Document:

Exhibit 10.3

 

DIAMOND JO WORTH, LLC

DIAMOND JO WORTH CORP.

 

$40,000,000 11% Senior Secured Notes due 2012

 

PURCHASE AGREEMENT

 

June 30, 2005

 

JEFFERIES & COMPANY, INC.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California  90025

 

Ladies and Gentlemen:

 

Each of
Diamond Jo Worth, LLC, a Delaware limited liability company (the “Company”), Diamond Jo Worth Corp., a
Delaware corporation (“DJW Corp.”
and, together with the Company, the “Issuers”),
(solely with respect to Sections  5(i), 6(c), 6(g), 6(h),
6(k), 6(n), 6(o), 6(p), 6(q), 6(y), 8
and 11), Diamond Jo Worth Holdings, LLC, a Delaware limited liability
company (“Parent”), and (solely
with respect to Sections  6(c), 6(g), 6(h), 6(o),
6(p), 6(q), 8 and 11) Diamond Jo, LLC, a Delaware
limited liability company (“DJL”),
hereby agrees with you as follows:

 

1.                                      Issuance of
Securities.  The Issuers propose to issue and sell to Jefferies & Company, Inc. (the
“Initial Purchaser”), and the Initial Purchaser proposes to
purchase, $40,000,000 aggregate principal amount of the Issuers’ 11% Senior
Secured Notes due 2012 (together with the Guarantees (as defined below), if
any, endorsed thereon, the “Notes”).  The
Notes will be issued pursuant to an indenture (the “Indenture”), to be dated
as of the Closing Date (as defined below), by and among the Issuers, the Guarantors (as defined below) (if any) and
U.S. Bank National Association, as trustee (the “Trustee”).  

 

Pursuant to
the Indenture, any future guarantor which becomes a party to the Indenture
(each, a “Guarantor”), will
jointly and severally, fully and unconditionally guarantee, on a senior secured
basis, to each holder of Notes and the Trustee, the payment and performance of
the Issuers’ obligations under the Indenture, the Notes and the Security
Documents (as defined below), including the payment of principal, interest and
premium, if any, on the Notes (the “Guarantees”).

 

Pursuant to
the terms of the Security Documents, all of the respective obligations of the
Issuers and the Guarantors, if any, under the Indenture, the Notes and the
Guarantees, if any, will be secured by the following (the “Collateral”): security interests in, or
pledges of (the “Security Interests”)
substantially all of the assets (other than certain excluded assets) of, and
all of the shares of capital stock of and membership interests in the Issuers,
the Guarantors, if any, and the Issuers’ future domestic restricted
subsidiaries who become parties thereto, the Interest Reserve Account (as
defined below) and the Construction Disbursement Account (as defined below), in
each case as set forth in the Offering Circular (as defined below).

 

The Notes will
be offered and sold to the Initial Purchaser pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as amended (the “Act”). 
The Issuers have
prepared a term sheet with attachments, dated June 30, 2005 (the “Term Sheet”), and, prior to Closing,

 

 

will prepare a final offering circular (the “Offering Circular”), relating to the offer and sale of the
Notes (the “Offering”).

 

Upon original
issuance thereof, and until such time as the same is no longer required under
the Indenture or the applicable requirements of the Act, the Notes shall bear
the following legend: 

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS.  NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS (OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(k) UNDER THE SECURITIES ACT AS PERMITTING RESALES OF
RESTRICTED SECURITIES BY NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE
ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE
AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY U.S.
STATE OR ANY OTHER APPLICABLE JURISDICTION.

 

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2.                                      Agreements to
Sell and Purchase.  On the
basis of the representations, warranties and agreements contained herein, and
subject to the terms and conditions hereof, the Issuers shall issue and sell to the Initial Purchaser (and, in order to induce
the Initial Purchaser to purchase the Notes, the Issuers and Parent shall grant
the Security Interests), and the Initial Purchaser agrees to purchase from the Issuers, $40,000,000 aggregate principal amount of
Notes.  The purchase price for the Notes
shall be 95% of the principal amount thereof.

 

3.                                      Terms of
Offering.  The Initial
Purchaser has advised the Issuers that the Initial Purchaser will make offers to
sell (the “Exempt
Resales”) the Notes purchased by
the Initial Purchaser hereunder on the terms set forth in the Offering
Circular, as amended or supplemented, solely to (a) persons whom the
Initial Purchaser reasonably believes to be “qualified institutional buyers,”
as defined in Rule 144A under the Act (“QIBs”), and (b) a
limited number of institutional “accredited investors,” as defined in Rule 501(a)(1),
(2), (3) or (7) under the Act that make certain representations and
warranties to the Initial Purchaser and the Issuers (“Accredited Investors” and, together with QIBs, “Eligible Purchasers), which representations and warranties are set
forth in the form of Accredited Investor Letter attached as Annex A to
the Offering Circular (the “Accredited
Investor Letter”).

 

On the Closing
Date, the Issuers and Parent will enter into certain security and pledge
agreements, mortgages and certain other collateral documents (collectively, and
together with the Cash Collateral Agreement (as defined below), the “Security Documents”), that will provide for the grant of the
Security Interests in the Collateral to U.S. Bank National Association, as
collateral agent for the Trustee and the holders of the Notes (in such capacity,
the “Secured Party”).  The Security Interests will secure the
payment and performance when due of all of the respective obligations of the
Issuers under the Indenture and the Notes. 

 

On the Closing
Date, the Issuers, the Trustee and the disbursement agent shall enter into a
cash collateral and disbursement agreement (the “Cash Collateral Agreement”), that will provide for the deposit
of approximately $3.3 million of the net proceeds from the Offering into an
interest reserve account (the “Interest Reserve
Account”) to be used to fund the payment of the first nine months of
interest on the Notes and the deposit of the remaining net proceeds from the
Offering into a construction disbursement account (the “Construction Disbursement Account”) to be
used in connection with the design, construction, development, equipping and
opening costs of the Facility.  

 

The Notes are
being sold in connection with a financing related to the design, development,
construction, equipping and operation by the Company of the Diamond Jo Worth
Casino in Worth County, Iowa (the “Facility”).  In connection therewith, the Issuers have
entered into, or will enter into at or before Closing, the following documents
(the “Facility Documents”):  (i) Standard Form of Agreement
Between Owner and Contractor, dated as of June 6, 2005 (the “Construction Contract”), by and between the
Company and Henkel Construction Company, (ii) the Standard Form of
Agreement between Owner and Architect, dated March 1, 2005, by and between
the Company and Kittrell Garlock and Associates, AIA, Ltd., and (iii) the
Management Services Agreement (the “Management
Services Agreement”), to be entered into by and among the Company
and Peninsula Gaming Partners, LLC (“PGP”).

 

The following
documents are referred to herein as the “Note
Documents”:  (i) this Agreement, (ii) the
Indenture, (iii) the Notes (including the Guarantees (if any)), and (iv) the
Security Documents.  The Note Documents,
collectively with the Facility Documents, are referred to herein as the “Operative Documents.”  The transactions contemplated by the
Operative Documents (including,

 

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without limitation, (i) the Offering and the application of the
net proceeds therefrom as described in the Offering Circular, as amended or
supplemented, (ii) the issuance and sale of the Notes in accordance with
this Agreement, (iii) the creation, grant, recording and perfection of the
Security Interests, (iv) the contribution by Peninsula Gaming, LLC (“PGL”) of all of the outstanding membership
interests in the Company to Parent, such that immediately following such
contribution each of the Issuers is a direct wholly owned subsidiary of Parent
and Parent is a direct wholly owned subsidiary of PGL (the “Contribution”), and (v) the design,
development, construction, equipping, management and operation of the Facility,
collectively are referred to herein as the “Transactions.”

 

In addition,
following the Closing Date, the Company anticipates entering into a new senior
secured credit facility (the “New Credit
Facility”) and, in connection with the New Credit Facility, the
Trustee, as Secured Party, and the lenders thereunder or their agent shall
enter into (and the Issuers and Parent shall acknowledge) an Intercreditor
Agreement substantially in the form attached as an exhibit to the Indenture
(the “Intercreditor Agreement”).

 

4.                                      Delivery and
Payment.  Delivery to the Initial Purchaser of and
payment for the Notes shall be made at a Closing (the “Closing”) to begin at 9:00 a.m., New York City time,
on July 15, 2005, (such time and date, the “Closing Date”) at the
offices of Mayer, Brown, Rowe & Maw, LLP, 1675 Broadway, New York, New
York 10019.  The Closing Date and the
location of delivery of and the form of payment for the Notes may be varied by
agreement between the Initial Purchaser and the Issuers. 

