortgagee’s
Right to Cure Defaults.  If the
Company shall fail to comply with any of the terms hereof with respect to the
procuring of insurance, the payment of taxes, assessments and other charges,
the keeping of the Mortgaged Property in repair, the payment and satisfaction
of Liens and encumbrances against the Mortgaged Property, the payment of any
other sum or deposit required under this Mortgage, or any other term herein
contained, Mortgagee may make advances or take other actions to perform the
same without releasing the Company from any Secured Obligations and may enter
upon the Mortgaged Property for any such purpose and take all such action
thereon as Mortgagee or any of its duly appointed agents may deem necessary or
appropriate therefor.  The Company agrees
to repay upon demand all sums so advanced and all sums expended by Mortgagee in
connection with such performance, including, without limitation, reasonable
attorneys’ fees, with Additional

 

18

 

Interest at the Additional Interest Rate from the dates such advances
are made, and all sums so advanced and/or expenses incurred, with Additional
Interest at the Additional Interest Rate, shall be secured hereby as Secured
Obligations, but no such advance and/or incurring of expense by Mortgagee,
shall be deemed to relieve the Company from any default hereunder, or to
release the Company from any Secured Obligations.  Mortgagee shall not be bound to inquire into
the validity of any Imposition or Lien which the Company fails to pay as and
when required by this Mortgage and which the Company does not contest in strict
accordance with the terms of this Mortgage and the other Transaction Documents.

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

ARTICLE VI

MISCELLANEOUS

 

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

 

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

 

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

 

If to
the Company:

 

Diamond
Jo Worth, LLC

c/o Peninsula Gaming Partners, LLC

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

Dubuque, Iowa 52004

Attn:  Natalie
Schramm

Fax No. 
(563) 690-2190

 

20

 

If to
Mortgagee:

 

Wells
Fargo Foothill, Inc.

2450 Colorado Avenue, Suite 3000 West

Los Angeles, California 90404

Attention: Business Finance Division Manager

 

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

 

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

 

Section
6.5             Applicable Law.  The Company and Mortgagee agree that the
rights and obligations under this Mortgage regarding the creation, perfection
and enforcement of the liens and security interests herein granted shall be
governed and construed and interpreted in accordance with the internal laws of
the State of Iowa.  All other provisions
of this Mortgage shall be governed by the laws of the State of New York,
without regard to principles of conflict of laws.  In the event that any provisions or clause of
this Mortgage conflict with applicable laws, such conflict shall not affect
other provisions of this Mortgage which can be given effect without the
conflicting provision, and to this end the provisions of this Mortgage are
declared to be severable.

 

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

 

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

 

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

 

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

 

Section
6.10           Security Interest.

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

Section
6.14           Conflicts with
Loan Agreement.  In the event of a
conflict between the provisions of the security agreement contained in the Loan
Agreement and the provisions of

 

22

 

this Mortgage, this Mortgage shall govern in all matters relating to
the validity and enforceability of the Lien created hereby on the Real
Property, the Improvements, the Fixtures and the Rents and (except as expressly
set forth to the contrary herein or in the security agreement contained in the
Loan Agreement) the security agreement in the Loan Agreement shall govern in
all other respects.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
6.16           Interaction with
Loan Agreement.  All terms,
covenants, conditions, provisions and requirements of the Loan Agreement are
incorporated by reference in this Mortgage. 
Notwithstanding any other provision of this Mortgage, the terms and
provisions of this Mortgage shall be subject and subordinate to the terms of
the Loan Agreement.  To the extent that
the Loan Agreement provides the Company with a particular cure or notice
period, or establishes any limitations or conditions on Mortgagee’s actions
with regard to a particular set of facts, the Company shall be entitled to the
same cure periods and notice periods, and Mortgagee

 

23

 

shall be subject to the same limitations and conditions, under this
Mortgage, as under the Loan Agreement, in place of the cure periods, notice
periods, limitations and conditions provided for under this Mortgage; provided,
however, that such cure periods, notice periods, limitations and
conditions shall not be cumulative as between the Loan Agreement and this
Mortgage.  In the event of any conflict
or inconsistency between the provisions of this Mortgage and those of the Loan
Agreement, including, without limitation, any conflicts or inconsistencies in
any definitions herein or therein, the provisions or definitions of the Loan
Agreement shall govern.

 

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

 

Section
6.18           Mortgagee as
Agent; Successor Agents.

 

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

 

(b)           Mortgagee
shall at all times be the same Person that is Agent under the Agency
Documents.  Written notice of resignation
by Agent pursuant to the Agency Documents shall also constitute notice of
resignation as Agent under this Mortgage. 
Removal of Agent pursuant to any provision of the Agency Documents shall
also constitute removal as Agent under this Mortgage.  Appointment of a successor Agent pursuant to
the Agency Documents shall also constitute appointment of a successor Agent
under this Mortgage.  Upon the acceptance
of any appointment as Agent by a successor Agent under the Agency Documents,
that successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent

 

24

 

as Mortgagee under this Mortgage, and the retiring or removed Agent
shall promptly (i) assign and transfer to such successor Agent all of its
right, title and interest in and to this Mortgage and the Mortgaged Property,
and (ii) execute and deliver to such successor Agent such assignments and
amendments and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Agent of the liens and
security interests created hereunder, whereupon such retiring or removed Agent
shall be discharged from its duties and obligations under this Mortgage.  After any retiring or removed Agent’s
resignation or removal hereunder as Agent, the provisions of this Mortgage and
the Agency Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Mortgage while it was Mortgagee hereunder.

 

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

 

ARTICLE VII

LOCAL LAW PROVISIONS

 

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

 

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

 

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

 

25

 

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

 

IMPORTANT: 
READ BEFORE SIGNING.  THE TERMS OF
THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE.  NO OTHER TERMS OR ORAL
PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY
ENFORCED.  YOU MAY CHANGE THE TERMS
OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.  THIS NOTICE APPLIES TO ALL AGREEMENTS ENTERED
INTO TO WHICH THE COMPANY AND MORTGAGEE ARE PARTIES.

 

	
   

  	
  DIAMOND JO
  WORTH, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie A.
  Schramm

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Natalie A.
  Schramm

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
  /s/Erica M. Hunt

  	
   

  	
   

  
	
   

  	
   

  
	
  (No Seal)

  	
   

  
					

 

S-1

 

 

	
  STATE OF Iowa

  	
  )

  	
   

  
	
   

  	
  )ss:

  	
   

  
	
  COUNTY OF Scott

  	
  )

  	
   

  

 

On this 14th day
of May, A.D., 2005, before me, a Notary Public in and for the State of Iowa,
personally appeared Natalie Schramm, to me personally known, who being by me
duly sworn did say that the person is (a) (the) Chief Financial Officer of
Diamond Jo Worth, LLC, a Delaware limited liability company, executing the
foregoing instrument, that the instrument was signed on behalf of the said
limited liability company by authority of the limited liability company and the
said Natalie Schramm acknowledged the execution of said instrument to be the
voluntary act and deed of said limited liability company by it voluntarily executed.

 

	
   

  	
  /s/Curt Beason

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public in the State of Iowa

  

 

S-2

 

EXHIBIT A

 

Legal Description of Fee Simple Interests 

 

Lots 1, 2, 3, 4, 5
and 6 in Block 1 and lot 5 in Block 2, Top of Iowa Addition, Worth County,
Iowa, according to the recorded plat thereof.

 

A-1

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