Document:

Exhibit 10.1

 

	
  

  	
  Document
  G701TM – 2001

  

 

Change Order

 

	
  PROJECT
  (Name and address):

  	
   

  	
  CHANGE
  ORDER NUMBER: Two (2) REVISED

  	
   

  	
  OWNER: o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Diamond Jo
  Worth, L.L.C.

  	
   

  	
  DATE:
  August 8, 2005

  	
   

  	
  ARCHITECT: o

  
	
  Excursion
  Gambling Boat

  	
   

  	
   

  	
   

  	
   

  
	
  Worth County,
  IA

  	
   

  	
   

  	
   

  	
  CONTRACTOR: o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TO
  CONTRACTOR  (Name and address):

  	
   

  	
  ARCHITECT’S
  PROJECT NUMBER:

  	
   

  	
  FIELD: o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Henkel
  Construction Company

  	
   

  	
  CONTRACT
  DATE: June 6, 2005

  	
   

  	
  OTHER: o

  
	
  P.O. Box 920

  	
   

  	
  CONTRACT
  FOR: General Construction

  	
   

  	
   

  
	
  Mason City,
  IA 50402

  	
   

  	
   

  	
   

  	
   

  

 

THE
CONTRACT IS CHANGED AS FOLLOWS:

(Include,
where applicable, any undisputed amount attributable to previously executed Construction
Change Directives)

Incorporate documents, clarifications to contract, allowances,
assumptions, Guaranteed Maximum Price (GMP), and substantial completion date
per Attachment “A” - Change Order Number Two (2) - Changes to Contract and
Clarifications to Guaranteed Maximum Price (GMP) dated August 8, 2005, and
Attachment “B” - Modifications to AIA A-111 Standard Form of Agreement Between
Diamond Jo Worth, L.L.C. as Owner and Henkel Construction Company as
Contractor, amending that certain AIA- A111 Standard Form of Agreement Between
Diamond Jo Worth, L.L.C. (Owner) and Henkel Construction Company (Contractor)
dated as of June 6, 2005.

 

	
  The original Contract Sum was

  	
   

  	
  $

  	
  925,000.00

  	
   

  
	
  The net change by previously authorized
  Change Orders

  	
   

  	
  $

  	
  3,776.848.00

  	
   

  
	
  The Contract Sum prior to this Change Order
  was

  	
   

  	
  $

  	
  4,701,848.00

  	
   

  
	
  The Contract Sum will be increased by this
  Change Order in the amount of

  	
   

  	
  $

  	
  16,850,652.00

  	
   

  
	
  The new Contract Sum including this Change
  Order will be

  	
   

  	
  $

  	
  21,552,500.00

  	
   

  
							

 

The Contract Time will be
increased by twenty-five (25) days.

The date of Substantial
Completion as of the date of this Change Order therefore is March 10, 2006

 

NOTE:
This Change Order does not include changes in the Contract Sum, Contract Time
or Guaranteed Maximum Price which have been authorized by Construction Change
Directive until the cost and time have been agreed upon by both the Owner and
Contractor, in which case a Change Order is executed to supersede the
Construction Change Directive.

 

NOT VALID
UNTIL SIGNED BY THE ARCHITECT, CONTRACTOR AND OWNER.

 

	
  KGA
  Architecture

  	
   

  	
  Henkel
  Construction Company

  	
   

  	
  Diamond Jo
  Worth, L.L.C

  
	
  ARCHITECT
  (Firm name)

  	
   

  	
  CONTRACTOR
  (Firm name)

  	
   

  	
  OWNER
  (Firm name)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4495 Polaris
  Avenue

  	
   

  	
  P.O. Box 920

  	
   

  	
  7137 Mision
  Hills Drive

  
	
  Las Vegas,
  NV 89103

  	
   

  	
  Mason City,
  IA 50402

  	
   

  	
  Las Vegas,
  NV 89113

  
	
  ADDRESS

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ George
  F. Garlock

  	
   

  	
  /s/ Thomas
  R. Schaefer

  	
   

  	
  /s/ Michael
  Luzich

  
	
  BY
  (Signature)

  	
   

  	
  BY
  (Signature)

  	
   

  	
  BY
  (Signature)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  George F. Garlock

  	
   

  	
  Thomas R.
  Schaefer, President

  	
   

  	
  Michael Luzich,
  President

  
	
  (Typed
  name)

  	
   

  	
  (Typed
  name)

  	
   

  	
  (Typed
  name)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
       8.19.05

  	
   

  	
       8-19-05

  	
   

  	
       August
  19, 2005

  
	
  DATE

  	
   

  	
  DATE

  	
   

  	
  DATE

  

 

 

AIA
Document G701TM – 2001. Copyright © 1978
and 2003 by The American Institute of Architects.  All rights reserved.  WARNING: This AIA®
Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document,
or any portion of it, may result in severe civil and criminal penalties and
will be prosecuted to the maximum extent possible under the law.  This document was produced by AIA software at
18:10:42 on 08/19/2005 under Order No. 1000158854_1 which expires on 1/31/2006,
and is not for resale.

 

	
  User Notes:

  	
   

  	
  (3688451336)

  

 

 

ATTACHMENT
“B”

Change
Order Number Two (2)

Modifications
to AIA A111 Standard form of Agreement Between Diamond Jo Worth, LLC,

as Owner and Henkel Construction Company, as Contractor Dated as of
June 6, 2005

 

Section 5.1.2
of the Contract is amended and restated in its entirety by adding the following
after the pre-printed form: The Contractor’s fee is as follows: Contractor’s
fee of Seven-hundred-thousand-and no/100 dollars ($700,000.00) is included as
part of the Guaranteed Maximum Price (GMP). Fee for additive changes to the
Contract shall be 3.5%. Fee shall not be reduced for deductive change orders.
Owner may add the construction of a 100 room hotel by Change Order for the
separate flat fee of Two-Hundred-Fifty-Thousand and No/100 Dollars
($250,000.00) if hotel construction is added by Change Order prior to
January 1, 2006.

 

Section 5.2.1.1
of the Contract, as originally stated, is amended and restated in its entirety
by substituting the following: In the event that the sum of the Contractor’s
Cost of the Work and the Contractor’s Fee are less than the Guaranteed Maximum
Cost (GMP), one hundred per cent (100%) of all savings shall be retained by the
Contractor.

 

Delete Articles 6 through 13.

 

Replace
with the following:

 

ARTICLE 6   PAYMENTS

 

6.1           PROGRESS PAYMENTS

 

6.1.1        Based upon Applications for Payment submitted
to the Owner by the Contractor and Certificates for Payment issued by the
Owner, the Owner shall make progress payments on account of the Contract Sum to
the Contractor as provided below and elsewhere in the Contract Documents.

 

6.1.2        The period covered by each Application for
Payment shall be one calendar month ending on the last day of the month.

 

6.1.3        Provided that an Application for Payment is
received by the Owner not later than the 10th day of a month, the Owner shall
make payment to the Contractor not later than the 30th day of the
same month. If an Application for Payment is received by the Owner after the
application date fixed above, payment shall be made by the Owner not later than
twenty (20) days after approval by the Owner’s Project Representative or
Project Representative’s Designee.

 

6.1.4        Each Application for Payment shall be based
on the most recent schedule of values submitted by the Contractor in
accordance with the Contract Documents. The schedule of values shall
allocate the entire Contract Sum among the various portions of the Work. The
schedule of values shall be prepared in such form and supported by such
data to substantiate its accuracy as the Architect may require. This schedule,
unless objected to by the Architect, shall be used as a basis for reviewing the
Contractor’s Applications for Payment.

 

 

6.1.5        Applications for Payment shall indicate the
percentage of completion of each portion of the Work as of the end of the
period covered by the Application for Payment.

 

6.1.6        Subject to other provisions of the Contract
Documents, the amount of each progress payment shall be computed as follows:

 

.1             Take that portion of the Contract Sum (net of
the Contractor’s fee) properly allocable to completed Work as determined by
multiplying the percentage completion of each portion of the Work by the share
of the Contract Sum allocated to that portion of the Work in the
schedule of values, Pending final determination of cost to the Owner of
changes in the Work, amounts not in dispute shall be included as provided in
Subparagraph 7.3.8 of AIA Document A201-1997;

 

.2             Add that portion of the Contract Sum (net of
the Contractor’s fee) properly allocable to materials and equipment delivered
and suitably stored at the site for subsequent incorporation in the completed
construction or, if approved in advance by the Owner, suitably stored off the
site at a location agreed upon in writing.

 

.3             Add the Contractor’s fee, less retainage.
Retainage shall be 10% until the Contract Agreement is 50% complete and has
been performed in accordance with the terms thereof after which no further
retainage shall be withheld and none shall be released until Substantial
Completion, except by mutual agreement between Owner and Contractor. The
Contractor’s Fee shall be computed upon the Cost of the Work described in the
two preceding Clauses at the rate stated in section 5.1.2 or, if the
Contractor’s Fee is stated in that Subparagraph, shall be an amount that bears
the same ratio to that fee as the Cost of the Work in the two preceding Clauses
bears to the schedule of values;

 

.4             Subtract the aggregate of previous payments
made by the Owner; and

 

.5             Subtract amounts, if any, for which the
Architect has withheld or nullified a Certificate for Payment as provided in Paragraph 9.5 of AIA Document
A201-1997.

 

6.1.7        The progress payment amount determined in
accordance with Subparagraph 6.1.6 shall be further modified under the
following circumstances:

 

.1             Add, upon Substantial Completion of the Work,
a sum sufficient to increase the total payments to the full amount of the
Contact Sum, less such amounts as the Architect shall determine for incomplete
Work, retainage applicable to such work and unsettled claims; and (Subparagraph 9.8.5 of aia Document A201-1997 requires release of
applicable retainage upon Substantial Completion of Work with consent of
surety, if any.)

 

.2             Add, if final completion of the Work is
thereafter materially delayed through no fault of the Contractor, any
additional amounts payable in accordance with Subparagraph 9.10.3 of AIA
Document A201-1997.

 

6.1.8        Except with the Owner’s prior approval,
payments to Subcontractors shall be subject to retainage. Retainage shall be
ten per cent (10%) until the Work under the subcontract

 

 

agreement is fifty per cent (50%) complete and has been performed in
accordance with the terms thereof after which no further retainage will be held
and none shall be released until Substantial Completion, except by mutual
agreement between Owner and Contractor.

 

6.1.9        Except with the Owner’s
prior approval, the Contractor shall not make advance payments to suppliers for
materials or equipment which have not been delivered and stored at the site.

 

6.2           FINAL PAYMENT

 

6.2.1        Final payment,
constituting the entire unpaid balance of the Contract Sum, shall be made by
the Owner to the Contractor when:

 

.1             the
Contractor has fully performed the Contract except for the Contractor’s
responsibility to correct Work as provided in Subparagraph 12.2.2 of AIA
Document A201-1997, and to satisfy other requirements, if any, which extend
beyond final payment; and

 

.2             a
final Certificate for Payment has been issued by the Architect.

 

6.2.2        The Owner’s final payment
to the Contractor shall be made no later than 30 days after the issuance of the
Architect’s final Certificate for Payment.

 

ARTICLE 7  TERMINATION OR
SUSPENSION

 

7.1           The Contract may be
terminated by the Owner or the Contractor as provided in Article 14 of AIA
Document A201-1997.

 

7.2           The Work may be
suspended by the Owner as provided in Article 14 of AIA Document
A201-1997.

 

ARTICLE 7          INTENTIONALLY
OMITTED

 

ARTICLE 8          INTENTIONALLY
OMITTED

 

ARTICLE 9          INTENTIONALLY
OMITTED

 

ARTICLE 10        INTENTIONALLY
OMITTED

 

ARTICLE 11        INTENTIONALLY
OMITTED

 

ARTICLE 12        INTENTIONALLY
OMITTED

 

ARTICLE 13        INTENTIONALLY
OMITTED

 

 

ATTACHMENT
“A”

Change
Order Number Two (2)

(Changes
to Contract and Clarification to Guaranteed Maximum Price (GMP))

dated August 8, 2005, amending that
certain

AIA-
A111 Standard form of Agreement Between Diamond Jo Worth, LLC (Owner) and

Henkel Construction
Company (Contractor)

dated as of June 6, 2005 (the “Contract”)

 

The Contract is hereby amended as follows:

 

A.       Section 4.3.1 of the Contract is amended by deleting the
first sentence following the pre-printed form and replacing it with the
following:

 

The project Substantial Completion date shall
be March 10, 2006.

 

The following items will not be completed
prior to Substantial Completion and the project shall not be subject to
liquidated damages as a result:

 

•         Landscaping.

•         Faux
painting of the building exterior.

•         Final and
faux painting of the water tower.

•         Wastewater
Treatment system. Contractor will commence with construction of this facility
as soon as practically possible which will be dependant upon Iowa Department of
Natural Resources approval of the plans and issuance of the waste water permit.
Until the new wastewater treatment facility is operational, the Owner will
operate with the existing lagoon system.

•         Offsite work
at existing lagoon area, except as set forth in item number four (4) of
inclusions under section 5.2.1.

•         Water tower
painting. Water service may have to be interrupted to paint the interior of the
water tower after temperatures remain consistently above forty degrees
Fahrenheit if the interior painting cannot be completed through the winter
months.

 

It is agreed that construction on such
elements will commence as soon as practically possible and shall be completed
as soon as reasonably possible after Substantial Completion.

 

B.       Section 5.2.1 of the Contract is amended by adding the
following:

 

Guaranteed Maximum Price (GMP) shall be
Twenty-one-million-five-hundred-fifty-two-thousand-five-hundred and no/100
dollars ($21,552,500.00). One-hundred per cent (100%) of any and all savings
achieved shall be retained by Contractor.

 

Monthly progress payment applications shall
include a monthly conditional partial lien release supplied from and on behalf
of Contractor only and no other partial lien releases will be required from or
for any subcontractor, supplier, fabricator, or vendor working for or supplying
to Contractor.

 

Contractor’s conditional partial lien release
will always be provided for an amount up to and including the previous month’s
billing and only in the event that Contractor has been paid for same.

 

 

Progress payment application documentation shall be limited to copies
of monthly progress payment applications for subcontractors with individual
contract amounts in excess of $150,000. No back-up or documentation will be
supplied to substantiate costs for work self performed by Contractor, however,
each payment application shall include an invoice from Contractor in its
standard form stating the amount requested by Contractor in such payment
application.

 

The following items shall be included in the GMP (subject to noted
exceptions):

 

1.        General
liability insurance is included with an underlying coverage amount of $2,000,000.00
per project and aggregate excess/umbrella liability per project of
$8,000,000.00.