 

The Issuers shall deliver to the Initial
Purchaser one or more certificates representing the Notes (the “Global Securities”), each in definitive
form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company (“DTC”),
or such other names as the Initial Purchaser may request upon at least one
Business Day’s notice to the Issuers,
in an amount corresponding to the aggregate principal amount of the Notes sold pursuant
to Exempt Resales to QIBs and to Accredited Investors, respectively, in each
case against payment by the Initial Purchaser of the purchase price therefore
by immediately available Federal funds bank wire transfer to such bank account
as the Issuers shall designate
to the Initial Purchaser at least two Business Days prior to the Closing.  “Business
Day” means any day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed.

 

The Global
Securities in definitive form shall be made available to the Initial Purchaser
for inspection at the offices of Mayer, Brown, Rowe & Maw, LLP, 1675
Broadway, New York, New York 10019 (or such other place as shall be acceptable
to the Initial Purchaser) not later than the close of business, New York City
time, one Business Day immediately preceding the Closing Date.

 

5.                                      Agreements of
the Issuers.  Each of the Issuers, jointly and severally,
hereby agrees, and Parent, solely with respect to Section 5(i) below
to the extent applicable to Parent, hereby agrees:

 

(a)                                  Certain Events.  To (i) advise the Initial Purchaser
promptly after obtaining knowledge (and, if requested by the Initial Purchaser,
confirm such advice in writing) of (A) the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of any of the Notes for offer or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, and (B) the happening
of any event that makes any statement of a material fact made in the Offering
Circular untrue or that requires the making of

 

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any additions to or changes in the Offering
Circular in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, (ii) use its
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption from qualification of any of the
Notes under any state securities or Blue Sky laws, and (iii) if at any
time any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of any of
the Notes under any such laws, use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest practicable time.

 

(b)                                 Offering Circular.  To (i) furnish the Initial Purchaser and
those persons identified by the Initial Purchaser to the Issuers, without
charge, as many copies of the Term Sheet and the Offering Circular, and any
amendments or supplements thereto, as the Initial Purchaser may reasonably
request, and (ii) promptly prepare, upon the Initial Purchaser’s
reasonable request, any amendment or supplement to the Offering Circular that
the Initial Purchaser, upon the advice of legal counsel, deems may be necessary
in connection with Exempt Resales (and the Issuers hereby consent to the use of
the Term Sheet and the Offering Circular, and any amendments and supplements
thereto, by the Initial Purchaser in connection with Exempt Resales).

 

(c)                                  Notice of Amendment or Supplement.  Except as set forth in Section 5(d),
not to amend or supplement the Offering Circular prior to the Closing Date, or
at any time prior to the completion of the resale by the Initial Purchaser of
all of the Notes, unless the Initial Purchaser shall previously have been
advised thereof and shall not have objected thereto within two Business Days
after being furnished a copy thereof. 

 

(d)                                 Preparation of Amendments and Supplements.  At any time prior to the completion of the
resale by the Initial Purchaser of all of the Notes, (i) if any event
shall occur as a result of which, in the reasonable judgment of the Issuers or the Initial Purchaser or
their respective counsel, it becomes necessary or advisable to amend or
supplement the Offering Circular in order to make the statements therein, in
the light of the circumstances under which they were made and when such
Offering Circular is delivered to an Eligible Purchaser, not misleading, or if
it is necessary to amend or supplement the Offering Circular to comply with
Applicable Law (as defined below), forthwith to prepare an appropriate
amendment or supplement to the Offering Circular (in form and substance
reasonably satisfactory to the Initial Purchaser) so that as so amended or
supplemented, (A) the Offering Circular will not include an untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made and when such Offering Circular is so delivered, not misleading,
and (B) the Offering Circular will comply with Applicable Law, and (ii) if
it becomes necessary or advisable to amend or supplement the Offering Circular
so that the Offering Circular will contain all of the information specified in,
and meet the requirements of, Rule 144A(d)(4) under the Act,
forthwith to prepare an appropriate amendment or supplement to the Offering
Circular (in form and substance satisfactory to the Initial Purchaser) so that
the Offering Circular, as so amended or supplemented, will contain the
information specified in, and meet the requirements of, such Rule.

 

(e)                                  Qualification of Securities.  To cooperate with the Initial Purchaser and
the Initial Purchaser’s counsel in connection with the qualification of the
Notes under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchaser may request and continue

 

5

 

such qualification in effect so long as
reasonably required for Exempt Resales, and to file such consents to service of
process or other documents as may be necessary in order to effect such
qualification; provided, that neither of the Issuers shall be
required in connection therewith (i) to file any general consent to
service of process or take any action that would subject it to service of
process in suits other than those arising out of the offer and sale of the
Notes in any jurisdiction in which it is not otherwise so subject, (ii) to
register or qualify as a foreign corporation in any jurisdiction where it is not
now so qualified or (iii) to subject itself to general taxation in respect
of doing business in any jurisdiction in which it is not otherwise so subject.

 

(f)                                    Costs and Expenses.  Whether or not any of the Transactions are
consummated or this Agreement is terminated, to pay (i) all costs,
expenses, fees and taxes incident to and in connection with the performance of
the obligations of the Issuers and Parent under this Agreement, including:  (A) the preparation, printing and
distribution of the Term Sheet and the Offering Circular and all amendments and
supplements thereto (including, without limitation, financial statements and
exhibits), and all preliminary and final Blue Sky memoranda and all other
agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith (including the furnishing of copies of the
foregoing to the Initial Purchaser and such other persons as the Initial
Purchaser may designate), (B) the printing, processing and distribution
(including, without limitation, word processing and duplication costs) and
delivery of each of the Operative Documents and any other agreements or
documents in connection with the Transactions, (C) the preparation,
issuance and delivery of the Notes, including the fees and expenses of the
Trustee and the Secured Party (including fees and expenses of their respective
counsel) and the cost of their respective personnel, and all costs and expenses
related to the delivery of the Notes to the Initial Purchaser and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, and (D) the
qualification of the Notes for offer and sale under the securities or Blue Sky
laws of the several states (including, without limitation, filing fees and fees
and disbursements of the Initial Purchaser’s counsel relating to such
registration or qualification and the preparation of memoranda related
thereto); (ii) all fees and expenses of the counsel and accountants of the
Issuers and Parent and their respective direct and indirect parents and
subsidiaries; (iii) all expenses and listing fees in connection with the
application for quotation of the Notes in The PORTALSM Market (“PORTAL”) of the National Association of Securities Dealers, Inc.
(“NASD”); (iv) all fees and expenses
(including fees and expenses of counsel) of the Issuers in connection with approval of the Notes by DTC for “book-entry”
transfer; (v) all fees charged by rating agencies in connection with the
rating of the Notes; (vi) the costs and charges of any transfer agent,
registrar and/or depositary (including DTC); (vii) all costs and expenses
in connection with the creation and perfection of the Security Interests
(including, without limitation, filing and recording fees, search fees, taxes
and costs of title policies); (viii) all costs and expenses of the
Transactions (including, without limitation, filing and recording fees); and (ix) all
fees and expenses (including reasonable fees and expenses of counsel) incurred
by the Initial Purchaser in connection with the preparation, negotiation and
execution, as applicable, of the Operative Documents and any other agreements
or documents in connection with the Transactions and the consummation of the
Transactions.

 

(g)                                 Use of Proceeds.  To use the proceeds from the sale of the
Notes in the manner described in the Offering Circular under the caption “Use
of Proceeds.” 

 

(h)                                 Waiver of Certain Laws.  To the extent it may lawfully do so, not to
insist upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any

 

6

 

stay, extension usury or other law, wherever
enacted, now or at any time hereafter in force, that would prohibit or forgive
the payment of all or any portion of the principal of or interest on the Notes,
or that may affect the covenants or the performance of the Indenture or any of
the Security Documents (and, to the extent it may lawfully do so, each Issuer
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power granted to the Trustee in the Indenture or to the
Secured Party in the Security Documents but shall suffer and permit the
execution of every such power as though no such law had been enacted).

 

(i)                                     Security Interests.  (A) To do and perform all things
required to be done and performed under the Security Documents prior to, on and
after the Closing Date, including, without limitation, all things that are
required to be done and performed under the Security Documents that are
necessary or reasonably advisable to obtain on or prior to the Closing Date (i) all
Permits (as defined below), other than any gaming approvals required to be
obtained by a purchaser in a foreclosure sale, necessary for the granting,
perfection and enforcement of the Security Interests and for the foreclosure by
the Secured Party thereon following an Event of Default (as defined in the
Indenture), (ii) all termination statements, mortgage releases and other
documents necessary to terminate any Liens (as defined in the Indenture) on the
Collateral (other than Liens created by the Indenture, Liens created by the
Security Documents and Permitted Liens (as defined in the Indenture)), and (iii) subject
to the terms of the Intercreditor Agreement and any Permitted Liens, a valid
and perfected, first priority Security Interest with respect to each of the
assets, shares of capital stock and membership interests which are to
constitute, as of the Closing Date, the Collateral. 

 

(B)  To provide an
A.L.T.A. survey of the Facility, certified to all parties designated by the
Initial Purchaser in a manner satisfactory to the Initial Purchaser, by a land
surveyor duly registered and licensed in the State in which the property
described in such survey is located and reasonably acceptable to the Initial
Purchaser, within thirty (30) days of Closing if the Issuers fail to satisfy
the condition to Closing set forth in Section 9(a)(xiv)(H).  Additional title insurance shall be provided
or additional action shall be taken within thirty (30) days of Closing to cure
defects as may be disclosed on any such survey as reasonably required by the
Initial Purchaser or the Trustee, provided that such defect be susceptible to
cure, and further provided that failure to so cure or insure over, whether the
defect be susceptible to cure or not, shall constitute an Event of Default. 

 

(j)                                     Integration.  Not to, and to ensure that no affiliate (as
defined in Rule 501(b) under the Act) of either of the Issuers will,
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any “security” (as defined in the Act) that would be integrated with the
sale of the Notes in a manner that would require the registration under the Act
of the sale to the Initial Purchaser or of the offers or sales of Notes
pursuant to Exempt Resales.

 

(k)                                  Rule 144A Information.  For so long as any of the Notes remain
outstanding, during any period in which either of the Issuers is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
to make available, upon request, to any holder of the Notes in connection with
any sale thereof and any prospective Eligible Purchaser of such Notes from such
holder, the information required by Rule 144A(d)(4) under the Act.

 

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(l)                                     DTC. 
To comply with the representation letter of the Issuers to DTC relating to the approval of
the Notes by DTC for “book entry” transfer.

 

(m)                               PORTAL. 
To use its reasonable best efforts to effect the inclusion of the Notes
in PORTAL and to use its reasonable best efforts to maintain the listing of the
Notes on PORTAL for so long as the Notes are outstanding.

 

(n)                                 Reporting Requirements.  For so long as any of the Notes remain
outstanding, to furnish to the Initial Purchaser copies of all reports and
other communications (financial or otherwise) furnished to the Trustee or to
the holders of the Notes and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Issuers with the Commission
or any national securities exchange on which any class of securities of the
Issuers may be listed. 

 

(o)                                 No Selling Efforts or General Solicitation.  Not to, and not to authorize or permit any
person acting on its behalf to, (i) distribute any offering material in
connection with the offer and sale of the Notes other than the Term Sheet and
the Offering Circular and any amendments and supplements to the Offering
Circular prepared in compliance with Section 5(d), or (ii) solicit
any offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (including, without limitation, as such
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.

 

(p)                                 No Similar Offerings.  Not to, directly or indirectly, without the
prior consent of the Initial Purchaser, offer, sell, contract to sell, grant
any option to purchase or otherwise dispose of (or announce any offer or sale
of, contract to sell, grant of any option to purchase or other disposition of)
any securities of any of the Issuers or the Guarantors (if any) substantially
similar to the Notes or the Guarantees (if any) for a period of six months
after the date of the Offering Circular; provided,
that the foregoing will not apply to (i) the Notes or the
Guarantees (if any) or (ii) borrowings (not constituting the issuance of
securities) from financial institutions to the extent not prohibited by the
Indenture.

 

(q)                                 ERISA. 
At any time prior to the completion of the resale by the Initial
Purchaser of the Notes, to notify the Initial Purchaser promptly in writing if
either of the Issuers or any of their Affiliates becomes a party in interest or
a disqualified person with respect to any employee benefit plan, and to
identify such plans.  The terms “ERISA,” “Affiliates,”
“party in interest,” “disqualified person” and “employee benefit plan” shall
have the meanings as set forth in Section 6(ii).

 

(r)                                    Facility Authorizations. 
To diligently seek the issuance of any Permit (as defined in Section 6(p))
which is necessary for the Issuers to design, construct, develop, own and
operate the Facility, including without limitation, any necessary Permit to be
issued by any Gaming Authority (as defined in Section 6(n)) or
Governmental Authority (as defined in Section 6(n)).

 

(s)                                  Performance of this Agreement.  To do and perform in all material respects
all things required or necessary to be done and performed on its part under
this Agreement on or prior to the Closing Date and to satisfy in all material
respects all conditions

 

8

 

precedent to the delivery of the Notes and
the granting, perfection and enforcement of the Security Interests in the
Collateral as of the Closing Date.

 

6.                                      Representations
and Warranties of the Issuers.  Each of
the Issuers, jointly and severally, represents and warrants to the Initial
Purchaser, and Parent represents and warrants with respect to itself (but not
the Issuers) to the Initial Purchaser solely with respect to applicable
provisions of Sections 6(c), 6(g), 6(h), 6(k), 6(n),
6(o), 6(p), 6(q) and 6(y), and DJL represents and
warrants with respect to itself (but not the Issuers) to the Initial Purchaser
solely with respect to applicable provisions of Sections 6(c), 6(g),
6(h), 6(o), 6(p) and 6(q), that:

 

(a)                                  Offering Circular.  The Offering Circular, as of its date and as
of the Closing Date will not, and each supplement or amendment thereto (if any)
as of its date will not, contain any untrue statement of a material fact or
omit to state any material fact (except with respect to offers and sales of
Notes by the Initial Purchaser to Accredited Investors, as to which the Issuers
make no representation) necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  The foregoing representation and warranty
made in this Section 6(a) shall not apply to any statements or
omissions made in reliance on and in conformity with information relating to
the Initial Purchaser furnished to the Issuers
by the Initial Purchaser specifically for inclusion in the Offering
Circular.  The Offering Circular, as of
its date and as of the Closing Date and as amended or supplemented, will
contain, all of the information specified in, and meet the requirements of, Rule 144A(d)(4) under
the Act (it being understood that the Issuers have no past or current
operations and that, accordingly, only an unaudited balance sheet (and no
profit and loss and retained earnings statements) of the Issuers is included in
the Offering Circular).  

 

(b)                                 144A Eligibility.  There are no securities of the same class
(within the meaning of Rule 144A) as the Notes of either of the Issuers
registered under the Exchange Act or listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a United
States automated inter-dealer quotation system. 
The Notes are eligible for resale pursuant to Rule 144A under the
Act.

 

(c)                                  Due Organization; Good Standing.  Each of the Issuers (i) has been duly
organized, is validly existing and is in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite power and authority
to conduct and carry on its business and to own, lease, use and operate its
properties and assets as described in the Offering Circular, and (iii) is
duly qualified or licensed to do business and is in good standing as a foreign
limited liability company or corporation, as the case may be, authorized to do
business in each jurisdiction in which the nature of its business or the
ownership, leasing, use or operation of its properties and assets requires such
qualification or licensing, except where the failure to be so qualified or
licensed would not, singly or in the aggregate, have a material adverse effect
on (A) the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Issuers, taken as a whole, (B) the
ability of either Issuer, Parent or DJL to perform its obligations in all
material respects under any of the Operative Documents to which it is a party
or to consummate in all material respects the Transactions, (C) the
enforceability of any of the Security Documents to which it is a party or the
attachment, perfection or priority of any of the Security Interests intended to
be created thereby in any portion of the Collateral in which it has an interest
or (D) the validity of any of the Operative Documents to which it is a
party or the consummation of any of the Transactions in which it is a party
(each, a “Material Adverse

 

9

 

Effect”).  Each of Parent and DJL has been duly
organized, is validly existing and is in good standing under the laws of the
State of Delaware.