 

2.        Performance
and Payment Bonds are included equal to the contract amount. Bonds shall be
delivered after proof of financing reasonably acceptable to Contractor, and
Contractor’s surety has been received and approved by surety.

 

3.        GPS
surveying is included as part of the earthwork. Earthwork scope of work shall
be established with points and grades established by Owner. Survey and/or
layout service is excluded. This service will be completed by Yaggy Colby
Associates in a contract direct between the Owner and Yaggy Colby Associates.
Contractor included GPS surveying as part of Contractor’s earthwork scope of
work and is utilizing points/grades established by the Yaggy Colby survey team.

 

4.        Trucking
of excavation spoils from the casino project and stockpiling them at the lagoon
site south of Highway 105 is included. Any other work performed south of
Highway 105 shall be added to the contract by change order.

 

5.        Over
excavation and backfill with same soil to a maximum depth of 18” under all
parking lot paving is included.

 

6.        Type
1 cement is included in lieu of Type 5 and Type C cement is included in lieu of
Type F fly ash for the ready-mixed concrete.

 

7.        Type
1.5B, 20-gauge metal deck from Vulcraft is included in lieu of specified deck.

 

8.        Roof
system shall be a 60-mil; fully-adhered EPDM roof system and roof membrane
shall be installed to the top of the roof parapets on plywood backing instead
of a metal panel system.

 

9.        Corridor
walls shall be installed to just above ceiling height and a framed drywall
ceiling shall be installed to provide the necessary sound barrier and/or fire
rating.

 

10.      Sound
insulation shall be included at interior wall partitions surrounding restrooms,
surrounding rooms 136 and 139, and in partition walls to just above ceilings
where those walls establish the outside perimeter of the IRGC and DCI
Suite areas only.

 

11.      We
have included standard-colored block and mortar at all split-face and regular-face
cement masonry locations. A pigmented sealer or paint will be used to provide
any color.

 

12.      The
following items only are included for signage:

 

•         Life safety
signage.

 

 

•         Monument
signs (2 each) (See attached Exhibit 1 indicating elevation and
location of such Monument signs).

•         Exterior
directional signs (10 each). Signs will be backlit.

•         Painted
billboards at building (7 each).

•         Chasing
lights at building, which chasing lights shall be 1,290 lineal feet.

 

13.      Battery-powered
automatic valves are included at all water closets, urinals and
lavatories/faucets.

 

14.      Wall-mounted
Schedule-80 PVC piping is included with PVC straps (no ball valves) for the
water feature piping shown on Sheets W1.1 and W2.0.

 

15.      The
manufacturer for the electrical switchgear shall be Siemens.

 

16.      Innovative
Technologies shall be the vendor for the transient voltage surge suppression
(TVSS) system.

 

17.      Copper
wiring shall be used with appropriate terminations at all panel feeders.
Aluminum wiring shall not be used.

 

18.      Rough-in
for Telephone/Data, Audio/Visual and Security/Surveillance shall be based on
designs from Wiring by Design, Communications Engineering and CI3,
respectively.

 

•         Audio/Visual
services scope of work includes conduit and cable. Terminations and equipment
are excluded as part of our work associated with this trade.

•         Telephone/Data
services scope of work includes conduit, cable, outlet jacks, outlet jack
terminations, patch panels and patch panel terminations. All other equipment is
excluded.

•         Surveillance/Security
services scope of work includes conduit only and the installation of the cable
as part of our rough-in work associated with this trade. Terminations,
equipment, and cable are excluded.

 

19.      Turning
lanes and traffic signalization- Contractor includes four (4) traffic
signals on poles to be located at the intersection of Wheelerwood Road and
Highway 105. All other road work on Wheelerwood Road and Highway 105 including
road widening, granular shouldering, raised islands, pavement markings, and
relocation of any lights is excluded.

 

20.      A
CMU retaining wall at the south side of the Loading Dock is included to a
distance of 57 feet from Column Line C4. An 8” wide x 8’-0” high split-face CMU
wall on the south side of the Loading Dock is included to a distance of 60
lineal feet along grid line “CC”. An 8” wide x 6’-0” high split-face CMU wall
at the Can Wash area is included to a distance of 28 lineal feet. The 8”
masonry retaining wall at the north side of the Loading Dock as shown on Detail
2/S4.12 shall be installed as an 8”. cast-in-place concrete wall west of Column
Line C2 to a distance of 90 feet. Owner and Contractor agree that this
section of wall shall serve as a safety rail. Minimum height above grade
behind the wall shall be 42” above final grade.

 

21.      XYPEX
waterproofing is included to a height of only of 12” AFF at the wet basement
interior grade beams.

 

22.      EPDM
membrane with a plywood substrate is included at the back side of parapet walls
instead of metal wall panels and hat channels.

 

 

23.      Shop-fabricated
parapet coping cap and counter-flashings are included in lieu of the specified
pre-manufactured systems.

 

24.      Fire-rated
drywall enclosures are included around steel columns where required in lieu of
sprayed-on cementitious fireproofing.

 

25.      Faux
painting (including Veri-Tex) is included. (See Allowances)

 

26.      Two
(2) each-1 1/4 inch conduits are included to the
propane location for future wiring by others. All other work associated with
the propane system is excluded.

 

27.      Contractor
includes four (4) each- 4” empty conduits for Telephone and Data to hotel
as shown on Sheet TCS 1.01 for installation of Telephone and Data cable and
wire in the future by others.

 

28.      Hydronic
snow-melt system is included for the Vestibules only (no Loading Dock). The
boiler for this system shall be located in Janitors 107.

 

29.      Two
(2) each- 600-kw diesel emergency generators are included with paralleling
switchgear.

 

30.      Contractor
shall hook up to the existing wells from the new water treatment facility. New
wells are excluded.

 

31.      Ceramic and quarry tile shall be thin-set.

 

32.      Installation
of gaming area carpet, pad, and six inch carpet base is included. Gaming area
carpet and pad installation shall be by the double-stick method in which the
pad is glued to the concrete and the carpet is glued to the pad. Patterns shall
match at all seams. Carpet base shall be installed to a height of six inches on
all walls contiguous to the gaming floor. Furnishing of gaming area carpet
materials including carpet, pad, and pre- bound carpet base delivered to the
site and including sales taxes is excluded and shall be provided by Owner.

 

The following items shall be excluded
from the GMP:

 

1.        All
finishes called out as “special finishes” which are not faux finished per the
Owner’s drawing shall be pre-finished by the manufacturer and no finishing
shall be required by Contractor in those areas except for touch-up painting if
required as a result of Contractor’s installation.

 

2.        Duplicate
records shall not be required and are excluded.

 

3.        Owner
shall be responsible for establishing inspection authority and criteria for
managing inspections required to obtain Certificate of Occupancy. Contractor
will schedule inspections as reasonably required to achieve compliance with the
inspecting authority Owner establishes.

 

4.        Grading
areas offsite, trucking offsite except those excess soils from the casino
project only that are to be stockpiled onto the property south of Highway 105,
and/or filling in existing lagoons is excluded. This work may be added to the
contract by Change Order at a later date.

 

5.        Over
excavation and backfill in sidewalk areas is excluded.

 

 

6.        Chasing
lights at the water tower are excluded.

 

7.        Transformer
shall be located to the north to be even with building line.

 

8.        Second
ballasts in light fixtures are excluded.

 

9.        All
interior concrete grade beams located directly below the 0.0* slabs on grade
except for the grade beam located on Grid Line “C5” from “CM” to “CP” are
excluded. These grade beams are typically shown on Detail 10/S4.10. There is
approximately 1,150 lineal feet of this 18” wide x 18” high grade beam that
will be eliminated. A 24” x 24” concrete cap will be added for each location
where the auger cast piling occurs.

 

10.      Stamped
and/or stained concrete at the building exterior is excluded.

 

11.      Stamped
concrete at the building interior is excluded.

 

12.      PDA,
Pile Load and any other testing at the Water Tower are excluded.

 

13.      Electrical
to the hotel is not required and is excluded.

 

14.      Empty
conduits for future power feeds to the Hotel are not required and are excluded.

 

15.      Builder’s
Risk Insurance is excluded and shall be provided by Owner per the original
contract.

 

16.      Design
services and/or costs are excluded.

 

17.      Soil
boring or geotechnical analysis is excluded.

 

18.      Testing
services for soil compaction, concrete strength, structural steel (including
testing required due to non-AISC Certified fabricator), PDA and Pile Load tests
at Water Tower, etc. is excluded.

 

19.      Utility
costs for startup of Casino and food service equipment are excluded.

 

20.      The
following items shall be furnished and installed by the Owner:

 

•         Conference
Room – Tables, Chairs, and COM Chair Fabric.

•         Executive
Office – Chair, Desk, Guest Chair, COM Guest Chair Fabric, and COM Chair Fabric.

•         Administration – Task Chair, Guest Chair, COM
Guest Chair Fabric, COM Fabric, and Desk

•         Cubicle
Space – Cubicles with Grade A Fabric, Chair, and COM Fabric.

•         General
Enclosed “Office” Areas – Desk, Guest Chair, COM Fabric, and Chair.

•         Maintenance
Areas – Chair, Desk, and Guest Chair.

•         Slots and
Pit Gaming – Roulette Chairs, “21” Chairs, and Slot Bases.

•         Lounge –
Wood Lounge Chairs, Cocktail Tables, and Metal Table Bases.

•         Food Vendor
Seating Area – Seating, Vinyl Seat Upholstery, Tables, and Table Bases.

•         Poker Room –
Player Seating, Dealer Seating, and Fabric.

 

21.      Paving
and/or site preparation for the 153-space “Future Lot” at the northwest,
92-space “Future RV Park” at the south, and any parking north of the current
property line is excluded.

 

22.      Insulating
Concrete Deck (as specified in Section 03520) is excluded.

 

 

23.      Additional
structure required at water tower to accommodate signage as well as additional
foundations, etc. are excluded if required.

 

24.      Architecturally
Ornamental Handrail and Railing (as specified in Section 05720) is
excluded.

 

25.      Expansion
Joint Cover Assemblies (as specified in Section 05810) is excluded.

 

26.      Sprayed
Fireproofing (as specified in Section 07250) is excluded.

 

27.      Built-Up
Roofing (as specified in Section 07510) is excluded.

 

28.      Floor,
wall and ceiling finishes for Food Vendor areas (Rooms 228 and 231) are
excluded.

 

29.      Food
Service Equipment for Food Vendor (Rooms 228 and 231) and Vendor Seating (Rooms
229 and 232) areas is excluded.

 

30.      Signage
(as specified in Section 10405) is excluded. In addition, we exclude and
the Owner shall be responsible for the following signage and permits or permit
applications (if required):

 

•         Chasing
lights at water tower.

•         Reader
boards at water tower.

•         Lighted
“arrow” at water tower.

 

31.      Operable
panel partitions are excluded.

 

32.      Window
treatments are excluded.

 

33.      Pump for fire sprinkler system is excluded.

 

34.      Architectural enclosures or fencing for
transformer and generators is excluded.

 

C.       Section 5.2.1.1 of the Contract is amended by adding the
following:

 

Jointly, Contractor, Architect, and Owner will continue to pursue value
engineering opportunities that reduce costs and/or construction time and
Contractor will retain the first $150,000.00 of cost reductions resulting from
value engineering without a reduction in contract price and/or an earlier
substantial completion date. A primary example is the elimination of sheetrock
walls to structure in corridors and replacing them with rated ceilings over
those corridors.

 

Current areas being pursued for value engineering opportunities include
(but are not limited to) the metal wall panels, standing seam roofing, doors
and finish hardware, floor finishes, themeing, food service equipment, etc. As
stated above, Owner agrees that these and other value engineering opportunities
shall be reviewed in good faith.

 

D.       Section 5.2.2 of the Contract is amended by adding the
following:

 

The following alternates may be added to the
contract by Change Order at a later date:

 

a.        Increase
the insurance coverage by providing an insurance policy for this project that
has an additional coverage of $17,000,000.00 for the aggregate

 

 

excess/umbrella liability. Total coverage for this project would then
be $8,000,000.00 + $17,000,000.00 = $25,000,000.00. These insurance limits are
per project. The coverage period will be to June 30, 2008. Our insurance
provider for this coverage is RSUI Indemnity Company (part of the Alleghany
Insurance Holdings unit). The “2004 Best’s Key Rating Guide” indicates they are
A rated. To include this Alternate, please add $104,715.00 to our contract
amount. Please note that either this Alternate or Alternate #.b can be
accepted, but not both.

 

b.        Provide project specific insurance coverage
of $1,000,000.00 primary and $25,000,000.00 umbrella through June 30,
2008. Note that the premium for the period of July 1, 2006 through
June 30, 2008 is estimated and subject to adjustment based on volatility
of the insurance market. Any increase in premium amount for this period will be
billed to the Owner and the GMP will be adjusted by that amount. This insurance
is quoted by Swett & Crawford, a subsidiary of AON. To include this
Alternate, please add $194,000.00 to our contract amount. Please note that
either this Alternate or Alternate #.a can be accepted, but not both.

 

E.        Section 5.2.4 of the Contract is amended
by adding the following:

 

The
following Allowances are included as part of the Guaranteed Maximum Price
(GMP). Unless otherwise noted, these Allowances include all materials, sales
tax, freight, unloading and handling, and labor and equipment required for
installation. If designated as “material only”, the Allowances include only the
purchase of material, sales tax and freight:

 

	
  •

  	
   

  	
  Landscaping
  (including trees, shrubs and other plantings, seed” and sod, rocks and
  boulders, mulch, lawn irrigation, etc.)

  	
   

  	
  $

  	
  50,000.00

  	
   

  
	
  •

  	
   

  	
  Faux
  Painting (including Veri-Tex) at Building and Water Tower

  	
   

  	
  $

  	
  565,000.00

  	
   

  
	
  •

  	
   

  	
  Food Service
  Equipment

  	
   

  	
  $

  	
  1,500,000.00

  	
   

  
	
  •

  	
   

  	
  Conduits to
  RV Parking Lot

  	
   

  	
  $

  	
  3,210.00

  	
   

  
	
  •

  	
   

  	
  Light
  Fixtures at Building Murals (material only; installation is in Contract
  Amount)

  	
   

  	
  $

  	
  12,600.00

  	
   

  
	
  •

  	
   

  	
  Hydronic
  Boiler Connections for Snow Melt System

  	
   

  	
  $

  	
  1,000.00

  	
   

  
	
  •

  	
   

  	
  Chasing
  Lights at Building

  	
   

  	
  $

  	
  90,000.00

  	
   

  
	
  •

  	
   

  	
  Heat Tape
  Electrical Connections (tape itself is included with ACI Mechanical)

  	
   

  	
  $

  	
  3,100.00

  	
   

  
	
  •

  	
   

  	
  Silo
  Lighting (material only; installation is in Contract Amount)

  	
   

  	
  $

  	
  50,000.00

  	
   

  
	
  •

  	
   

  	
  Pond and
  Water Wheel Lighting (material only; installation is in Contract Amount)

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  •

  	
   

  	
  Stage
  Lighting and Controls (material only; installation is in Contract Amount)

  	
   

  	
  $

  	
  15,000.00

  	
   

  
	
  •

  	
   

  	
  Water Tower
  Panel, Sign Connection and Fiber Optics

  	
   

  	
  $

  	
  45,000.00

  	
   

  
	
  •

  	
   

  	
  Specialty
  Lighting (track and spot lights, etc.)