 

(d)                                 Subsidiaries.  Immediately following the Closing, (i) each
of DJW Corp. and the Company will have no subsidiaries, and (ii) Parent
will directly own 100% of (A) the outstanding membership interests in the
Company, and (B) the outstanding shares of capital stock of DJW Corp., in
each case, free and clear of all Liens, except for Liens created by the
Indenture and the Security Documents. 
Except as disclosed in the Offering Circular, there are no outstanding (i) securities
convertible into or exchangeable for any capital stock of or any membership
interests in, as the case may be, either of the Issuers, (ii) options,
warrants or other rights to purchase or subscribe for any capital stock of or
any membership interests in, or any securities convertible into or exchangeable
for any capital stock of or any membership interests in, as the case may be,
either of the Issuers or (iii) contracts, commitments, agreements,
understandings, arrangements, undertakings, rights, calls or claims of any kind
relating to the issuance of any capital stock of or any membership interests
in, as the case may be, either of the Issuers, any such convertible or
exchangeable securities or any such options, warrants or rights.  Except as set forth above, immediately
following the Closing, neither of the Issuers will directly or indirectly own
any capital stock of or other equity interest in any person.

 

(e)                                  Capitalization.  All of the outstanding shares of capital
stock of or membership interests in, as the case may be, each of the Issuers have been duly authorized,
are validly issued, fully paid and nonassessable, and were not issued in
violation of, and are not subject to, any preemptive or similar rights.  The table under the caption “Capitalization”
in the Offering Circular (including the footnotes thereto) sets forth, as of June 30,
2005, (i) the actual capitalization of the Company and its subsidiaries,
on a consolidated basis, and (ii) the as adjusted capitalization of the
Company and its subsidiaries, on a consolidated basis, after giving effect to
the Offering and the application of the net proceeds therefrom.  Immediately following the Closing, except as
set forth in such table or as described in the footnotes thereto, neither of
the Issuers will have any
liabilities, absolute, accrued, contingent or otherwise other than:  (i) liabilities that are reflected in
the Company Financial Statements (as defined below) or (ii) liabilities
incurred subsequent to June 30, 2005, in the ordinary course of business,
that would not, singly or in the aggregate, have a Material Adverse Effect. 

 

(f)                                    No Registration Rights.  There are no contracts, commitments,
agreements, arrangements, understandings or undertakings of any kind to which
either of the Issuers is a party, or by which either of them is bound, granting
to any person the right (i) to require either of the Issuers to file a registration
statement under the Act with respect to any securities of either of the Issuers or requiring either of the Issuers to include such securities
with the Notes registered pursuant to any registration statement, or (ii) except
for this Agreement, to purchase or offer to purchase any securities of
either of the Issuers or any of their respective affiliates. 

 

(g)                                 Power and Authority.  Each of the Issuers, Parent and DJL has all
requisite power and authority to execute and deliver, and to perform its
obligations under, the Operative Documents to which it is a party and to
consummate the Transactions to which it is a party.  

 

10

 

(h)                                 Authorization of this Agreement.  This Agreement and the Transactions
contemplated hereby (including, without limitation, the Offering and the
issuance and sale of the Notes in accordance with this Agreement) have been
duly authorized by each of the Issuers, Parent and DJL, in each case, to the
extent party thereto, and this Agreement has been validly executed and
delivered by, and is the legal, valid and binding obligation of, each of the
Issuers, Parent and DJL, in each case, to the extent party thereto, enforceable
against each of the Issuers, Parent and DJL, in each case, to the extent party
thereto in accordance with its terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally, (ii) any rights of acceleration and the
availability of equitable remedies and general principles of equity (whether
considered in a proceeding in equity or at law) and (iii) with respect to
rights to indemnity or contribution thereunder, by Federal and state securities
laws and public policy considerations. 

 

(i)                                     Authorization of Indenture.  The Indenture and the Transactions
contemplated thereby have been duly authorized by each of the Issuers and, on the Closing Date, the
Indenture will have been validly executed and delivered by, and will be the
legal, valid and binding obligation of, each of the Issuers, enforceable against each of the Issuers in accordance with its terms, except that (i) such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be subject to
general principles of equity (whether considered in a proceeding in equity or
at law).  On the Closing Date, the
Indenture will conform to the requirements of the Trust Indenture Act of 1939,
as amended (the “TIA”), applicable to an indenture
that is required to be qualified under the TIA.

 

(j)                                     Authorization of Notes.  The Notes have been duly authorized by each of the Issuers for issuance and
sale to the Initial Purchaser pursuant to this Agreement and, on the Closing
Date, will have been validly executed, authenticated, issued and delivered by
the Issuers in accordance with
the terms of this Agreement and the Indenture. 
When the Notes have been issued and executed by the Issuers and
authenticated by the Trustee in accordance with the terms of the Indenture and
delivered to and paid for by the Initial Purchaser in accordance with the terms
of this Agreement, the Notes will be legal, valid and binding obligations of each of the Issuers, entitled to the
benefits of the Indenture and enforceable against each of the Issuers in accordance with their terms, except to
the extent that (i) such enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally
and (ii) any rights of acceleration and the availability of equitable
remedies may be subject to general principles of equity (whether considered in
a proceeding in equity or at law).  Upon
and following delivery to the Initial Purchaser, the Notes will rank on a parity
with all senior Indebtedness (as defined in the Indenture) of each of the Issuers that is
outstanding on the date hereof or that may be incurred hereafter and senior to
all other Indebtedness of each of the
Issuers that is outstanding on the date hereof or that may be incurred
hereafter; provided, that pursuant to the
Intercreditor Agreement, the Lien on the Collateral securing the New Credit
Facility will be senior to the Lien on the Collateral securing the Notes and
the Guarantees (if any).

 

(k)                                  Authorization of Security Documents.  Each of the Security Documents and the
Transactions contemplated thereby (including, without limitation, the creation,
grant, recording and perfection of the Security Interests, the execution and
filing of financing statements and the payment of any fees and taxes in
connection therewith) have been duly authorized by each of the Issuers and
Parent, in each case, to the extent party thereto, on the Closing Date, each

 

11

 

of the Security Documents will have been
validly executed and delivered by, and will be the legal, valid and binding
obligation of, each of the Issuers and Parent, in each case, to the extent
party thereto, enforceable against each of the Issuers and Parent, in each
case, to the extent party thereto in accordance with its terms, except that (i) such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be subject to
general principles of equity (whether considered in a proceeding in equity or
at law).

 

(l)                                     Authorization of Other Operative Documents and Other Transactions.  Each of the Facility Documents and the Transactions
contemplated thereby have been duly authorized by each of the Issuers which is
a party thereto and, on the Closing Date, each of the Facility Documents will
have been validly executed and delivered by, and will be the legal, valid and
binding obligation of, each of the Issuers which is a party thereto,
enforceable against each of the Issuers which is a party thereto in accordance
with its terms, except that (i) such enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors’ rights
generally and (ii) any rights of acceleration and the availability of
equitable remedies may be subject to general principles of equity (whether
considered in a proceeding in equity or at law).  On the Closing Date, the Management Agreement
will be the legal, valid and binding obligation of PGP, enforceable against PGP
in accordance with its terms, except that (i) such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and (ii) any rights of acceleration and the
availability of equitable remedies may be subject to general principles of
equity (whether considered in a proceeding in equity or at law).

 

(m)                               Actions in Connection with the Transactions.  Each of the Operative Documents, as executed
and delivered, and each of the Transactions described in the Offering Circular,
conforms in all material respects to the description thereof in the Offering
Circular.  

 

(n)                                 No Violation.  The Company is not in violation of its
certificate of formation or operating agreement (the “Company
Charter Documents”), DJW Corp. is not in violation of its charter or
bylaws (the “DJW Corp. Charter Documents”), and
Parent is not in violation of its certificate of formation or operating
agreement (the “Parent Charter Documents” and,
collectively with the Company Charter Documents, the DJW Corp. Charter
Documents and the certificate of formation and operating agreement of DJL, the “Charter Documents”). 
Neither of the Issuers nor Parent is (i) in violation of any
Federal, state, municipal, county, parish, local or foreign statute, law,
ordinance or standard applicable to it, or any judgment, decree, rule,
regulation or order applicable to it (including, without limitation, common law
and Chapter 99F of the Code of Iowa (1999) in each case including the rules and
regulations promulgated thereunder (collectively, “Applicable
Law”), of any government, governmental or regulatory agency or body
(including, without limitation, the Iowa Racing and Gaming Commission or other
applicable gaming authority) (each, a “Gaming Authority”),
court, arbitrator or self-regulatory organization, domestic or foreign (each, a
“Governmental Authority”) or (ii) in
breach of or default under any bond, debenture, note or other evidence of
indebtedness, indenture, mortgage, deed of trust, lease or any other agreement
or instrument to which any such person is a party or by which any of them or
any of their respective equity interests or other property is bound (collectively,
“Applicable Agreements”), other than, in
the case of each of the immediately preceding clauses (i) and (ii),
violations, breaches or defaults that would not, singly or in the aggregate,
have a Material Adverse Effect.  There
exists no condition

 

12

 

that, with the passage of time or otherwise,
would reasonably be expected to (x) constitute a violation of (A) the
Charter Documents or (B) Applicable Laws or (y) constitute a breach of or
default under any Applicable Agreement or (z) result in the imposition of any
penalty or the acceleration of any indebtedness, other than, in the case of the
immediately preceding clauses (x)(B),(y) and (z), such violations, breaches,
penalties or defaults that would not, singly or in the aggregate, have a
Material Adverse Effect.  All Applicable
Agreements are in full force and effect with respect to the Issuers, in each
case, to the extent a party thereto, and are legal, valid and binding
obligations of the Issuers, in each case, to the extent a party thereto.