  	
   

  	
  $

  	
  150,000.00

  	
   

  
	
  •

  	
   

  	
  Electrical
  Connections for Monument and Directional Signs

  	
   

  	
  $

  	
  14,300.00

  	
   

  
	
  •

  	
   

  	
  Silo

  	
   

  	
  $

  	
  245,215.00

  	
   

  

 

 

F.        Section 5.2.5 of the Contract is amended
by adding the following:

 

The Substantial Completion date and the GMP are based upon: the 80%
Construction Documents from KGA Architecture issued, dated, and posted to the
FTP site by KGA on July 1, 2005,
the Contractor’s current costing including the value engineering reductions
described herein, the changes and clarifications included in this Attachment
“A”, reasonable assumptions, and stipulations previously agreed to in our
AIA-A111 Standard Form of Agreement Between Owner and Contractor dated
June 6, 2005 and the associated AIA-A207 General Conditions. Unless noted otherwise
in this change order, increases in scope received by Henkel Construction
Company subsequent to the above 80% Construction Documents shall be treated as
changes to the contract and shall be incorporated by Change Order.

 

Final design documents were issued on August 8, 2005, Progress
payments will be made by Owner in respect of payment applications or
requisitions for payments received from Contractor totaling $1,320,490.64 for
costs incurred and/or Work completed though July 31, 2005 by wire transfer
to Contractor’s designated account no later than two (2) business days
after the funds in respect of such payment applications being disbursed from
the Construction Disbursement Account to the Disbursed Funds Account, but Owner
shall endeavor to make such payment as soon as is reasonably commercially
possible thereafter. Contractor expressly acknowledges and agrees that,
notwithstanding anything to the contrary contained herein, unless and until the
parties hereto agree upon a Guaranteed Maximum Price based upon such 100%
documents issued on August 8, 2005, following this Change Order Contractor
shall not make purchases of equipment and materials in respect of the Project
in excess of One Hundred Thousand and 00/100 Dollars ($100,000) individually or
One Million and 00/100 Dollars in the aggregate (except for purchases that have
already been made per the Contract through Change Order) without the prior
written consent of Owner, which consent shall not be unreasonably withheld or
delayed.

 

Owner will furnish Henkel Construction Company a detailed drawing
outlining areas requiring faux finishing. Faux finish pricing is based upon the
areas identified in that drawing.

 

Owner agrees to require that Contractor be the general contractor for
construction of the hotel associated with and constructed near the Diamond Jo
Worth, LLC project; provided, however, the failure of the
developer of such hotel to employ Contractor as the general contractor with
respect to the construction of such hotel shall in no way impose any liability
or further obligation on Owner. Following the execution thereof, Owner will
provide Contractor with copies of the Owner’s executed hotel “Letter of Intent”
documents showing a mandatory commitment on the part of the hotel operator to
use Henkel Construction Company as the general contractor for construction of
the hotel associated with the casino.

 

 

Exhibit 1

(see attached)Exhibit 10.2

 

EXECUTION COPY

 

CASH
COLLATERAL AND DISBURSEMENT AGREEMENT

 

 

among

 

 

U.S. BANK
NATIONAL ASSOCIATION,

 

as the
Disbursement Agent,

 

 

U.S. BANK
NATIONAL ASSOCIATION,

 

as the
Trustee,

 

 

and

 

 

DIAMOND JO
WORTH, LLC

 

and

 

DIAMOND JO
WORTH CORP.,

 

together, as
the Issuers

 

 

Dated as of July 19,
2005

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
  1.1

  	
  Defined Terms

  	
   

  
	
   

  	
  1.2

  	
  Additional Defined Terms

  	
   

  
	
   

  	
  1.3

  	
  Rules of Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Establishment of Accounts

  	
   

  
	
   

  	
  2.1

  	
  Appointment of Disbursement Agent

  	
   

  
	
   

  	
  2.2

  	
  Establishment of Accounts

  	
   

  
	
   

  	
  2.3

  	
  Pledge
  Agreement

  	
   

  
	
   

  	
  2.4

  	
  Investment of Funds in Accounts

  	
   

  
	
   

  	
  2.5

  	
  Agency

  	
   

  
	
   

  	
  2.6

  	
  Waiver of Set-off Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Disbursements from Accounts

  	
   

  
	
   

  	
  3.1

  	
  Conditions to Disbursement

  	
   

  
	
   

  	
  3.2

  	
  Method of Disbursement

  	
   

  
	
   

  	
  3.3

  	
  Disbursement Agent’s Compensation

  	
   

  
	
   

  	
  3.4

  	
  Transfer of Funds to the Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Agreements of the Issuers, the Disbursement
  Agent and the Trustee

  	
   

  
	
   

  	
  4.1

  	
  Disbursement Requests and Disbursements

  	
   

  
	
   

  	
  4.2

  	
  Insufficient Available Funds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Interest
  Reserve

  	
   

  
	
   

  	
  5.1

  	
  Interest Disbursements

  	
   

  
	
   

  	
  5.2

  	
  Interest Reserve Account Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Certain
  Covenants

  	
   

  
	
   

  	
  6.1

  	
  Notice
  of Opening

  	
   

  
	
   

  	
  6.2

  	
  Issuers’ Officer’s Certificates.

  	
   

  
	
   

  	
  6.3

  	
  Officer’s Certificate as Representation and
  Warranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Construction Disbursement Account

  	
   

  
	
   

  	
  7.1

  	
  Conditions to Initial Disbursements

  	
   

  
	
   

  	
  7.2

  	
  Conditions to Subsequent Disbursements

  	
   

  
	
   

  	
  7.3

  	
  Advance Disbursements

  	
   

  
	
   

  	
  7.4

  	
  Disbursements after an Event of Default

  	
   

  
	
   

  	
  7.5

  	
  Final Disbursement of Funds Following
  Opening

  	
   

  
	
   

  	
  7.6

  	
  First Disbursement Request.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Amendments to Construction Disbursement
  Budget; Amendments to Contracts; Amendments to Facility Cost Schedule and
  Cost Overruns.

  	
   

  
	
   

  	
  8.1

  	
  Construction Disbursement Budget Amendment
  Process

  	
   

  
	
   

  	
  8.2

  	
  Contract Amendment Process

  	
   

  

 

i

 

	
   

  	
  8.3

  	
  Contracts Entered into after the Issue Date

  	
   

  
	
   

  	
  8.4

  	
  Facility Cost Schedule and Cost Overruns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Events
  of Default

  	
   

  
	
   

  	
  9.1

  	
  Indenture

  	
   

  
	
   

  	
  9.2

  	
  Exception to Prior Disbursement

  	
   

  
	
   

  	
  9.3

  	
  Insufficient Funds

  	
   

  
	
   

  	
  9.4

  	
  Performance of Certain Obligations

  	
   

  
	
   

  	
  9.5

  	
  Failure to Deliver Collateral Agreements

  	
   

  
	
   

  	
  9.6

  	
  Abandonment of Facility

  	
   

  
	
   

  	
  9.7

  	
  Termination or Invalidity of Construction
  Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Disbursed Funds Account

  	
   

  
	
   

  	
  10.1

  	
  Rights of the Issuers to Disbursed Funds
  Account

  	
   

  
	
   

  	
  10.2

  	
  Right to Substitute Disbursed Funds Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Indemnity.

  	
   

  
	
   

  	
  11.1

  	
  Limitation of Liability

  	
   

  
	
   

  	
  11.2

  	
  Reliance on Certificates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Substitution or Resignation

  	
   

  
	
   

  	
  14.1

  	
  Disbursement Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Account
  Statement

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Notice

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Miscellaneous

  	
   

  
	
   

  	
  17.1

  	
  Waiver

  	
   

  
	
   

  	
  17.2

  	
  Invalidity

  	
   

  
	
   

  	
  17.3

  	
  No Authority

  	
   

  
	
   

  	
  17.4

  	
  Assignment

  	
   

  
	
   

  	
  17.5

  	
  Benefit

  	
   

  
	
   

  	
  17.6

  	
  Time

  	
   

  
	
   

  	
  17.7

  	
  Governing Law; Waiver of Jury Trial

  	
   

  
	
   

  	
  17.8

  	
  Entire Agreement; Amendments

  	
   

  
	
   

  	
  17.9

  	
  Notices

  	
   

  
	
   

  	
  17.10

  	
  Counterparts

  	
   

  
	
   

  	
  17.11

  	
  Captions

  	
   

  
	
   

  	
  17.12

  	
  Right to Consult Counsel

  	
   

  
	
   

  	
  17.13

  	
  Disputes

  	
   

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Form of Initial Disbursements
  Certificate

  
	
  Exhibit B-1

  	
   

  	
  Form of Issuers’ Closing Certificate

  
	
  Attachment A to Exhibit B-1

  	
   

  	
  Form of Issuers’ Officer’s Certificate
  to Issuers’ Closing Certificate

  
	
  Exhibit B-2

  	
   

  	
  Form of Disbursement Agent’s Closing
  Certification

  
	
  Exhibit B-3

  	
   

  	
  Form of Trustee’s Closing
  Certification

  
	
  Exhibit C

  	
   

  	
  Form of Interest Disbursement Request

  
	
  Exhibit D-1

  	
   

  	
  Form of Construction Disbursement
  Request and Certificate

  
	
  Attachment A to Exhibit D-1

  	
   

  	
  Form of Issuers’ Officer’s Certificate
  to Construction Disbursement Request and Certificate

  
	
  Exhibit D-2

  	
   

  	
  Form of Advance Disbursement Request
  and Certificate

  
	
  Attachment A to Exhibit D-2

  	
   

  	
  Form of Issuers’ Officer’s Certificate
  to Advance Disbursement Request and Certificate

  
	
  Exhibit D-3

  	
   

  	
  Form of First Disbursement Officer’s
  Certificate

  
	
  Exhibit E

  	
   

  	
  Form of Construction Disbursement
  Budget Amendment Certificate

  
	
  Exhibit F-1

  	
   

  	
  Form of Contract Amendment Certificate

  
	
  Exhibit F-2

  	
   

  	
  Form of Additional Contract
  Certificate

  
	
  Exhibit G

  	
   

  	
  Form of Consent to Collateral
  Assignment of Contract

  
	
  Exhibit H

  	
   

  	
  Form of Pro Forma Title Policy

  
	
  Exhibit I

  	
   

  	
  Property Legal Description

  

 

iii

 

CASH
COLLATERAL AND DISBURSEMENT AGREEMENT

 

THIS CASH
COLLATERAL AND DISBURSEMENT AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this “Agreement”)
is dated as of July 19, 2005, by and among U.S. Bank National Association,
having an office at 60 Livingston Avenue, St. Paul, Minnesota 55107, as trustee (together with its successors and assigns,
the “Trustee”) under the Indenture
(as defined below), U.S. Bank National Association, as disbursement agent
(together with its successors and assigns, the “Disbursement Agent”), Diamond Jo Worth, LLC, a Delaware
limited liability company (the “Company”),
and Diamond Jo Worth Corp., a Delaware corporation (“DJW Corp.” and, together with the Company, the “Issuers”).

 

R E C I T A L S

 

A.            Notes.  The Issuers have issued Forty Million Dollars
($40,000,000) in aggregate principal amount of their 11% Senior Secured Notes due 2012 (the “Original Notes”
and, together with any additional Notes issued under the Indenture and any new
notes issued in exchange for the Original Notes or such additional Notes, the “Notes”)
concurrently herewith.  The Notes have
been issued pursuant to the provisions of an Indenture (as amended,
supplemented or otherwise modified from time to time, the “Indenture”) dated the date hereof, among
the Issuers and the Trustee, on behalf of itself and the holders of the
Notes.  Net proceeds from the issuance of
Notes will be disbursed as follows:  (a) Thirty
Four Million Two Hundred Thousand Dollars ($34,200,000.00) (the “Construction Proceeds”) will be deposited
contemporaneously with the execution of this Agreement into Account No. 790235001
held at the Disbursement Agent (said account, or any substitute account
selected in accordance with the terms of this Agreement, is referred to herein
as the “Construction Disbursement Account”),
to be maintained by the Disbursement Agent pursuant to Section 2 of
this Agreement; and (b) Three Million Three Hundred Thousand Dollars
($3,300,000) (the “Interest Reserve Proceeds,”
which, together with the Construction Proceeds shall be referred to herein as
the “Proceeds”), will be deposited
contemporaneously with the execution of this Agreement into Account No. 790235002,
held at the Disbursement Agent (said account, or any substitute account
selected in accordance with the terms of this Agreement, is referred to herein
as the “Interest Reserve Account”),
to be maintained by the Disbursement Agent pursuant to Section 2 of
this Agreement.

 

B.            Collateral and Collateral
Assignment.  As security for their
obligations under the Notes and the Indenture, the Issuers have granted
security interests to the Trustee, on behalf of itself and the holders of
Notes, in certain assets and have collaterally assigned certain contracts to
the Trustee.  As further security for
their obligations under the Notes and the Indenture, the Issuers also have
granted pursuant to the Pledge Agreement a security interest to the Trustee, on
behalf of itself and the holders of the Notes, in all of the Issuers’ right,
title and interest in the Construction Disbursement Account, the Interest Reserve
Account and the Disbursed Funds Account (as defined herein) and any Proceeds or
other amounts held in any such accounts.

 

C.            Purpose.  The parties intend that portions of the
Proceeds and the other amounts deposited from time to time in the Construction
Disbursement Account be used for the design, development, construction,
equipping and operation of the Facility (as defined herein), all in accordance
with this Agreement and the Indenture. 
The parties have entered into this Agreement 

 

1

 

in order to set forth the
conditions upon which, and the manner in which, funds will be disbursed in
order to permit the Company to design, develop, construct, equip and operate
the Facility and to pay certain Debt Financing Costs when due and payable under
the Notes.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Definitions.

 

1.1           Defined
Terms.  In this
Agreement (including the preamble and Recitals), the terms defined in this Section 1
shall have the meanings herein specified, such definitions to be equally
applicable to both the singular and plural forms of any of the terms defined:

 

“Accounts” means the Interest Reserve
Account and the Construction Disbursement Account.

 

“Additional Contract Certificate” means the
Officer’s Certificate of the Issuers in the form of Exhibit F-2
attached hereto.

 

“Additional Revenue” means revenue
(including, without limitation, investment income (loss), less any losses or
costs associated therewith, earned on amounts in the Construction Disbursement
Account) generated by the Issuers (other than from disposition of its assets),
but only to the extent that such revenue is held by the Issuers, free and clear
of any claims of any other parties whatsoever, other than claims of the Trustee
and holders of the Notes; provided, however, that as of any date
of measurement, Additional Revenue also shall include investment income (loss),
less any losses or costs associated therewith, which the Issuers reasonably
determine (with the reasonable concurrence of the Disbursement Agent) will be
earned on funds in the Construction Disbursement Account through the reasonably
anticipated date of Opening, taking into account the current and future
reasonably anticipated rates of return on Cash Equivalents in the Construction
Disbursement Account and the reasonably anticipated times and amounts of draws
therefrom for the payment of Construction Expenses or in connection with
permitted amendments to the Construction Disbursement Budget (as applicable).

 

“Advance Disbursements” means a disbursement
from the Construction Disbursement Account to the Issuers pursuant to Section 7.3
and in accordance with the Construction Disbursement Budget, notwithstanding
the fact that not all certifications and lien releases have been obtained and
other disbursement conditions have not been satisfied; provided, however,
that the aggregate amount of Advance Disbursements outstanding at any time
shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000).

 

“Advance Disbursement Certificate” means an
Officer’s Certificate from the Issuers in the form of Exhibit D-2
attached hereto.

 

“Advance Disbursement Officer’s Certificate”
has the meaning set forth in Section 6.2.3.

 

2

 

“Affiliate” has the meaning given in the
Indenture.

 

“Agreed Permits” has the meaning given in Attachment
A to Exhibit B-1 attached hereto.

 

“Applicable Permits” means the national,
state and local license authorizations, certifications, filings, recordings,
permits or other approvals with or of any Governmental Instrumentality,
including, without limitation, environmental, construction, operating or
occupancy permits and any agreements, consents or approvals that are required
for the design, construction, operation or maintenance of the Facility in
accordance with the Operative Documents. 
Without limiting the foregoing, Applicable Permits also include
Construction Period permits for temporary construction utilities and temporary
sanitary facilities, dump permits, road use permits, permits related to the
use, storage and disposal of hazardous materials introduced to the Property for
or in connection with the performance of the design, construction, operation or
maintenance of the Facility, and permits issued pursuant to any building,
mechanical, electrical, plumbing or similar codes.

 

“Architect” means Kittrell Garlock and
Associates, AIA, Ltd., d/b/a KGA Architecture, and its successors identified by
notice from the Company to the Disbursement Agent.

 

“Architect Agreement” means the Standard Form of
Agreement Between Owner and Architect (AIA Document B141-1997 edition) for the
Facility, executed by the Architect and the Company, dated March 1, 2005
(as amended, modified or supplemented from time to time in accordance with this
Agreement).

 

“Available Funds” means, at any given time,
the sum of (a) the balance of the Construction Disbursement Account
(taking into account any additional amounts deposited by the Issuers in the
Construction Disbursement Account pursuant to clause (ii) of Section 7.6),
(b) so long as there is no Default or Event of Default, Additional Revenue
expected to be earned from and after such time, (c) the net proceeds of
any FF&E Financing that the Issuers have incurred or reasonably expect to
incur as permitted under the Indenture, less all amounts previously drawn upon
from such FF&E Financing, and (d) the net proceeds available for loan
under any Senior Credit Facility that the Issuers enter into or reasonably
expect to enter into as permitted under the Indenture, less all amounts
previously drawn upon from such Senior Credit Facility.

 

“Business Day” means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in New York, New York, are authorized or obligated by law or executive order to
close.

 

“Cash Equivalents” has the meaning given in
the Indenture.

 

“Collateral” has the meaning given in the
Indenture.

 

“Construction Contract” means the Standard Form of
Agreement Between Owner and Contractor (AIA Document A111-1997 edition) and
General Conditions of the Contract for Construction (AIA Document A201-1997
edition) for the construction of the Facility, executed 

 

3

 

by the General Contractor and
the Company, dated June 6, 2005 (as
amended, modified or supplemented from time to time in accordance with this
Agreement).

 

“Construction Disbursement Budget” means the
Initial Construction Disbursement Budget, as the same may be amended, modified
or supplemented from time to time in accordance with this Agreement.

 

“Construction Disbursement Budget Amendment Certificate”
means an Officer’s Certificate from the Issuers in the form of Exhibit E
attached hereto.

 

“Construction Disbursement Certificate”
means an Officer’s Certificate from the Issuers in the form of Exhibit D-1
attached hereto.

 

“Construction Disbursement Officer’s Certificate”
has the meaning set forth in Section 6.2.2.

 

“Construction Documents” means the
Construction Contract, the Architect Agreement, and any other Contract entered
into by the Company on, prior to or after the Issue Date with respect to
construction of all or any portion of the Facility (other than the Financing
Agreements and the documents evidencing or securing the FF&E Financing or a
Senior Credit Facility), as the same may be amended, modified or supplemented
from time to time as permitted thereunder and in accordance with this
Agreement.

 

“Construction Expenses” means expenses
incurred in connection with the design, development, engineering, construction,
installation or equipping of the Facility in accordance with the Construction
Disbursement Budget, excluding, however (a) any such expenses paid on or
prior to the Issue Date, (b) any Debt Financing Costs and (c) any
Issue Fees and Expenses.

 

“Construction Period” means the period from
the Issue Date to and including the date of the Opening.

 

 “Contract”
means a contract to which the Company is a party pertaining to the design,
development, engineering, installation or construction of all or any portion of
the Facility, including, without limitation, any contract, license and
performance and payment bond or guarantee, if any; provided, however,
such term shall not include any of the Subcontracts, the Subcontractors, the
Financing Agreements or any of the documents evidencing or securing the
FF&E Financing or any Senior Credit Facility.

 

“Contract Amendment Certificate” is an
Officer’s Certificate from the Issuers in the form of Exhibit F-1
attached hereto.

 

“Contractor” means a party to a Contract
other than the Company.

 

“Control Account Agreement” means one or
more Deposit Account Control Agreements dated as of even date herewith by and
among the Trustee, the Issuers, and the institution at which the Disbursed
Funds Account is held.

 

4

 

“Debt Financing Costs” means all principal,
interest, premium fees and other amounts payable or accrued from time to time
under the Notes.

 

“Default” means any event, omission or
failure of a condition that is, or with the passage of time or the giving of
notice or both could be, an Event of Default.

 

“Disbursed Funds Account” means Account No. 2013837 and Account No. 201162, each held at American Trust
(ABA Number 073900522), in the
name of the Company, or any substitute account selected by the Issuers in
accordance with this Agreement, which account shall be funded from disbursements
from the Construction Disbursement Account pursuant to this Agreement and shall
be pledged as collateral to the Trustee pursuant to the Control Account
Agreement, for the benefit of itself and the holders of the Notes, and, with
respect to at least one such account, from which the Company shall have general
check writing authority.

 

“Disbursement” means any disbursement of
funds pursuant to a Disbursement Request.

 

“Disbursement Agent’s Closing Certificate”
is an Officer’s Certificate from the Disbursement Agent in the form of Exhibit B-2
attached hereto.

 

“Disbursement Request” means any Initial
Disbursement Request, Construction Disbursement Request, Interest Disbursement
Request, Advance Disbursement Request and any other request for disbursement
from the Accounts made pursuant to this Agreement.

 

“Facility” means the design, development,
construction, equipping and commencement of operations of the improvements
described in the Construction Documents and in accordance therewith.

 

“Facility Cost Schedule” means an itemized schedule in
the form of Schedule 1 to the Construction Disbursement Officer’s
Certificate, a form of which is attached hereto as Schedule 1 to
Attachment A to Exhibit D-1.

 

 “FF&E
Financing” has the meaning given in the Indenture.

 

“Final Plans” means Plans which (a) have
received all required approvals from all Governmental Instrumentalities
required to approve such Plans prior to commencement of that portion of the
Facility reflected in such Plans; (b) contain sufficient specificity to
permit the completion of the work or improvement reflected in such Plans and
collectively contain sufficient specificity to permit completion of the
Facility; (c) are consistent with constructing the Facility to include the
Minimum Facilities; (d) have been signed by an architect licensed to
practice architecture in the State of Iowa; and (e) have been delivered to
the Disbursement Agent.

 

“Financing Agreements” means, collectively,
this Agreement, the Indenture, the Security Documents, the Notes and any other
loan or security agreement entered into on, prior to or after the Issue Date
with or for the benefit of the Trustee to finance all or any portion of the
Facility, as each of the same may be amended, modified or supplemented from
time to time as permitted thereunder and in accordance with the terms and
conditions of this Agreement.

 

5

 

“First Disbursement Request” means the first
Disbursement Request (other than an Interest Disbursement Request) made pursuant
to this Agreement.

 

“First Disbursement Officer’s Certificate”
has the meaning set forth in Section 6.2.4.

 

“Gaming Laws” has the meaning given in the
Indenture.

 

“Gaming Licenses” has the meaning given in
the Indenture.

 

“General Contractor” means Henkel
Construction.

 

“Governmental Instrumentality” means any
national, state or local government (whether domestic or foreign), any
political subdivision thereof or any other governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body, agency, bureau
or entity (including any Gaming Authority, any zoning authority, the FDIC, the
Comptroller of the Currency or the Federal Reserve Board, any central bank or
any comparable authority) or any arbitrator with authority to bind a party at
law.

 

“Hard Costs” means the costs and expenses in
respect of supplying goods, materials and labor for the construction of
improvements relating to the Facility or other amounts payable pursuant to the
Construction Documents.

 

“Initial Construction Disbursement Budget”
means the itemized schedule, in the form attached as Exhibit 1 to
the First Disbursement Officer’s Certificate, setting forth on a line
item-basis all of the costs which the Company anticipates to expend from and
after the Issue Date in connection with the design, development, engineering,
construction, installation, equipping and commencement of operations of the
Facility, including all Construction Expenses but excluding all Debt Financing
Costs, which costs in the aggregate shall not exceed the Available Funds.

 

“Initial Disbursements Certificate” means an
Officer’s Certificate from the Issuers in the form attached hereto as Exhibit A.

 

“Interest Disbursement Certificate” means an
Officer’s Certificate from the Issuers in the form attached hereto as Exhibit C.

 

“Interest Payment Date” has the meaning
given in the Notes.

 

“Issue Fees and Expenses” means fees and
expenses incurred on or before the Issue Date by the Issuers or for which the
Issuers are liable in connection with the offering of the Notes.

 

“Issue Date” has the meaning given in the
Indenture.

 

“Issuers’ Closing Certificate” means an
Officer’s Certificate from the Issuers in the form of Exhibit B-1
attached hereto.

 

“Issuer’s Closing Officer’s Certificate” has
the meaning set forth in Section 6.2.1.

 

6

 

“Lien” has the meaning given in the
Indenture.

 

“Manager” means Peninsula Gaming, LLC and
its permitted successors and assigns identified by notice from the Issuers to
the Disbursement Agent.

 

 “Material
Construction Document” means any of the Construction Contract, the
Architect Agreement, and without duplication, any other Contract with a total
contract amount in excess of $100,000.

 

“Minimum Facilities” means a casino offering
not less than 500 slot machines.

 

 “Officer’s
Certificate” means a certificate signed by one of the following
officers of the Person on whose behalf or for whose benefit the certificate is
being executed or delivered:  the
Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer, Executive Vice President, Vice President, Treasurer or Assistant
Treasurer.

 

“Opening” means the time when the Facility
shall have been opened to the general public, is receiving customers in the
ordinary course of business and has received, and has in full force and effect,
all material Permits required for operation.

 

“Operative Documents” means the Financing
Agreements and the Construction Documents.

 

“Permits” has the meaning given in the
Indenture.

 

“Person” means any individual, corporation,
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other entity.

 

“Plans” means the plans, specifications,
working drawings, design documents and any change orders relating thereto,
which may be amended by the Company as necessary or appropriate, that
collectively:  (a) provide for and
detail the manner of construction of improvements for the Facility; (b) call
for construction which will permit the Opening to occur; (c) call for
construction which will cause the Facility to be completed for a total cost
consistent with the Construction Disbursement Budget and the line items set
forth therein, taking into consideration the availability of Available Funds,
including Realized Savings; (d) are consistent with constructing the
Facility to include the Minimum Facilities; (e) have been signed by an
architect who is licensed to practice architecture in the State of Iowa; and (f) to
the extent such Plans are amended, such Plans are consistent with previous
Plans and are reasonably inferable therefrom, as the same may be amended or
supplemented from time to time.

 

“Pledge Agreement” means each of the
Security Agreement and/or Control Account Agreement among any of the
Disbursement Agent, the Trustee and the Issuers relating to the Trustee’s
security interest in the Accounts and the Disbursed Funds Account and the
proceeds thereof.

 

“Property” means the real property located
in Worth County, Iowa, on which the Issuers will construct the Facility, as
more particularly described in Exhibit I hereto.

 

7

 

“Property Documents” means each easement or
material agreement affecting the Property or the Company’s use thereof.

 

“Realized Savings” means the excess of the
amount budgeted in the Construction Disbursement Budget for a line item over
the amount of funds expended or owed by the Company to complete the tasks set
forth in such line item and for the materials and services used to complete
such tasks, so long as the terms for such tasks are final and unconditional
(other than the satisfactory completion of such tasks), including without
limitation the execution of fixed price purchase orders to acquire the
materials that are the subject of such line item (as applicable); provided,
however, that Realized Savings for any line item shall be deemed to be
zero (i) if such savings are obtained in a manner that materially detracts
from the overall value, quality and amenities of the Facility and (ii) unless
and until the Issuers have delivered a fully executed Construction Disbursement
Budget Amendment Certificate (together with all exhibits thereto) which includes
such Realized Savings.

 

“Remaining Costs” means, at any given time,
the amount of Construction Expenses (including Retainage Amounts) set forth in
the Construction Disbursement Budget that remain unpaid at such time (including
amounts that have not yet accrued at such time).

 

“Reserved Construction Amount” means the
amount (exclusive of any Retainage Amounts) necessary as of the date of the
Final CDA Disbursement to complete the Facility in accordance with the Final
Plans and containing the Minimum Facilities, including punch list items.