 

(o)                                 No Conflict.  None of the execution, delivery or (assuming
satisfaction of the condition specified in Section 9(a)(xii))
performance of any of the Operative Documents, by either Issuer, Parent or DJL
in each case, to the extent a party thereto, nor the compliance by it with the
terms and provisions thereof, nor the consummation of any of the Transactions,
shall conflict with, violate, constitute a breach of or a default (with the
passage of time or otherwise) under, result in the imposition of a Lien on any
assets of or any capital stock of or membership interests in either of the Issuers (except for Liens created by
the Indenture, Liens created by the Security Documents and Permitted Liens), or
result in an acceleration of indebtedness under or pursuant to, (i) its
Charter Documents, (ii) the Peninsula Indenture (as defined herein), the
Existing Credit Agreement (as defined herein) or any other Applicable
Agreement, or (iii) (assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 7 of this Agreement
and, if any Exempt Resales are made to Accredited Investors, the accuracy of
the representations and warranties of such Accredited Investors contained in
the Accredited Investor Letters executed by such Accredited Investors) any
Applicable Law, other than, in the case of the immediately preceding clauses (ii) and
(iii), such violations, breaches or defaults that would not, singly or in the
aggregate, have a Material Adverse Effect. 
After giving effect to the Transactions, no Default or Event of Default
(each, as defined in the Indenture) will exist.

 

(p)                                 Permits. 
Except as disclosed in the Offering Circular and assuming the accuracy
of the representations and warranties of the Initial Purchaser in Section 7
of this Agreement and, if any Exempt Resales are made to Accredited Investors,
the accuracy of the representations and warranties of such Accredited Investors
contained in the Accredited Investor Letters executed by such Accredited
Investors, no permit, certificate, authorization, approval, consent, license or
order of, or filing, registration, declaration or qualification with, any
Governmental Authority or any other person (collectively, “Permits”)
is required by either Issuer or Parent to own, lease, use and operate its
properties and assets and to conduct and carry on its business as described in
the Offering Circular, or by either Issuer, Parent or DJL in connection with,
or as a condition to, the execution, delivery or performance of any of the
Operative Documents by it to the extent it is a party thereto, the compliance
with the terms and provisions thereof or the consummation of any of the
Transactions to the extent it is a party thereto, other than (i) such
Permits as have been made or obtained on or prior to the Closing Date, which
Permits are in full force and effect on the Closing Date, (ii) as may be
required for Exempt Resales under the securities or blue sky laws of the
various jurisdictions in which the Notes are being offered by the Initial
Purchaser and (iii) such Permits, the failure of which to make or obtain
would not, singly or in the aggregate, have a Material Adverse Effect.

 

(q)                                 No Proceedings.  Except as disclosed in the Offering Circular
and other than ongoing general licensing
investigations conducted in the ordinary course of business, there is no
action, claim, suit, demand, hearing, notice of violation or deficiency, or
proceeding

 

13

 

(including, without limitation, any
investigation or partial proceeding, such as a deposition), domestic or foreign
(collectively, “Proceedings”),
pending or, to the knowledge of the Issuers, threatened, either (i) in
connection with, or that seeks to restrain, enjoin or prevent the consummation
of, or that otherwise objects to, any of the Operative Documents or any of the
Transactions, or (ii) that could, singly or in the aggregate, have a
Material Adverse Effect.  Neither of the
Issuers nor Parent is subject to any judgment, order, decree, rule or
regulation of any Governmental Authority that could, singly or in the
aggregate, have a Material Adverse Effect. 
No injunction or order has been issued and no Proceeding is pending or,
to the knowledge of the Issuers, threatened that (i) asserts that the
offer, sale and delivery of the Notes to the Initial Purchaser pursuant to this
Agreement or the initial resale of the Notes by the Initial Purchaser in the
manner contemplated by this Agreement is subject to the registration requirements
of the Act, or (ii) would prevent or suspend the issuance or sale of the
Notes, including the Exempt Resales, or the use of the Preliminary Offering
Circular, the Offering Circular, or any amendment or supplement thereto, in any
jurisdiction.

 

(r)                                    Regulated Persons.  Each of the Issuers’ respective directors,
officers, key personnel, partners, members and persons holding a five percent
or greater equity or economic interest in the Issuers (each of such persons, a “Regulated Person” and, collectively, the “Regulated Persons”) has all Permits (including, without
limitation, Permits with respect to engaging in gaming operations) necessary or
advisable to own, lease, use and operate the properties and assets and to
conduct and carry on the businesses described in the Offering Circular, other
than such Permits the failure of which to have would not, singly or in the
aggregate, have a Material Adverse Effect (a “Material
Permit”).  All Material
Permits are valid and in full force and effect. 
Each of the Regulated Persons is in compliance with the terms and
conditions of all Permits (including, without limitation, Permits with respect
to engaging in gaming or racing operations) necessary or advisable to own,
lease, use and operate the properties and assets and to conduct and carry on
the businesses described in the Offering Circular, other than where such
failure to be in compliance would not, singly or in the aggregate, have a
Material Adverse Effect.  None of the
execution, delivery or performance of any of the Operative Documents, nor the
compliance with the terms and provisions thereof, nor the consummation of any
of the Transactions, will allow or result in, and no event has occurred which
allows or results in, or after notice or lapse of time would allow or result
in, the imposition of any material penalty under, or the revocation or
termination of, any Material Permit or any material impairment of the rights of
the holder of any Material Permit. 
Neither of the Issuers has received any notice from any issuer, and the
Issuers have no actual knowledge, that any issuer is considering limiting,
conditioning, suspending, modifying, revoking or not renewing any Material
Permit. 

 

(s)                                  No Investigations of Regulated Persons. 
To the knowledge of the Issuers, except as disclosed in the Offering
Circular, no Gaming Authority is investigating any Regulated Person, other than ongoing general licensing
investigations conducted in the ordinary course of business.  

 

(t)                                    Title to Assets.  Immediately following the Closing, each of
the Issuers (i) will have
good and marketable title, free and clear of all Liens (other than Liens
created by the Indenture, Liens created by the Security Documents and Permitted
Liens), to all property and assets described in the Offering Circular as being
or to be owned by it and (ii) will hold a valid leasehold interest with
respect to each such lease and will remain in possession of the real

 

14

 

property leased pursuant to those leases
until the date the lease expires in accordance with its terms.  DJW Corp. has no assets, other than assets
received in payment for its capital stock. 

 

(u)                                 Sufficiency and Condition of Assets.  The assets of each of the Issuers include all of the assets and
properties necessary or required in, or otherwise material to, the conduct of
the businesses of each of them as currently conducted and as proposed to be
conducted (as described in the Offering Circular), and such assets are in
working condition, except where the failure of such assets to be in working
condition would not, singly or in the aggregate, have a Material Adverse
Effect.  Without limiting the foregoing,
each of the properties of the Issuers
(including, without limitation, all buildings, structures, improvements and
fixtures located thereon, thereunder, thereover or therein, and all
appurtenances thereto and other aspects thereof) is otherwise suitable,
sufficient, adequate and appropriate in all respects (including physical,
structural, operational, legal, practical and otherwise) for its current and
proposed use, operation and occupancy, except, in each such case, for such
failures to meet such standards as would not, singly or in the aggregate, have
a Material Adverse Effect.  

 

(v)                                 Insurance. 
As of the Closing, each of the Issuers
maintains reasonably adequate insurance covering its properties, operations,
personnel and businesses against losses and risks in accordance with customary
industry practice, and all such insurance is outstanding and duly in force. 

 

(w)                               Real Property.  No condemnation, eminent domain, or similar
proceeding exists, is pending or, to the knowledge of the Issuers, is
threatened, with respect to or that could affect any real properties owned by
either of the Issuers, except
for such proceedings as would not, singly or in the aggregate, have a Material
Adverse Effect.  No real property owned
by either of the Issuers is
subject to any sales contract, option, right of first refusal or similar
agreement or arrangement with any third party. 
There is no real property currently under contract or subject to an
option in favor of either of the Issuers,
except for real property which the failure of the Issuers to acquire, would not, singly or in the aggregate, have
a Material Adverse Effect.

 

(x)                                   Related Party Transactions.  Except as disclosed in the Offering Circular,
there are no related party transactions that would be required to be disclosed
in the Offering Circular if the Offering Circular were a prospectus included in
a registration statement on Form S-1 filed under the Act. 

 

(y)                                 Security Interests.  Upon execution and delivery of the Security
Documents by the Issuers and Parent, in each case, to the extent it is a party
thereto, and the issuance of the Notes, the Security Documents to which it is a
party will create, in favor of the Secured Party for the benefit of the holders
of the Notes, a legal, valid and enforceable security interest in (subject to
Permitted Liens) all of the right, title and interest of the Issuers and
Parent, as the case may be, in the Collateral covered by the Security Documents
and the proceeds thereof.  Upon: (i) the
filing or recording of applicable Security Documents or appropriate Uniform
Commercial Code financing statements with the appropriate filing, records,
registry, and/or other public office (with respect to filings to be made in the
U.S. Patent and Trademark Office, within three (3) months of the date of
the applicable Security Document, and with respect to filings in the U.S.
Copyright Office within one (1) month of the date of the applicable
Security Document), together with the payment of the requisite filing or
recordation fees related thereto, (ii) in the case of each Securities
Account and the Investment Related Property therein (as each such term is

 

15

 

defined in the Security Agreement) with
respect to which a control agreement, in the form of Exhibit B to the
Security Agreement, has been executed and delivered, and (iii) in the case
of each Deposit Account (as defined in the Security Agreement) and the cash and
other funds on deposit therein with respect to which a control agreement, in
the form of Exhibit C to the Security Agreement, has been executed and
delivered, the Security Interests will constitute first priority security
interests in (subject to Permitted Liens), such Collateral (other than
insurance policies).  As of the Closing
Date, the Collateral will be subject to no Liens other than Permitted Liens. 

 

(z)                                   Taxes. 
All material tax returns required to be filed by either of the Issuers in any jurisdiction
(including foreign jurisdictions) have been filed and, when filed, all such
returns were accurate in all material respects, and all taxes, assessments,
fees and other charges (including, without limitation, withholding taxes,
penalties and interest) due or claimed to be due from either of the Issuers have been paid, other than
those being contested in good faith by appropriate proceedings, or those that
are currently payable without penalty or interest and, in each case, for which
an adequate reserve or accrual has been established on the books and records of
the Issuers, as applicable, in
accordance with generally accepted accounting principles of the United States,
consistently applied (“GAAP”).  There are no actual or proposed additional
tax assessments for any tax period against either of the Issuers that would, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The charges, accruals and reserves on the
books and records of the Issuers
in respect of any tax liability for any tax periods not finally determined are
adequate to meet any assessments of tax or re-assessments of additional tax for
any such period.

 

(aa)                            Intellectual Property.  The Issuers
own, possess or are licensed under, and have the right to use, all trademarks,
service marks, trade names and other intellectual property (collectively, “Intellectual Property”) currently used in and material to
the conduct of their business, free and clear of all Liens, other than
Permitted Liens.  To the knowledge of the
Issuers, no claims have been asserted by any person challenging the use of any
such Intellectual Property by either of the Issuers and there is no valid basis for any such claim, and the
use of such Intellectual Property by the Issuers
will not infringe on the Intellectual Property rights of any other person.

 

(bb)                          Accounting Controls.  Each of the Issuers maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) material transactions
are executed in accordance with management’s general or specific authorization,
(ii) material transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP, and to maintain asset
accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any material
differences.

 

(cc)                            Financial Statements.  The unaudited balance sheet as of June 30,
2005 of the Company contained in the Offering Circular (the “Company Financial Statements”) presents fairly the financial
position of the Company as of its date, and has been prepared in accordance
with GAAP.

 

(dd)                          No Material Adverse Change.  Subsequent to the respective dates as of
which information is given in the Offering Circular, except as disclosed in the
Offering Circular,

 

16

 

(i) neither of the Issuers has incurred any liabilities,
direct or contingent, that are material, singly or in the aggregate, to any of
them, or has entered into any material transactions not in the ordinary course
of business, (ii) there has not been any material decrease in the capital
stock or membership interests, as the case may be, or any material increase in
long-term indebtedness or any material increase in short-term indebtedness of
either of the Issuers, or any
payment of or declaration to pay any dividends or any other distribution with
respect to either of the Issuers,
and (iii) there has not been any material adverse change in the
properties, business, prospects, operations, earnings, assets, liabilities or
condition (financial or otherwise) of the Issuers taken as a whole (each of clauses (i) and (iii), a “Material Adverse Change”). 
To the actual knowledge of the
Issuers after reasonable inquiry, there is no event that is reasonably likely
to occur, which if it were to occur, could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect, except such events
that have been disclosed in the Offering Circular.

 

(ee)                            Ratings. 
No “nationally recognized statistical rating organization” as such term
is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed either of the Issuers
that it is considering imposing) any condition (financial or otherwise) on the Issuers’ retaining any rating assigned
to any securities of either of the Issuers,
or (ii) has indicated to either of the Issuers that it is considering (A) the
downgrading, suspension, or withdrawal of, or any review for a possible change
that does not indicate the direction of the possible change in, any rating so
assigned, or (B) any change in the outlook for any rating of any
securities of either of the Issuers.

 

(ff)                                Solvency. 
Each of the Issuers is incurring its respective indebtedness under the
Notes for proper purposes and in good faith. 
Immediately before and after giving effect to the issuance of the Notes,
for each of the Issuers (on a consolidated basis) considered as going concerns,
(i) its assets at a fair valuation exceed the sum of its debts; (ii) the
present fair salable value of its assets is not less than the amount that will
be required to pay its probably liability on its existing debts as they become
absolute and matured, (iii) it has and will have adequate capital with
which to conduct the business it is presently conducting and presently
anticipates conducting; and (iv) it does not intend to incur, and does not
believe and reasonably should not believe that it will incur, debts beyond its
ability to pay as those debts become due. 
Neither of the Issuers is aware of any reason why it would be
inappropriate to consider the Issuers as a going concern.  For purposes of this paragraph, “debts”
includes contingent and unliquidated debts, at a fair valuation.

 

(gg)                          No Solicitation.  Neither of the Issuers nor any of their affiliates nor anyone acting on their
behalf has (i) taken, directly or indirectly, any action designed to cause
or to result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of the Notes or
to facilitate the sale or resale of any of the Notes, (ii) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, any of
the Notes, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of either of the Issuers.

 

(hh)                          No Registration.  Without limiting Sections 6(o) and 6(p),
no registration under the Act, and no qualification of the Indenture under the
TIA is required for the sale of the Notes to the Initial Purchaser as
contemplated hereby or for the Exempt Resales, assuming (i) that the
purchasers in the Exempt Resales are Eligible Purchasers, (ii) the
accuracy of the Initial Purchaser’s representations contained in Section 7
of this Agreement and (iii) if any Exempt

 

17

 

Resales are made to Accredited Investors, the
accuracy of the representations and warranties of such Accredited Investors
contained in the Accredited Investor Letters executed by such Accredited
Investors.  No form of general
solicitation or general advertising (including, without limitation, as such
terms are defined in Regulation D under the Act) was used by either of the Issuers or any of their respective
affiliates or any of their respective representatives in connection with the
offer and sale of any of the Notes or in connection with Exempt Resales.  No securities of the same class as the Notes
have been offered, issued or sold by either of the Issuers or any of their respective affiliates within the
six-month period immediately prior to the date hereof.  