 

“Retainage Amounts” means, at any given
time, amounts which have accrued and are owing under the terms of a Contract
for work or services to the Company already provided but which at such time
(and in accordance with the terms of the Contract) are being withheld from
payment to the respective Contractor until certain subsequent events (e.g.,
completion benchmarks or required release to a Subcontractor) have been
achieved under the Contract.

 

“Security Agreement” means that certain
Security Agreement dated as of even date herewith, made by the Issuers in favor
of the Trustee, acting in the capacity of collateral agent for the benefit of
itself and the holders of the Notes.

 

“Security Documents” has the meaning given
in the Indenture.

 

“Senior Credit Facility” has the meaning
given in the Indenture.

 

“Soft Costs” means all costs and expenses
(other than Hard Costs) set forth in the Construction Disbursement Budget,
including without limitation pre-opening costs.

 

“Subcontracts” has the meaning given in the
Construction Contract.

 

“Subcontractors” means the Persons
performing the obligations under the Subcontracts.

 

“Title Insurer” means Chicago Title
Insurance Company.

 

8

 

“Title Policy” means the lender’s policy or
policies of title insurance to be provided by the Title Insurer to the Trustee
with respect to the Property, together with all endorsements thereto, in the
form attached hereto as Exhibit H.

 

“Trustee’s Closing Certificate” is the
Officer’s Certificate from the Trustee in the form of Exhibit B-3
attached hereto.

 

1.2           Additional
Defined Terms.  In
addition, the terms listed below in the left column below shall have the
respective meanings assigned to such terms in the Section of this
Agreement listed opposite such terms in the right column below.  All other capitalized terms not defined
herein, but defined in the Indenture, shall have the meanings ascribed to them
in the Indenture.

 

	
  Defined Terms

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Advance Disbursement Request

  	
   

  	
  4.1

  
	
  Agreement

  	
   

  	
  Introduction

  
	
  Company

  	
   

  	
  Introduction

  
	
  Construction Disbursement Account

  	
   

  	
  A of Recitals

  
	
  Construction Disbursement Request

  	
   

  	
  4.1

  
	
  Construction Proceeds

  	
   

  	
  A of Recitals

  
	
  Disbursement Agent

  	
   

  	
  Introduction

  
	
  Event of Default

  	
   

  	
  9

  
	
  Final CDA Disbursement

  	
   

  	
  7.5.1

  
	
  GMP

  	
   

  	
  7.6

  
	
  GMP Change Order

  	
   

  	
  7.6

  
	
  Indenture

  	
   

  	
  A of Recitals

  
	
  Initial Disbursements

  	
   

  	
  7.1

  
	
  Initial Disbursement Request

  	
   

  	
  4.1

  
	
  Interest Disbursement Request

  	
   

  	
  4.1

  
	
  Interest Reserve Account

  	
   

  	
  A of Recitals

  
	
  Interest Reserve Proceeds

  	
   

  	
  A of Recitals

  
	
  Issuers

  	
   

  	
  Introduction

  
	
  Maximum GMP

  	
   

  	
  7.6

  
	
  Notes

  	
   

  	
  A of Recitals

  
	
  Original Notes

  	
   

  	
  A of Recitals

  
	
  Proceeds

  	
   

  	
  A of Recitals

  
	
  Trustee

  	
   

  	
  Introduction

  

 

1.3           Rules of
Interpretation.  The
following rules of interpretation shall apply herein.

 

1.3.1        The singular includes the plural and the
plural includes the singular.

 

1.3.2        The word “or” is not exclusive.

 

1.3.3        A reference to a Person includes its
permitted successors and permitted assigns.

 

9

 

1.3.4        Accounting terms have the meanings
assigned to them by U.S. GAAP (as defined in the Indenture), as applied by the
accounting entity to which they refer.

 

1.3.5        The words “include,” “includes”
and “including” are not limiting.

 

1.3.6        A reference in a document to an Article,
Section, Exhibit, Schedule, Annex, Attachment or Appendix is to the Article,
Section, Exhibit, Schedule, Annex, Attachment or Appendix of such document
unless otherwise indicated.  Exhibits,
Schedules, Annexes or Appendices to any document shall be deemed incorporated
by reference in such document.

 

1.3.7        References to any document, instrument
or agreement (a) shall include all exhibits, schedules and other
attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, and (c) shall mean
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time.

 

1.3.8        The words “hereof,” “herein”
and “hereunder” and words of
similar import when used in any document shall refer to such document as a
whole and not to any particular provision of such document.

 

1.3.9        References to “days” shall mean calendar days, unless the
term “Business Days” shall be used.

 

2.             Establishment
of Accounts.

 

2.1           Appointment
of Disbursement Agent. 
The Trustee and the Issuers hereby appoint U.S. Bank National
Association as the Disbursement Agent, and U.S. Bank National Association
hereby accepts such appointment as the Disbursement Agent, in each case upon
the terms and conditions set forth in this Agreement.  The Disbursement Agent agrees to act in good
faith at all times.

 

2.2           Establishment
of Accounts. 
Concurrently with the execution and delivery hereof, the Disbursement
Agent shall establish the Accounts at the Disbursement Agent and credit
thereto, in accordance with the provisions of Recital A hereof, the
Proceeds.  All funds in the Accounts and
the Disbursed Funds Account shall be held in trust and not commingled with any
deposit or commercial bank account.  All
funds accepted by the Disbursement Agent pursuant to this Agreement shall be
held in the appropriate Account or the Disbursed Funds Account for the benefit
of the Issuers subject to the terms and conditions of this Agreement and the
Pledge Agreement (including, without limitation, the rights of the Trustee
hereunder and thereunder).  The
Disbursement Agent may, upon the request of the Issuers, establish sub-accounts
for accounting purposes within the Accounts and the Disbursed Funds Account, it
being understood and agreed that the creation of such sub-accounts shall in no
way affect the pledge in favor of the Trustee in the Accounts and the Disbursed
Funds Account hereunder.

 

2.3           Pledge
Agreement.  Pursuant to
the Pledge Agreement, the Issuers have granted to the Trustee, for the benefit
of the holders of the Notes, a first priority security interest in the Accounts
and the Disbursed Funds Account and all funds and assets from time to time
deposited therein, and all products and proceeds thereof.  The Disbursement Agent shall note in its
records 

 

10

 

that all funds and other assets in the
Accounts and the Disbursed Funds Account have been pledged to the Trustee and
that the Disbursement Agent is holding such items as agent for the Trustee, as
secured party.  The Disbursement Agent
shall maintain dominion and control over the Accounts and the Disbursed Funds
Account and the funds and assets therein solely for the benefit of the Trustee,
as secured party, and for no other parties or Persons; provided, however,
that the Issuers shall be able to obtain disbursements from the Accounts and
the Disbursed Funds Account in accordance with the terms hereof and upon such
disbursement to the Issuers, such pledge and security interest shall be
extinguished and released with respect to the amount so disbursed.  Accordingly, it is the intention of the
parties that all such funds and assets shall not be within the bankruptcy “estate”
(or corresponding term used in the bankruptcy or insolvency laws governing the
Disbursement Agent) of the Disbursement Agent. 
All such funds and all earnings accruing from time to time thereon shall
be held in the applicable Account or the Disbursed Funds Account until
disbursed or transferred in accordance with the terms hereof.

 

2.4           Investment
of Funds in Accounts. 
All funds from time to time credited to and contained in each of the
Construction Disbursement Account (other than those to be disbursed pursuant to
the Initial Disbursement Request, which shall be so disbursed on the Issue
Date) and the Interest Reserve Account shall be invested only in Cash
Equivalents from time to time by written instructions by the Issuers delivered
to the Disbursement Agent, pending disbursement of such funds pursuant to this
Agreement; provided, however, that the Disbursement Agent shall
have concluded that such investments conform with the requirements of the
Indenture and each Pledge Agreement and that appropriate steps have been taken
with respect to each such investment so as to assure the continuing perfection
of the Trustee’s first priority security interest in such investment.  For purposes of determining the steps to be
taken in order to achieve and maintain such perfection, the Disbursement Agent
shall have the right to require the delivery of, and to rely upon, an opinion
of counsel to the Issuers or the Disbursement Agent (the reasonable expense of
which shall be paid by the Issuers) specifying (A) that the counsel is
familiar with the legal requirements applicable to the perfection of security
interests in said investments and (B) the steps required to perfect and
maintain a first priority security interest in favor of the Trustee in such
investments.  If no such investment
instructions are received by the Disbursement Agent, after the occurrence and
during a continuance of a Default or Event of Default, such funds shall be
invested in Cash Equivalents selected by the Disbursement Agent in conformity with
the requirements of the Indenture and the Pledge Agreement.  The Disbursement Agent shall not be liable
for any investment, reinvestment or similar losses, fees, taxes or charges or
for the availability or liquidity of funds in the Accounts as a result of any
investments made or reduced to cash in accordance with this Agreement, and the
Disbursement Agent is hereby authorized to direct the Securities Intermediary
(as defined in the Pledge Agreement) in writing (i) to purchase Cash
Equivalents in accordance herewith and (ii) to reduce to cash any Cash
Equivalents (without regard to maturity) in any Account in order to make any
application or disbursement required hereunder.

 

2.5           Agency.  The Disbursement Agent shall act solely as
the Trustee’s agent in connection with its duties under this Agreement,
notwithstanding any other provision contained herein, without any authority to
obligate the Trustee outside of the scope of the authority set forth in this
Agreement or to compromise or pledge its security interest hereunder; provided,
however, that the Disbursement Agent is authorized to make disbursements
from the Accounts on behalf of the Trustee pursuant to the terms of this
Agreement.  The Issuers acknowledge and 

 

11

 

agree that in no event shall the Trustee or
the holders of the Notes be liable for, nor shall the obligations of the
Issuers under the Indenture, the Notes or the other Security Documents be
affected or diminished as a consequence of, any action or inaction of the
Disbursement Agent with respect to the Accounts or the Disbursed Funds Account
or any funds or other assets credited thereto or deposited herein.

 

2.6           Waiver
of Set-off Rights.  The
Disbursement Agent hereby acknowledges the Trustee’s security interest as set
forth in this Agreement and the Pledge Agreement and waives any and all
security interests, claims, encumbrances, liens and rights of set off which it
may have in the Accounts or the Disbursed Funds Account or any funds or other assets
credited thereto or deposited therein (including any and all rights of offset,
deduction and lien), whether statutory or otherwise afforded by law, agreement
or otherwise) and further waives any right to set-off said funds, assets or
investments now or in the future against any indebtedness of the Issuers to the
Disbursement Agent.  The waivers set
forth in this Section are of rights which may exist now or hereafter in
favor of the Disbursement Agent in its individual capacity, and not of any such
rights which may exist now or hereafter in favor of the Disbursement Agent in
its capacity as agent for the Trustee. 
Nothing in this Section shall be construed as waiving, limiting or
diminishing any rights of the Trustee or the Issuers against the Disbursement
Agent or one another.  Nothing in this Section shall
constitute, or be deemed to constitute, a waiver or abridgement of the security
interests, claims, encumbrances, liens and rights of set off held by the
Trustee in the Accounts and the Disbursed Funds Account.

 

3.             Disbursements from Accounts.

 

3.1           Conditions
to Disbursement.  The
Disbursement Agent shall disburse funds from the Accounts only upon
satisfaction of the applicable conditions to disbursement set forth herein.

 

3.2           Method
of Disbursement.  Upon
satisfaction (or a written waiver by the Trustee) of the applicable conditions
to disbursement set forth herein, the Disbursement Agent shall disburse funds
from the applicable Account as specified in the applicable Disbursement
Request.

 

3.3           Disbursement
Agent’s Compensation.   So long as the Trustee
also serves as Disbursement Agent hereunder, the Disbursement Agent shall not,
except as otherwise provided in Section 13, be entitled to any fee
for its services hereunder.  If the
Trustee is not also serving as Disbursement Agent hereunder, the Disbursement
Agent shall be entitled to such reasonable fee payable by the Issuers as is set
forth in the separate agency agreement with the Trustee.  The Disbursement Agent hereunder (whether or
not serving as the Trustee) shall be entitled to reimbursement for its
reasonable expenses (including, without limitation, the reasonable fees and
expenses of the Disbursement Agent’s counsel after the occurrence and during
the continuance of a Default or an Event of Default) as compensation for
services performed under this Agreement. 
The Disbursement Agent shall receive such payments without the
requirement of obtaining any further consent or action on the part of the
Issuers with respect to the payment; provided, however, that,
without limiting the foregoing, the Disbursement Agent shall provide written
itemization of requested reimbursement of such expenses within thirty (30) days
of receiving a written request therefor from the Issuers.  Disbursements for each calendar month shall
be made on the first day of the subsequent calendar month.  The provisions of this Section 3.3
shall survive the termination of this Agreement.

 

12

 

3.4           Transfer
of Funds to the Trustee. 
Upon the receipt of written notice executed by the Trustee, which states
that (a) an Event of Default hereunder has occurred and is continuing and (b) the
Trustee is entitled to the funds in the Accounts and the Disbursed Funds
Account (a copy of which notice shall be sent by the Trustee to the Issuers
concurrently therewith), the Disbursement Agent shall, without need for further
authorization or notice to the Issuers, deliver to the Trustee all funds in the
Accounts and the Disbursed Funds Account.

 

4.             Agreements of the Issuers, the
Disbursement Agent and the Trustee.  The Issuers, the Disbursement Agent and the
Trustee severally agree as follows:

 

4.1           Disbursement
Requests and Disbursements.

 

(a)           The Issuers shall concurrently with
the execution and delivery of this Agreement have the right to submit to the
Disbursement Agent, with a copy to the Trustee, the Initial Disbursement
Certificate, requesting the disbursement of funds from the Construction
Disbursement Account (the “Initial
Disbursement Request”).

 

(b)           The Issuers or, as set forth in Section 5.1,
the Trustee (with a copy provided to the Issuers), shall have the right to
submit to the Disbursement Agent, with a copy to the Trustee, the Interest
Disbursement Certificate, requesting the disbursement of funds from the
Interest Reserve Account to pay the interest due on the Notes (an “Interest Disbursement Request”) on the
applicable Interest Payment Date.

 

(c)           In accordance with Section 7.2
or Section 7.3, the Issuers shall have the right from time to time
during the course of this Agreement, to submit to the Disbursement Agent, with
a copy to the Trustee, a Construction Disbursement Certificate (a “Construction Disbursement Request”) or an
Advance Disbursement Certificate (an “Advance
Disbursement Request”).

 

(d)           The Disbursement Agent shall review
each Disbursement Request submitted pursuant to Sections 4.1(a) through
(c) above to determine that they meet the requirements of Sections
7.1 and 7.2 of this Agreement and conform to the forms of Exhibits A,
C, D-1 and D-2 respectively, but the Disbursement Agent
shall have no obligation to review any attachments, exhibits and certificates
required thereby (as the case may be) or to inquire whether any condition
certified to has been satisfied.  If the
Disbursement Agent has determined that the requirements of Sections 7.1
and 7.2 of this Agreement have been met and that such Disbursement
Request conforms to the forms of Exhibits A, C, D-1
and D-2, as applicable, then the Disbursement requested shall be made by
the Disbursement Agent.  Except as to the
Initial Disbursement, which shall be made on the Issue Date, the Disbursement
Agent shall notify the Issuers and the Trustee as soon as reasonably possible
(and in any event within two (2) Business Days after the Disbursement
Agent receives the required documents) if any Disbursement Request, or any
portion thereof, is disapproved and the reason(s) therefor.

 

(e)           Provided that a Disbursement Request
submitted in accordance with Sections 4.1(a) or (c) above
is not disapproved by the Disbursement Agent in accordance with this Agreement,
then, within two (2) Business Days following submission of such
Disbursement Request, the Disbursement Agent shall disburse to the Disbursed
Funds Account the funds 

 

13

 

requested in such
Disbursement Request (other than those to be disbursed pursuant to the Initial
Disbursement Request, which shall be disbursed on the Issue Date).  The Issuers shall withdraw funds from and
write checks on the Disbursed Funds Account solely for the purpose of paying
Construction Expenses identified on such Disbursement Request.

 

(f)            Provided that an Interest
Disbursement Request submitted in accordance with Section 4.1(b) above
is not disapproved by the Disbursement Agent in accordance with this Agreement,
then, within two (2) Business Days following submission of such Interest
Disbursement Request, the Disbursement Agent shall disburse to the Trustee the
funds requested in such Interest Disbursement Request.

 

(g)           The Trustee may waive any condition
to a disbursement requested in a Disbursement Request.

 

4.2           Insufficient
Available Funds.  The
Issuers shall promptly, and in no event later than two (2) Business Days
following knowledge thereof, notify the Trustee and the Disbursement Agent in
writing if at any time the Issuers reasonably believe that there are
insufficient Available Funds (a) to permit the Opening or (b) to
complete construction of the Facility in accordance with the Final Plans and/or
the Construction Disbursement Budget (as in effect at such time).  Such notice shall specify in reasonable
detail (i) the amount of such deficiency and (ii) the steps which the
Issuers intend to take to cure such deficiency and the anticipated timing
thereof.

 

5.             Interest
Reserve.

 

5.1           Interest
Disbursements.  Ten (10) days
prior to each of the first two (2) Interest Payment Dates, the Issuers
shall deliver to the Disbursement Agent an Interest Disbursement Request,
setting forth the amount required to be paid and the Interest Payment Date upon
which such payment is due and payable. 
Subject to Section 4.1(d), on each such Interest Payment
Date, the Disbursement Agent shall liquidate Cash Equivalents (to the extent
required) held in the Interest Reserve Account and disburse to the Trustee the
amounts described in the Interest Disbursement Request as due and payable on
that date; provided, however, that the Trustee may direct in
writing the Disbursement Agent to liquidate Cash Equivalents (to the extent
required) and disburse to the Trustee the amounts necessary to pay the amounts
required to be paid on the Notes in the event that the Issuers fail to timely
deliver the Interest Disbursement Request, in which case the obligations of the
Issuers under this Section 5.1 shall be deemed performed.  In the event there are insufficient funds in
the Interest Reserve Account to pay the amount set forth in an Interest
Disbursement Request or direction so given by the Trustee, the Issuers shall,
not less than three (3) Business Days prior to the applicable Interest
Payment Date, deposit immediately available funds into the Interest Reserve
Account in an amount equal to such deficiency. 
The Issuers acknowledge that the Issuers’ failure to provide notice or
deposit funds referenced in this Section shall not in any way exonerate or
diminish the Issuers’ obligation to make all payments under the Notes as and
when due.

 

5.2           Interest
Reserve Account Amounts. 
Upon payment in full of each of the first two (2) interest payments
due on the Notes, the Disbursement Agent shall transfer any funds and/or Cash
Equivalents in the Interest Reserve Account to the Construction Disbursement
Account and 

 

14

 

such funds and/or Cash Equivalents shall be
deemed Additional Revenue; provided, however, that if the Final
CDA Disbursement has been made pursuant to Section 7.5 prior to the
second Interest Payment Date, any funds remaining in the Interest Reserve
Account shall be disbursed to the Disbursed Funds Account.

 

6.             Certain
Covenants.

 

6.1           Notice
of Opening.  Promptly
after (but in any event within seven days after) the date of Opening, the
Issuers shall deliver an Officer’s Certificate to the Disbursement Agent and
the Trustee to the effect that the Opening has occurred.

 

6.2           Issuers’
Officer’s Certificates.

 

6.2.1        For Closing Certificate.  The Issuers shall attach to the Issuers’
Closing Certificate delivered to the Disbursement Agent and the Trustee an
Issuers’ Officer’s Certificate for Issuers’ Closing Certificate in the form of Attachment
A to Exhibit B-1 attached hereto (including all required exhibits and
attachments thereto) (the “Issuers’ Closing
Officer’s Certificate”), executed and completed as to the
information required therein.

 

6.2.2        For Construction Disbursement
Certificate.  The Issuers shall
attach to each Construction Disbursement Certificate delivered to the
Disbursement Agent and the Trustee an Issuers’ Officer’s Certificate for
Construction Disbursement Certificate in the form of Attachment A to Exhibit D-1
(including all required exhibits and attachments thereto) (the “Construction Disbursement Officer’s Certificate”),
executed and completed as to the information required therein.

 

6.2.3        For Advance Disbursement Certificate.  The Issuers shall attach to each Advance
Disbursement Certificate delivered to the Disbursement Agent and the Trustee an
Issuers’ Officer’s Certificate for Advance Disbursement Certificate in the form
of Attachment A to Exhibit D-2 (including all required exhibits and
attachments thereto) (the “Advance
Disbursement Officer’s Certificate”), executed and completed as to
the information required therein.

 

6.2.4        For First Disbursement Request.  The Issuers shall attach to the First
Disbursement Request (whether made pursuant to an Initial Disbursements
Certificate, Advance Disbursement Certificate or Construction Disbursement
Certificate) delivered to the Disbursement Agent and the Trustee a First
Disbursement Officer’s Certificate in the form of Exhibit D-3
(including all required exhibits and attachments thereto) (the “First Disbursement Officer’s Certificate”),
executed and completed as to the information required therein.

 

6.2.5        No Review Obligation.  Neither the Trustee nor the Disbursement
Agent shall have any obligation to review any Officer’s Certificates or other
documents attached to the Issuer’s Closing Certificate, the Construction
Disbursement Certificate or the Advance Disbursement Certificate or to
investigate any facts or matters contained in such Officer’s Certificates.  The Trustee and the Disbursement Agent shall
incur no liability if such Officer’s Certificates or other documents attached
to the Issuer’s Closing Certificate, the Construction Disbursement Certificate
or the Advance Disbursement Certificate do not conform to the forms 

 

15

 

attached to this
Agreement regardless of whether such Officer’s Certificates and other attached
documents are or are not reviewed by the Trustee and/or the Disbursement Agent.

 

6.3           Officer’s
Certificate as Representation and Warranty.  Each Officer’s Certificate signed on behalf
of the Issuers and delivered to the Disbursement Agent and/or the Trustee
pursuant to, or in connection with, this Agreement, shall be deemed to be a
representation and warranty by the Issuers to the Disbursement Agent and/or the
Trustee, as the case may be, as to the matters covered by such certificates.

 

7.             Construction Disbursement Account.

 

7.1           Conditions
to Initial Disbursements. 
Upon satisfaction of the conditions described below in this Section 7.1,
on the Issue Date the Disbursement Agent shall make the disbursements described
in the Initial Disbursements Certificate (the “Initial Disbursements”). 
The conditions to the Initial Disbursements shall consist of the
following:

 

(a)           The Disbursement Agent shall have
received the Proceeds;

 

(b)           The Disbursement Agent shall have
received the following executed documents: 
(i) the Initial Disbursements Certificate, (ii) the Issuers’
Closing Certificate, (iii) the Disbursement Agent’s Closing Certificate
(which the Disbursement Agent covenants and agrees to deliver to the Trustee
and the Issuers) and (iv) the Trustee’s Closing Certificate; and

 

(c)           The Disbursement Agent shall have
received confirmation from the Trustee that it has received the Initial
Disbursement Certificate, the Issuers’ Closing Certificate and the Disbursement
Agent’s Closing Certificate.

 

7.2           Conditions
to Subsequent Disbursements. 
Upon satisfaction (or a written waiver by the Trustee) of the conditions
described below in this Section 7.2, the Disbursement Agent shall
make the disbursements described in the corresponding Construction Disbursement
Request or Advance Disbursement Request (provided that the conditions set forth
in Section 7.1 shall have previously been satisfied) from the
Construction Disbursement Account to the Disbursed Funds Account:

 

(a)           The Disbursement Agent shall have
received a Construction Disbursement Request or Advance Disbursement Request
pertaining to the amounts requested for disbursement; and

 

(b)           The Trustee shall not have provided
the Disbursement Agent notice that a Default or Event of Default has occurred
and remains continuing.

 

7.3           Advance
Disbursements

 

.  Upon the satisfaction of the conditions
described below in this Section 7.3, the Issuers shall have the
right to deliver to the Disbursement Agent an Advance Disbursement Request,
which Advance Disbursement Request shall not be required to include or attach
the supporting documentation required for all other Disbursement Requests; provided,
however, that (i) within thirty (30) days after any Advance
Disbursement is made (or, if earlier, promptly following the occurrence of a
Default or an Event of Default), the Issuers shall, with respect to such
Advance Disbursement, provide the same supporting documentation 

 

16

 

as is required
under this Agreement with respect to other Construction Disbursement Requests
(which documentation may be included in a subsequent Construction Disbursement
Request) and (ii) in no event shall the outstanding balance of
undocumented Advance Disbursements from the Construction Disbursement Account
at any one time exceed $1,500,000.

 

7.4           Disbursements
after an Event of Default. 
In the event that the Trustee has provided the Disbursement Agent notice
that a Default or Event of Default exists and is continuing (unless the same
has been waived by the Trustee in writing), the Disbursement Agent shall not
approve any disbursement of funds for the Facility from the Construction
Disbursement Account.  Notwithstanding
the foregoing, the Trustee may direct that any of the following payments be
made, and provided, further, that nothing in this Section 7.4 shall
limit the Trustee’s right to the disbursement of funds in the Construction
Disbursement Account pursuant to Section 3.4:

 

(i)            if
all other conditions in Section 7.2 (including those stated in Section 7.1)
are met, funds from the Construction Disbursement Account, for work completed
or materials purchased on or prior to the date that such Default or Event of
Default first occurred;

 

(ii)           payments not to exceed One Million Five Hundred
Thousand Dollars ($1,500,000) in the aggregate to prevent the condition of the
Facility from deteriorating or to preserve any work completed on the Facility,
certified to the Disbursement Agent and the Trustee in writing by the Issuers
to be reasonably necessary or advisable; provided, however, that
the foregoing limitation may be increased or decreased by the Trustee by
written notice to the Disbursement Agent and the Issuers; and

 

(iii)          if
such condition continues for a period of three (3) consecutive months or
more, at the written request of the Issuers, Retainage Amounts for work
completed; provided that the Issuers and the Manager each certify to the
Disbursement Agent and the Trustee in writing the amount required to be paid
for such Retainage Amounts and that the conditions for paying such amounts
(other than that the Opening has occurred) are met.

 

7.5           Final
Disbursement of Funds Following Opening.

 

7.5.1        If any funds remain in the Construction
Disbursement Account and (a) Issuers have provided notice in accordance
with Section 6.1 herein that the Opening has occurred, (b) there
is no ongoing construction in connection with the Facility, other than
maintenance and repairs in the ordinary course of business and all punch list
items, in an aggregate amount (excluding Retainage Amounts) not to exceed
$250,000, and (c) there exists no continuing Default or Event of Default,
then the Issuers shall have the right to request that the Disbursement Agent
disburse to the Issuers all remaining funds in the Construction Disbursement
Account.  Upon receipt by the
Disbursement Agent of a Construction Disbursement Request with the paragraph
labeled “[For the Final CDA Disbursement Only]” included, the Disbursement
Agent shall disburse all remaining funds in the Construction Disbursement
Account as directed by the Issuers (the “Final
CDA Disbursement”).  All funds

 

17

 

disbursed to the
Issuers pursuant to this Section shall be used by the Issuers as required
pursuant to the Indenture and this Agreement, including without limitation Section 7.5.2.

 

7.5.2        To the extent that any work performed,
services rendered or materials provided in connection with the Facility as
contemplated under the Construction Disbursement Budget then in effect remain
unpaid on or after the date of the Final CDA Disbursement, the Issuers shall
apply all funds disbursed to the Issuers pursuant to Section 7.5.1
to pay all amounts due and owing under any Contracts in accordance therewith
prior to utilizing any other funds otherwise available to the Issuers for such
purposes.

 

7.6           First
Disbursement Request.

 

7.6.1        Guaranteed Maximum Price Contract.  The Issuers shall use their reasonable best
efforts to enter into with the General Contractor, as promptly as practicable
after the date hereof, a change order under the Construction Contract which
adds to the Construction Contract a guaranteed maximum price (the “GMP” and, such change order, the “GMP Change Order”) of no greater than $22.0
million (the “Maximum GMP”).

 

7.6.2        First Disbursement Request.  The Issuers shall not have the right
to deliver to the Disbursement Agent a First Disbursement Request unless the
following conditions precedent have been satisfied:  (i) the GMP Change Order has been
entered into among the Issuers and the General Contractor, (ii) in the event
that the GMP Change Order establishes a GMP in excess of the Maximum GMP, the
Issuers shall have deposited (or, concurrently with submitting the First
Disbursement Request, deposit) into the Construction Disbursement Account an
amount equal to the excess of the GMP established by the GMP Change Order over
the Maximum GMP, and (iii) the Issuers shall have complied with Section 6.2.4
hereof with respect to the First Disbursement Request.

 

8.             Amendments to Construction
Disbursement Budget; Amendments to Contracts; Amendments to Facility
Cost Schedule and Cost Overruns.