 

(ii)                                  ERISA. 
Neither of the Issuers nor any of their respective “Affiliates”
maintains a plan that is intended to qualify under Section 401(a) of
the Code, or is a “party in interest” or a “disqualified person” with respect
to any employee benefit plans.  No
condition exists or event or transaction has occurred in connection with any
employee benefit plan that could result in either of the Issuers or any such “Affiliate”
incurring any liability, fine or penalty that could, singly or in the
aggregate, have a Material Adverse Effect. 
Neither of the Issuers or any of the Guarantors nor any trade or
business under common control with the Issuers or the Guarantors (for purposes
of Section 414(c) of the Code) maintains any employee pension benefit
plan that is subject to Title IV of the Employee Retirement Income Act of 1974,
as amended, or the rules and regulations promulgated thereunder (“ERISA”).

 

The terms “employee benefit
plan,” “employee pension benefit plan,” and “party in interest” shall have the
meanings assigned to such terms in Section 3 of ERISA.  The term “Affiliate” shall have the meaning
assigned to such term in Section 407(d)(7) of ERISA, and the term “disqualified
person” shall have the meaning assigned to such term in section 4975 of
the Internal Revenue Code of 1986, as amended, or the rules, regulations and
published interpretations promulgated thereunder (collectively the “Code”).

 

(jj)                                  Investment Company Act and Other Federal Regulations.  Neither of the Issuers has taken, and none of them will take, any action that
may cause this Agreement or the issuance of the Notes to violate or result in a
violation of Section 7 of the Exchange Act (including, without limitation,
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System).  Neither of the Issuers is subject to regulation, or
shall become subject to regulation upon the consummation of the Offering and
sale of the Notes and the application of the net proceeds thereof as described
in the Offering Circular, under the Investment Company Act of 1940, as amended,
and the rules and regulations and interpretations promulgated thereunder.

 

(kk)                            No Brokers.  Neither of the Issuers has dealt with any broker, finder, commission agent or
other person (other than the Initial Purchaser) in connection with the Offering
and neither of the Issuers is
under any obligation to pay any broker’s fee or commission in connection with
the Offering (other than commissions and fees to the Initial Purchaser).

 

(ll)                                  No Labor Disputes.  Except as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect, neither of
the Issuers is engaged in any
unfair labor practice.  There is (i) no
unfair labor practice complaint or other proceeding pending or, to the
knowledge of the Issuers, threatened against either of the Issuers before the National Labor
Relations Board or any state, local or foreign labor relations board or any
industrial tribunal, and no grievance or arbitration proceeding arising out of
or under any collective

 

18

 

bargaining agreement is so pending or, to the
knowledge of the Issuers, threatened, (ii) no strike, labor dispute,
slowdown or stoppage pending or, to the knowledge of the Issuers,
threatened against either of the Issuers, and (iii) no union representation question
existing with respect to the employees of either of the Issuers, and, to the knowledge of the Issuers, no union
organizing activities are taking place except, in the case of each of clauses
(i), (ii) and (iii) above, as would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(mm)                      Environmental
Laws.  Except as disclosed in the Offering
Circular or as otherwise would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect or otherwise require disclosure in
the Offering Circular, (i) neither of the Issuers has been or is in
violation of any Federal, state or local laws and regulations relating to
pollution or protection of human health or the environment, including, without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of toxic or hazardous substances, materials or wastes, or
petroleum and petroleum products (“Materials of Environmental
Concern”), or otherwise relating to the protection of human health
and safety, or the use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, “Environmental
Laws”), which violation includes, but is not limited to,
noncompliance with, or lack of, any permits or other environmental
authorizations; (ii) to the knowledge of the Issuers, there are no
circumstances, either past, present or that are reasonably foreseeable, that
may lead to any such violation in the future; (iii) neither of the Issuers has received any
communication (written or oral), whether from a Governmental Authority or
otherwise, alleging any such violation; (iv) there is no pending or, to
the knowledge of the Issuers, threatened claim, action, investigation, notice
(written or oral) or other Proceeding by any person or entity alleging
potential liability of either of the Issuers
(or against any person or entity for whose acts or omissions either of the Issuers is or may reasonably be
expected to be liable, either contractually or by operation of law) for
investigatory, cleanup, or other response costs, or natural resources or
property damages, or personal injuries, attorney’s fees or penalties relating
to (A) the presence, or release into the environment, of any Materials of
Environmental Concern at any location, or (B) circumstances forming the
basis of any violation or potential violation, of any Environmental Law
(collectively, “Environmental Claims”); and (v) to
the knowledge of the Issuers, there are no past or present actions, activities,
circumstances, conditions, events or incidents that could reasonably be
expected to form the basis of any Environmental Claim.  

 

Each of the Issuers, as appropriate, has
conducted environmental investigations of, and have reviewed reasonably
available information regarding, the business, properties and operations of
each of the Issuers, and of
other properties within the vicinity of their business, properties and
operations, as appropriate for the circumstances of each such property and
operation; on the basis of such reviews, investigations and inquiries, the Issuers have reasonably concluded
that any costs and liabilities associated with such matters would not have,
singularly or in the aggregate, a Material Adverse Effect or otherwise require
disclosure in the Offering Circular.

 

(nn)                          Market Data.  All
statistical and market and industry related data included in the Offering
Circular are based on or derived from sources which the Issuers believe to be reliable and accurate.

 

(oo)                          Representations and Warranties.  Each certificate signed pursuant to Section 9(a)(viii) by
any officer of either of the Issuers and delivered to the Initial Purchaser or

 

19

 

counsel for the Initial Purchaser pursuant to
this Agreement shall be deemed to be a representation and warranty by such
Issuer or Guarantor to the Initial Purchaser as to the matters covered thereby.

 

7.                                      Representations
and Warranties of the Initial Purchaser.  The Initial Purchaser represents and warrants
to the Issuers
that:

 

(a)                                  QIB. 
It is a QIB with such knowledge and experience in financial and business
matters as is necessary in order to evaluate the merits and risks of an
investment in the Notes.

 

(b)                                 Eligible Purchasers.  It (i) is not acquiring the Notes with a
view to any distribution thereof that would violate the Act or the securities
laws of any state of the United States or any other applicable jurisdiction,
and (ii) will be soliciting offers for the Notes only from, and will be
offering and selling the Notes only to, (A) persons in the United States
whom it reasonably believes to be QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A under the Act,
and (B) Accredited Investors that execute and deliver to the Issuers and the
Initial Purchaser an Accredited Investor Letter.

 

(c)                                  No General Solicitation.  No form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or in any manner involving a public offering
within the meaning of Section 4(2) of the Act has been or will
be used by the Initial Purchaser or any of its representatives in connection
with the offer and sale of any of the Notes.

 

(d)                                 Representations of Eligible Purchasers.  In connection with the Exempt Resales, it
will solicit offers to buy the Notes only from, and will offer and sell the
Notes only to, persons whom it reasonably believes to be Eligible Purchasers in
accordance with this Agreement and on the terms contemplated by the Offering
Circular.

 

(e)                                  Power and Authority.  It has all requisite power and authority to
enter into, deliver and perform its obligations under this Agreement, and this
Agreement has been duly authorized by it.

 

8.                                      Indemnification.

 

(a)                                  Indemnification of Initial Purchaser.  Each of the Issuers, Parent and DJL shall,
and each of the Issuers shall cause the Guarantors, if any, to, jointly and
severally, without limitation as to time, indemnify and hold harmless the
Initial Purchaser and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act) the Initial
Purchaser (any of such persons being hereinafter referred to as a “controlling person”), and the respective officers,
directors, partners, employees, representatives and agents of the Initial
Purchaser and any such controlling person (collectively with the Initial
Purchaser, the “Purchaser Indemnified Parties”),
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys’ fees) and expenses (including, without
limitation, costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively, “Losses”), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with (i) any
untrue statement or alleged untrue 

 

20

 

statement of a material fact contained in the
Term Sheet or the Offering Circular (or any amendment or supplement thereto)
and (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided, that none of the Issuers, Parent, DJL or any Guarantor shall be liable under the
indemnity provided in this Section 8(a) to any Purchaser
Indemnified Party for any Losses that (A) result solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, any Term Sheet, which untrue statement or omission was completely
corrected in the Offering Circular (as then amended or supplemented) if it
shall have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (1) such Purchaser Indemnified Party sold the
Notes to the person alleging such Loss and failed to send or give, at or prior
to the written confirmation of such sale, a copy of the Offering Circular (as
then amended or supplemented), if required by law to have so delivered it, and (2) the
Issuers had previously
furnished copies of the corrected Offering Circular to such Purchaser
Indemnified Party within a reasonable amount of time prior to such sale or such
confirmation, and (3) the corrected Offering Circular, if delivered, would
have been a complete defense against the person asserting such Loss; or (B) are
based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with the Furnished
Information.  None of the Issuers,
Parent, DJL or the Guarantors (if any) shall be liable under this Section 8
for any settlement of any claim or action (other than settlements permitted by Section 8(b)(3))
effected without its prior written consent, which consent shall not be
unreasonably withheld.  The Issuers shall notify the Initial
Purchaser promptly of the institution, threat or assertion of any Proceeding of
which either of the Issuers is
aware in connection with the matters addressed by this Agreement which involves
either of the Issuers, Parent,
DJL, any of the Guarantors (if any) or any of the Purchaser Indemnified
Parties.  