 

8.1           Construction
Disbursement Budget Amendment Process.  The Construction Disbursement Budget may be
amended by the Issuers from time to time in the manner set forth herein without
review or approval from the Trustee or the Disbursement Agent.  Subject to Section 8.2, the
Issuers shall have the right from time to time to amend the Construction
Disbursement Budget to change the amounts allocated for specific line item
components of the work required to complete the Facility, including Soft Costs;
provided that, in any such amendment, the Company may neither modify the
description of any line item nor modify the amount set forth for any such line
item incurred on or prior to the Issue Date. 
A line item in the Construction Disbursement Budget may be increased
only if the funds for such increase are made available in the Construction
Disbursement Budget from (a) previously unallocated Available Funds or an
increase in Additional Revenue, in each case to the extent not previously
expended or dedicated to the payment of items contained in the Construction
Disbursement Budget; (b) an increase in Realized Savings from another line
item and a corresponding reduction in the construction line items related to
such Realized Savings; (c) the reduction of the “contingency” line item,
if any, in the Construction Disbursement Budget or (d) the reduction of
allocated reserves in the Construction Disbursement Budget pursuant to the
terms and condition 

 

18

 

of this Agreement.  Any such amendment shall be in writing and
shall identify with particularity the line items to be changed and the amount
of such change and (x) in the event of an increase in a construction line
item, the Realized Savings, Additional Revenue, line item for “contingency” (if
any) in the Construction Disbursement Budget and/or previously allocated
reserves which are permitted to be reduced (but not any Retainage Amounts),
which are proposed to be utilized to pay for the increase; and (y) in the
case of a decrease in a construction line item, the Realized Savings in the
amount of such reduction.  Construction
line items may be reduced only upon obtaining, and in the amount of, Realized
Savings.  The “contingency” line item, if
any, in the Construction Disbursement Budget may be reduced by allocation to
other line items.  Any amounts of
Realized Savings, Additional Revenue, contingency amounts or previously
allocated reserves so identified for use in connection with a particular line
item thenceforth shall be deemed dedicated to the particular line item, unless
and until the Construction Disbursement Budget is amended to reduce the amounts
budgeted for the line item.  The Issuers
shall submit the Construction Disbursement Budget Amendment Certificate to the
Trustee in the form of Exhibit E attached hereto; provided, however, that the Issuers shall
not be required to submit a Construction Disbursement Budget Amendment
Certificate if the amendment, together with all previous amendments for which a
Construction Disbursement Amendment Certificate was not submitted to the
Trustee, does not increase the total Construction Disbursement Budget by more
than $500,000 in the aggregate.  Neither
the Trustee nor the Disbursement Agent shall have any obligation to (i) review
the Construction Disbursement Budget Amendment Certificate or any documents
attached thereto, (ii) investigate into any facts or matters contained in
such Certificate or documents attached thereto, or (iii) make any
determination as to whether the obligation to submit a Construction
Disbursement Budget Amendment Certificate is triggered.  The Trustee and Disbursement Agent shall not
be responsible for determining whether the Issuers have complied with this Section 8.1
or whether the Construction Disbursement Budget Certificate or any documents
attached thereto comply with this Section 8.1 or this Agreement
generally.  Moreover, the Trustee and
Disbursement Agent shall not incur any liability for either reviewing or
failing to review such Certificate or documents attached thereto.  Upon receipt by the Trustee of the
Construction Disbursement Budget Amendment Certificate in the form of Exhibit E
attached hereto, fully executed and completed as to the information required
therein, such amendment shall become effective hereunder and the Construction
Disbursement Budget shall thereafter be as so amended; provided, however, that if, pursuant to the
proviso in the immediately preceding sentence, the Issuers were not required to
submit a Construction Disbursement Budget Amendment Certificate to the Trustee
with respect to such amendment, then such amendment shall become effective
hereunder at the time it is entered into and the Construction Disbursement
Budget shall thereafter be as so amended. 
No amendment to the Construction Disbursement Budget shall be effective
except in accordance with the preceding sentence.  Notwithstanding the foregoing, the Issuers
shall not be required to comply with this Section 8.1 in connection
with entering into the GMP Change Order.

 

8.2           Contract
Amendment Process.  The
Company shall have the right from time to time to amend any of the Construction
Documents to which it is a party to change the scope of the work for any
portion of the Facility and/or the Company’s payment obligations thereunder
without review or approval from the Trustee or Disbursement Agent.  Any such amendment that (i) when taken
together with all other amendments to such Construction Documents results in a
cost increase in excess of Twenty-Five 

 

19

 

Thousand Dollars ($25,000) in a Material Construction Document (or,
with respect to the Construction Contract only, in excess of Seventy-Five
Thousand Dollars ($75,000)), (ii) when taken together with all other
amendments to such Contract results in a material reduction of the scope or
quality of the work constituting the design or construction of the Facility, or
(iii) results in the likely addition of more than one week of construction
(or such amendments, in the aggregate, result in the likely addition of more
than four weeks of construction), shall be in writing and shall identify with
particularity all changes being made. 
The Company shall (a) deliver to the Trustee (x) an executed
copy of the Contract amendment (the effectiveness of which will be subject only
to satisfaction of the conditions in this Section 8.2), and
(y) a Contract Amendment Certificate in the form attached hereto as Exhibit F-1,
fully completed and executed, as applicable, and (b) if entering into such
Contract Amendment will result in an amendment to the Construction Disbursement
Budget, comply with the requirements of Section 8.1.  Neither the Trustee nor the Disbursement
Agent shall have any obligation to (1) review any Contract submitted, (2) review
the Contract Amendment Certificate or any documents attached thereto, (3) investigate
into any facts or matters contained in such Certificate or documents attached
thereto, (4) make any determination as to whether the obligation to submit
a Contract Amendment Certificate is triggered or (5) determine whether an
amendment to the Construction Disbursement Budget is needed as a result of such
Contract amendment.  The Trustee and
Disbursement Agent shall not be responsible for determining whether the Issuers
have complied with this Section 8.2 or whether the Contract Amendment
Certificate or any documents attached thereto comply with this Section 8.2
or this Agreement generally.  Moreover,
the Trustee and Disbursement Agent shall not incur any liability for either
reviewing or failing to review such Certificate or documents attached
thereto.  The Contract Amendment shall be
deemed approved upon receipt by the Trustee of the Contract Amendment
Certificate.  Notwithstanding the
foregoing, the Issuers shall not be required to comply with this Section 8.2
in connection with entering into the GMP Change Order.

 

8.3           Contracts
Entered into after the Issue Date.  The Company may from time to time enter into
Contracts constituting Construction Documents consistent with the Final Plans
and the Construction Disbursement Budget, as each is in effect from time to
time without review or approval of the Trustee or Disbursement Agent.  Each such Contract shall be in writing and,
if a Material Construction Document, shall become effective when and only
when:  (i) the Company and the
Contractor have executed and delivered the Contract (with the effectiveness
thereof subject only to satisfaction of the conditions in clauses (ii), (iii) and
(iv) below); (ii) the Company has submitted to the
Trustee:  (a) such Material
Construction Document together with an Additional Contract Certificate, and all
exhibits, attachments and certificates required thereby, each duly completed
and executed, as applicable, and (b) copies of such performance and
payment bonds as the Contractor may be required to provide to the Company
pursuant to such Material Construction Document (which performance and payment
bonds shall name the Trustee and the Issuers as additional co-obligees) and a
consent substantially in the form attached hereto as Exhibit G
signed by the Contractor; (iii) if entering into such Contract will result
in an amendment to the Construction Disbursement Budget, the Issuers have
complied with the requirements of Section 8.1; and (iv) if entering
into such Contract will cause the Available Funds to be less than the Remaining
Costs, the Issuers shall have complied with the requirements of Section 8.4.  Neither the Trustee nor the Disbursement
Agent shall have any obligation to (v) review any Contract or other
document submitted in connection with such Contract, (w) review performance and
payment bonds submitted to them or any documents attached thereto, (x)
investigate into any facts or matters contained in such Contracts, performance
and payment bonds or documents attached thereto, (y) determine whether a
Contract is a Material 

 

20

 

Construction Document or (z) determine
whether an amendment to the Construction Disbursement Budget is required or if
the Available Funds will be less than the Remaining Costs.  The Trustee and Disbursement Agent shall not
be responsible for determining whether the Issuers have complied with this Section 8.3
or whether the performance and payment bonds or any documents attached thereto
comply with this Section 8.3 or this Agreement generally.  Moreover, the Trustee and Disbursement Agent
shall not incur any liability for either reviewing or failing to review such
Contracts, performance and payment bonds or documents attached thereto.  Notwithstanding the foregoing, the Issuers
shall not be required to comply with this Section 8.3 in connection
with entering into the GMP Change Order.

 

8.4           Facility
Cost Schedule and Cost Overruns.

 

(a)           The Issuers covenant to promptly (and
in any event within ten (10) days of notice or knowledge thereof) cure any
anticipated cost overrun for any line item on the Construction Disbursement
Budget (after giving effect to any applicable reserves which have been
allocated to such line item by a Construction Disbursement Budget Amendment) by
(i) providing sufficient funds to cover in full such cost overrun from
previously unallocated Available Funds or other Additional Revenue as permitted
in this Agreement (but in each case only to the extent that the same have not
previously been expended or dedicated (including Retainage Amounts) to the
payment of line items contained in the Construction Disbursement Budget) and/or
(ii) with respect to a cost overrun as to a particular line item,
effecting a Construction Disbursement Budget Amendment to dedicate such funds
to the line items in question.  Neither
the Trustee nor the Disbursement Agent shall have any obligation to determine
whether an anticipated cost overrun exists or whether the Issuers have complied
with this Section 8.4 in addressing any cost overruns.  The Trustee and Disbursement Agent shall not
incur any liability for either reviewing or failing to review any cost overrun
materials.

 

(b)           Each Facility Cost Schedule shall
set forth (i) the actual investment income (loss), less any losses or
costs associated therewith, earned on the Construction Disbursement Account
through the date of such Facility Cost Schedule, and (ii) the additional
amount of investment income which the Issuers reasonably anticipate will be
earned in the Construction Disbursement Account from such date through the
Opening.  If at any time the Issuers
submit a Facility Cost Schedule pursuant to this Section and the
Issuers can no longer reasonably anticipate that the Additional Revenue earned
(and anticipated to be earned as determined above) from investments of funds in
the Construction Disbursement Account will equal the amount of such Additional
Revenue set forth in the Construction Disbursement Budget then in effect, then:

 

(i)            if
the total amount of such Additional Revenue at such date earned or anticipated
to be earned is less than the total amount of such Additional Revenue
anticipated as of the date of the most recent disbursement from the
Construction Disbursement Account, then the Available Funds shall be deemed
reduced by the amount of such deficiency and the Company (as a condition to the
next Construction Disbursement Request) shall provide or allocate additional
Available Funds and/or otherwise amend the Construction Disbursement Budget, if
necessary, so that the Remaining Costs do not exceed the total Available Funds;
or

 

21

 

(ii)           if
the total amount of such Additional Revenue at such date earned or anticipated
to be earned is greater than the total amount of such Additional Revenue
anticipated as of the date of the most recent disbursement from the
Construction Disbursement Account, then the Available Funds shall be deemed
increased by the amount of such excess.

 

Neither
the Trustee nor the Disbursement Agent shall have any obligation to review any
Facility Cost Schedules or to determine whether the Issuers have complied with
this Section 8.4.  The Trustee and
Disbursement Agent shall not incur any liability for either reviewing or
failing to review any Facility Cost Schedules.

 

9.             Events
of Default.  The occurrence of
any of the following specified events shall be an “Event of Default”
hereunder:

 

9.1           Indenture.  A Default or an Event of Default under the
Security Documents (as such terms are defined therein) has occurred and is
continuing, in either case beyond the expiration of applicable notice, grace
and cure periods.

 

9.2           Exception
to Prior Disbursement. 
The existence of an exception to a prior disbursement relating to the
Facility in excess of $50,000 which is not remedied within thirty (30) days
after notice.

 

9.3           Insufficient
Funds.  Any time that
the amount of Available Funds is less than the Remaining Costs and such
deficiency continues for a period of thirty (30) days after notice of such
deficiency without being cured.

 

9.4           Performance
of Certain Obligations. 
The failure of the Issuers to perform, observe or comply in all material
respects with any of their covenants under this Agreement and such failure continues
for a period of five (5) days after notice thereof without being cured.

 

9.5           Failure
to Deliver Collateral Agreements. The Issuers shall fail to
deliver any material documents in accordance with the Pledge Agreement and such
failure continues for a period of five (5) days after notice without being
cured.

 

9.6           Abandonment
of Facility.

 

(a)           Except as and to the extent permitted
under the Indenture, the Company shall cease to own the Property or any portion
thereof or the buildings, fixtures and other improvements to be situated on the
Property; or

 

(b)           Except as and to the extent permitted
under the Indenture, the Issuers shall abandon the Facility or otherwise cease
to pursue the operation of the Property or shall sell or otherwise dispose of
any interest in Property.

 

9.7           Termination
or Invalidity of Construction Documents.  Any of the Material Construction Documents
shall have terminated, become invalid or illegal, or otherwise ceased to be in
full force and effect (except in accordance with its terms upon completion of
the respective work or delivery of the respective materials); provided
that with respect to any Material 

 

22

 

Construction Document other than the
Construction Contract and the Architect Agreement, no Event of Default shall be
deemed to have occurred as a result of such termination so long as (a) the
Company provides written notice to the Disbursement Agent (immediately upon,
but in no event more than two (2) Business Days after, the Company’s
becoming aware of such Construction Document’s ceasing to be in full force or
effect) that the Company intends to replace the Contractor under such
Construction Document (or that replacement is not necessary), and (b) in
each case if, in the reasonable judgment of the Company, a replacement is
necessary, the Company (i) obtains a replacement Contractor for the
affected Contractor and (ii) enters into a replacement Construction
Document in accordance with Section 8.3, on terms no less
beneficial to the Company than then current market terms, within sixty (60)
days of such termination.

 

10.           Disbursed Funds Account.

 

10.1         Rights
of the Issuers to Disbursed Funds Account.  All amounts disbursed from the Construction
Disbursement Account shall be paid directly to the Disbursed Funds
Account.  The Disbursed Funds Account
shall be maintained in the name of the Issuers and all funds deposited or held
in such account shall belong to the Issuers, against which the Issuers may draw
for expenditures permitted by this Agreement from time to time.  All funds deposited and held in the Disbursed
Funds Account shall, pending disbursement in accordance with this Agreement, be
invested in cash or Cash Equivalents as directed by the Issuers, except as
otherwise provided herein or in the Pledge Agreement.  Pursuant to the Pledge Agreement, the Issuers
have granted to the Trustee (for the benefit of itself and the holders of the
Notes) a first priority security interest in its Disbursed Funds Account.  Funds in the Disbursed Funds Account shall be
disbursed solely in accordance with the terms and conditions of, and solely for
the purposes permitted under, this Agreement and the Indenture.  Further, the Issuers shall note in its
records that all funds and other assets in the Disbursed Funds Account have
been pledged to the Trustee.

 

10.2         Right
to Substitute Disbursed Funds Account.  The Issuers from time to time shall have the
right to designate a substitute account to serve as the Disbursed Funds
Account; provided that no such substitute account shall become the “Disbursed Funds Account” until (a) the
depository financial institution at which the substitute account is located
shall have acknowledged in a manner satisfactory to the Trustee that such
institution has waived its right of set off in such account or any liens
thereto, statutory or otherwise, and will have entered into an agreement
substantially similar to a Pledge Agreement, and (b) the Trustee and the
Disbursement Agent shall have received written notice of the location and
account number of such new substitute account.

 

11.           Indemnity.

 

11.1         Limitation
of Liability.  The
Disbursement Agent’s responsibility and liability under this Agreement shall be
limited as follows:  (a) the
Disbursement Agent does not represent, warrant or guaranty to the Trustee or
the holders of the Notes the performance by the Issuers, the Manager, the
General Contractor, the Architect or any Contractor, Subcontractor or provider
of materials or services in connection with construction of the Facility; (b) the
Disbursement Agent shall have no responsibility to the Issuers, the Trustee or
the holders of the Notes as a consequence of performance by the Disbursement
Agent hereunder, except with 

 

23

 

respect to breaches of its obligations under
this Agreement or for gross negligence or willful misconduct of the
Disbursement Agent; (c) the Issuers shall remain solely responsible for
all aspects of their business and conduct in connection with the Property and
the Facility, the accuracy of all applications for payment, and the proper
application of all disbursements; (d) the Disbursement Agent is not
obligated to supervise, inspect or inform the Issuers, the Trustee or any third
party of any aspect of the construction of the Facility or any other matter
referred to above; and (e) the Disbursement Agent owes no duty of care to
the Issuers, to protect against, or to inform the Issuers of, any negligent,
faulty, inadequate or defective design or construction of the Facility or
otherwise.  The Disbursement Agent shall
have no duties or obligations hereunder, except as expressly set forth herein,
shall be responsible only for the performance of such duties and obligations, shall
not be required to take any action otherwise than in accordance with the terms
hereof and shall not be in any manner liable or responsible for any loss or
damage arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false
representations, the exercise of its discretion, or any other reason, except
for its gross negligence or willful misconduct.

 

11.2         Reliance
on Certificates.  The
Disbursement Agent may conclusively rely upon any Disbursement Request or
Officer’s Certificate furnished to the Disbursement Agent conforming to the
form required under this Agreement.  The
Disbursement Agent may rely upon any document believed by it to be genuine and
to have been signed or presented by the proper person.  The Disbursement Agent need not investigate
any fact or matter stated in a Disbursement Request or Officer’s Certificate
and shall incur no liability in failing to make any such investigation.

 

12.           Indemnity.  The Issuers each indemnify, protect, hold
harmless and agree to defend the Disbursement Agent and each of its officers,
directors, agents and employees, from and against any and all claims, actions,
obligations, liabilities and expenses, including defense costs, investigative
fees and costs, legal fees, and claims for damages, arising from the
performance by the Disbursement Agent under this Agreement, arising from the
Disbursement Agent’s reliance on any Disbursement Request, Trustee Closing
Certificate or Officer’s Certificate delivered by the Issuers under this
Agreement or arising from any material error, inaccuracy, misstatement or
omission of fact therein, except to the extent that such liability, expense or
claim is attributable to the gross negligence or willful misconduct of the
Disbursement Agent and, except to the extent that such liability, expense or
claim is imposed upon the Disbursement Agent as set forth in Section 11.1.  The provisions of this Section 12
shall survive the termination of this Agreement.

 

13.           Termination.  This Agreement shall terminate automatically
thirty (30) days following such time as all amounts in the Accounts and the
Disbursed Funds Account have been distributed pursuant to and in accordance
with the terms hereof and the Opening has occurred; provided, however,
that the obligations of the Issuers under Section 12 of this
Agreement shall survive termination of this Agreement.

 

24

 

14.           Substitution
or Resignation

 

14.1         Disbursement
Agent.  The
Disbursement Agent may be removed by the Issuers.  The removal of the Disbursement Agent and
appointment of a successor Disbursement Agent shall become effective only upon
the successor Disbursement Agent’s acceptance of appointment as provided in
this Section 14.1.

 

14.1.1      The
Disbursement Agent may resign in writing at any time and be discharged from all
duties hereunder upon 30 days’ written notice to all parties hereto.  The Trustee (if a different Person than the
Disbursement Agent) or the holders of a majority in principal amount of the
then outstanding Notes may remove the Disbursement Agent upon 30 days written
notice by so notifying the Disbursement Agent, the Trustee and the Issuers.

 

14.1.2      If
the Disbursement Agent resigns or is removed or if a vacancy exists in the
office of Disbursement Agent for any reason, the Disbursement Agent shall
notify the Trustee of such within five (5) Business Days and the Trustee
shall notify the holders of the Notes within five (5) Business Days of its
receipt of notice from the Disbursement Agent and the Trustee (if a different
Person than the Disbursement Agent) shall, and the holders of a majority in
principal amount of the then outstanding Notes (if such holders provided a notice
pursuant to Section 14.1.1 or if there is no Trustee capable of acting at
such time) may, promptly appoint a successor Disbursement Agent reasonably
acceptable to the Issuers.  Within one
year after any successor Disbursement Agent appointed by the Trustee takes
office, the holders of a majority in principal amount of the then outstanding
Notes may appoint a successor Disbursement Agent reasonably acceptable to the
Issuers to replace the Disbursement Agent appointed by the Trustee.

 

14.1.3      If
a successor Disbursement Agent does not take office within 60 days after the
retiring Disbursement Agent resigns, the retiring Disbursement Agent, the
Trustee, the Issuers or the holders of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Disbursement Agent.

 

14.1.4      A
successor Disbursement Agent shall deliver a written acceptance of its
appointment to the retiring Disbursement Agent, the Issuers and the
Trustee.  Thereupon, the removal of the
Disbursement Agent shall become effective, and the successor Disbursement Agent
shall have all the rights, powers and duties of the Disbursement Agent under
this Agreement.  A retiring Disbursement
Agent shall promptly transfer all property held by it as Disbursement Agent to
the successor Disbursement Agent.

 

14.1.5      If the Disbursement Agent consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation or association, the successor
corporation without any further act shall be the successor Disbursement Agent.

 

14.1.6      The Disbursement Agent shall at all times
be a bank chartered under the laws of the United States of America or of any
state thereof that is authorized under such laws to exercise corporate trust
power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition
and a Thomson’s Bank Watch rating of B or better.

 

25

 

15.           Account
Statement.  On the first day of
each and every calendar month, the Disbursement Agent shall deliver to the
Issuers and the Trustee a statement prepared by the Disbursement Agent in a
form reasonably satisfactory to the Trustee and the Issuers, setting forth with
reasonable particularity the balance of funds then in each of the Accounts and
the manner in which such funds are invested.

 

16.           Notice.  The parties hereto irrevocably instruct the
Disbursement Agent that on the first date upon which the balance of the
Construction Disbursement Account is reduced to zero, the Disbursement Agent
shall deliver to the Trustee and the Issuers a notice that the balance in such
account has been reduced to zero.

 

17.           Miscellaneous.

 

17.1         Waiver.  Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be deemed
to have been given unless such waiver is in writing, signed by the waiving
party and specifically designates the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.

 

17.2         Invalidity.  If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties’
intent.

 

17.3         No
Authority.  Except as
set forth herein, the Disbursement Agent shall have no authority to, and shall
not, make any warranty or representation or incur any obligation on behalf of,
or in the name of, the Trustee.

 

17.4         Assignment.  This Agreement is personal to the parties
hereto, and the rights and duties of any party hereunder shall not be
assignable except with the prior written consent of the other parties.  In any event, this Agreement shall inure to
and be binding upon the parties and their successors and permitted assigns.

 

17.5         Benefit.  The parties hereto, the holders from time to
time of the Notes, and their respective successors and assigns, but no others,
shall be bound hereby and entitled to the benefits hereof.

 

17.6         Time.  Time is of the essence of each provision of
this Agreement.

 

17.7         Governing
Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B).

 

26

 

EACH OF THE ISSUERS, THE DISBURSEMENT AGENT AND THE TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY.

 

17.8         Entire
Agreement; Amendments. 
This Agreement (together with the Indenture and the Security Documents)
contains the entire agreement among the parties with respect to the subject
matter hereof and supersedes any and all prior agreements, understandings and
commitments, whether oral or written. 
This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties.

 

17.9         Notices.  All notices and other communications required
or permitted to be given or made under this Agreement shall be in writing and
shall be deemed to have been duly given and received, regardless of when and
whether received, either (a) on the day of hand delivery; (b) on the
date of confirmation of receipt of facsimile transmission; or (c) on the
third day after sent, when sent by United States certified mail, postage and certification
fee prepaid, return receipt requested, addressed as follows:

 

To the
Disbursement Agent:

U.S. Bank
National Association

60 Livingston
Avenue

St. Paul,
Minnesota 55107

Attention:  Corporate Trust Department

Facsimile
No.:  (651) 244-0711

 

To the
Trustee:

U.S. Bank
National Association

60 Livingston
Avenue

St. Paul,
Minnesota 55107

Attention:  Corporate Trust Department

Facsimile
No.:  (651) 244-0711

 

To the Company
or the Issuers:

Diamond Jo
Worth, LLC

3rd
Street Ice Harbor

P.O. Box
1750

Dubuque, Iowa
52001

Attention:  Chief Financial Officer

Facsimile No.:
(563) 557-0549

 

With a copy
to:

Peninsula
Gaming Partners, LLC

7137 Mission
Hills Drive

Las Vegas,
Nevada 89113

Attention:  Michael S. Luzich

Facsimile No.:
(702) 247-6822

 

27

 

or at such
other address as the specified entity most recently may have designated in
writing in accordance with this paragraph to the others.  Any notice to the Disbursement Agent or the
Trustee under this Agreement shall be deemed effective only upon receipt.

 

17.10       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

17.11       Captions.  Captions in this Agreement are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.

 

17.12       Right
to Consult Counsel. 
Each of the Disbursement Agent and the Trustee may, if any of them deems
necessary or appropriate, consult with and be advised by counsel in respect of
their duties hereunder.  Each of the
Disbursement Agent or the Trustee shall be entitled to rely upon the advice of
its counsel in any action taken in its capacity as the Disbursement Agent or
the Trustee, as the case may be, hereunder and shall be protected from any
liability of any kind for actions taken in reasonable reliance upon such
opinion of its counsel.  The Issuers
agree to pay all such reasonable counsel fees and expenses.

 

17.13       Disputes.  The parties to this Agreement shall have all
rights at law and equity with respect to any disagreement or dispute by any
party or among the parties with respect to the release of funds from the
Accounts or concerning the rights or obligations of the parties with respect
thereto (including matters relating to any certificates required to be
delivered under this Agreement).

 

(a)           Any disagreement with respect to the
construction, meaning or effect of this Agreement, or any other controversy
between the parties hereto arising out of this Agreement shall be submitted to
arbitration, one arbitrator to be chosen by the Issuers, one by the Trustee,
and a third to be chosen by the first two arbitrators before they enter into
arbitration.  The arbitrators shall be
impartial and shall be active or retired persons with experience in
construction, development and /or construction lending.

 

(b)           In the event that either party should
fail to choose an arbitrator within fifteen (15) days following a written
request by the other party to enter into arbitration, the requesting party may
choose two arbitrators who shall, in turn, choose the third arbitrator.  If the first two arbitrators have not chosen
a third arbitrator at the end of fifteen (15) days following the last day of
the selection of the first two arbitrators, each of the first two arbitrators
shall name three candidates, of whom the other arbitrator shall eliminate two,
and the determination of the third arbitrator shall be made from the remaining
two candidates by drawing lots.  Each
party shall present its case to the arbitrators within fifteen (15) days
following the date of the appointment of the third arbitrator.  The decision of a majority of the three
arbitrators shall be final and binding upon both parties.  Judgment may be entered upon the arbitration
award in any court having jurisdiction. 
Any such arbitration shall take place in New York City, unless some other
location is mutually agreed upon by the parties.  The arbitrators shall resolve any dispute
arising hereunder in a manner consistent with the intent of the parties as
expressed in this Agreement. The arbitrators shall not award any punitive,
consequential or exemplary damages or any amount in excess of the amount to be
released from the relevant Account.

 

28

 

(c)           The parties shall use their best
efforts to resolve the dispute as soon as practicable and to comply, if
available, with the fast track procedures specified in the American Arbitration
Association’s Construction Industry Arbitration Rules.  Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.

 

(d)           Notwithstanding any provisions
contained herein to the contrary, the provisions contained in this Section shall
not prohibit the Trustee from exercising any of its rights or remedies set
forth in the Indenture, the Notes or the Security Documents.

 

[signature pages follow]

 

29

 

IN WITNESS
WHEREOF, the parties have executed and delivered this Cash Collateral and
Disbursement Agreement as of the day first above written.

 

 

	
  DISBURSEMENT AGENT

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard
  H. Prokosch

  
	
   

  	
  Name:

  	
  Richard H.
  Prokosch

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard
  H. Prokosch

  
	
   

  	
  Name:

  	
  Richard H.
  Prokosch

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  ISSUERS

  	
  DIAMOND JO WORTH, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Natalie
  Schramm

  
	
   

  	
  Name:

  	
  Natalie
  Schramm

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIAMOND JO WORTH CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Natalie
  Schramm

  
	
   

  	
  Name:

  	
  Natalie
  Schramm

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

[Signature Page to Cash Collateral and
Disbursement Agreement]

 

 

U.S. Bank
National Association, acting in its capacity as Securities Intermediary under
(and as defined in) the Pledge Agreement, hereby acknowledges its agreement to
be bound by the provisions set forth in Section 2.4 of this
Agreement to the extent any written direction of the Disbursement Agent
delivered to the Securities Intermediary pursuant thereto is not inconsistent
with any written direction of the Trustee delivered to the Securities
Intermediary pursuant to the Pledge Agreement.

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard
  H. Prokosch

  
	
   

  	
  Name:

  	
  Richard H.
  Prokosch

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

[Signature Page to Cash Collateral and Disbursement Agreement]

 

30

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