 

(b)                                 Actions Against Parties; Notification. (1) If
any Proceeding shall be brought or asserted against any person entitled to
indemnification hereunder (an “Indemnified Party”),
such Indemnified Party shall give prompt written notice to the party or parties
from which such indemnification is sought (the “Indemnifying
Parties” and each, an “Indemnifying Party”);
provided, that the failure to so notify
the Indemnifying Parties shall not relieve any of the Indemnifying Parties from
any obligation or liability except to the extent (but only to the extent) that
it shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal) that such Indemnifying Party has been
prejudiced materially by such failure.

 

(2)                                  The
Indemnifying Parties shall have the right, exercisable by giving written notice
to an Indemnified Party, within 20 Business Days after receipt of written
notice from such Indemnified Party of such Proceeding, to assume, at their
expense, the defense of any such Proceeding; provided,
that an Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
parties unless: (i) the Indemnifying Parties have agreed to pay such fees
and expenses; (ii) the Indemnifying Parties shall have failed promptly to
assume the defense of such Proceeding or shall have failed to employ counsel
reasonably satisfactory to such Indemnified Party; or (iii) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and one or more Indemnifying Parties (or any affiliates
or controlling persons of any of the Indemnifying Parties), and such
Indemnified Party shall have been advised by counsel that there may be one or
more defenses available to such Indemnified Party that are in addition to, or
in

 

21

 

conflict with, those defenses available to
the indemnifying party or such affiliate or controlling person (in which case,
if such Indemnified Party notifies the Indemnifying Parties in writing that it
elects to employ separate counsel at the expense of the Indemnifying Parties,
the Indemnifying Parties shall not have the right to assume the defense thereof
and the reasonable fees and expenses of such counsel shall be at the expense of
the Indemnifying Parties; it being understood, however, that, the Indemnifying
Parties shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for such Indemnified Party).

 

(3)                                  None
of the Issuers, Parent, DJL, the Guarantors (if any), the Initial Purchaser,
their respective controlling persons nor any of their respective officers,
directors, partners, employees, representatives and agents shall consent to
entry of any judgment in or enter into any settlement of any pending or
threatened Proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not any Indemnified Party is a party thereto)
unless such judgment or settlement includes, as an unconditional term thereof,
the giving by the claimant or plaintiff to each Indemnified Party of a release,
in form and substance satisfactory to the Indemnified Party, from all Losses
that may arise from such Proceeding or the subject matter thereof (whether or
not any Indemnified Party is a party thereto).

 

(c)                                  Indemnification of Issuers, Parent, DJL and
Guarantors.  The Initial
Purchaser agrees to indemnify and hold harmless each of the Issuers, Parent, DJL and the
Guarantors (if any) and each of their controlling persons and the respective
members, managers, officers, directors, partners, employees, representatives
and agents of the Issuers,
Parent, DJL and the Guarantors (if any) and any such controlling person to the
same extent as the foregoing indemnity from the Issuers, Parent, DJL and the Guarantors (if any) to each of the
Purchaser Indemnified Parties stated in Section 8(a), but only with
respect to Losses that are caused by an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with the
Furnished Information.  The Initial
Purchaser shall not be liable under this Section 8(c) for any
settlement of any claim or action (other than settlements permitted by Section 8(b)(3))
effected without its prior written consent, which consent shall not be
unreasonably withheld.  Notwithstanding
the foregoing, any liability of the Initial Purchaser hereunder shall be
limited to an amount not to exceed the excess (such excess, the “Aggregate Amount”) of (i) the aggregate gross proceeds
received by the Initial Purchaser from the sale of the Notes over (ii) the
sum of (A) the aggregate price at which the Initial Purchaser purchased
the Notes from the Issuers and (B) the
amount of any Losses that the Purchaser Indemnified Parties otherwise have been
required to pay by reason of such untrue or alleged untrue statement of such
omission or alleged omission.

 

(d)                                 Contribution.  If the indemnification provided for in this Section 8
is unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each indemnifying party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, Parent, DJL and the
Guarantors (if any), on the one hand, and the Initial Purchaser, on the other
hand, from the Offering or (ii) if the allocation provided by

 

22

 

clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Issuers,
Parent, DJL and the Guarantors (if any), on the one hand, and the
Initial Purchaser, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations.  The
relative benefits received by the Issuers,
Parent, DJL and the Guarantors (if any), on the one hand, and the
Initial Purchaser, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the Offering (before deducting
expenses) received by the Issuers,
Parent, DJL and the Guarantors (if any), on the one hand, and the total
discounts and commissions received by the Initial Purchaser, on the other hand,
bear to the total price of the Notes in Exempt Resales as set forth on the
cover page of the Offering Circular. 
The relative fault of the Issuers,
Parent, DJL and the Guarantors (if any), on the one hand, and the
Initial Purchaser, on the other hand, shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Issuers,
Parent, DJL and the Guarantors (if any), on the one hand, or the Initial
Purchaser, on the other hand, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.  The amount paid or payable by
an Indemnified Party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section 8
was available to such party.

 

Each party
hereto agrees that it would not be just and equitable if contribution pursuant
to this Section 8(d) were determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), the Initial
Purchaser shall not be required to contribute, in the aggregate, any amount in
excess of the Aggregate Amount.  No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

 

(e)                                  Nonexclusive Remedy. The indemnity and contribution agreements contained in this Section 8
are in addition to any liability that any of the Indemnifying Parties may
otherwise have to the Indemnified Parties, and do not limit in any way rights
or remedies which may otherwise be available at law or in equity.

 

9.                                      Conditions.

 

(a)                                  Conditions to Obligations of Initial Purchaser.  The obligations of the Initial Purchaser to
purchase the Notes under this Agreement are subject to the satisfaction or
waiver of each of the following conditions:

 

(i)                                     Representations and Warranties of the Issuers, Parent and DJL.  All the representations and warranties of
each of the Issuers, Parent and DJL in this Agreement and in each of the other
Operative Documents to which it is a party shall be true and correct in all
material respects (other than representations and warranties with a Material
Adverse Effect qualifier or other materiality qualifier, which shall be true
and correct as written) at and as of the Closing Date after giving effect to
the Transactions consummated on or prior to the Closing Date

 

23

 

with the same
force and effect as if made on and as of such date.  On or prior to the Closing Date, each of the Issuers and Parent and, to the
knowledge of the Issuers, each other party to the Operative Documents (other
than the Initial Purchaser) shall have performed or complied in all material
respects with all of the agreements and satisfied in all material respects all
conditions on their respective parts required to be performed, complied with or
satisfied as of or prior to the Closing Date pursuant to the Operative
Documents.

 

(ii)                                  Availability of Offering Circular.  The Offering Circular, in form and substance
satisfactory to the Initial Purchaser and its counsel, shall have been printed
and copies made available to the Initial Purchaser not later than 12:00 noon,
New York City time, at least five Business Days prior to the Closing or at such
later date and time as the Initial Purchaser may approve.

 

(iii)                               No Injunction.  No
injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that would prevent or
materially interfere with the issuance and sale of the Notes or the
consummation of any of the other Transactions; and no stop order suspending the
qualification or exemption from qualification of any of the Notes in any
jurisdiction shall have been issued and no Proceeding for that purpose shall
have been commenced or, to the knowledge of the Issuers, be pending or
contemplated as of the Closing Date.

 

(iv)                              No Proceedings.  No
action shall have been taken and no Applicable Law shall have been enacted,
adopted or issued that would, as of the Closing Date, prevent the consummation
of any of the Transactions.  Except as
disclosed in the Offering Circular, no Proceeding shall be pending or, to the
knowledge of the Issuers, threatened, other than Proceedings that (A) if
adversely determined would not, singly or in the aggregate, adversely affect
the issuance or marketability of the Notes, and (B) could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(v)                                 No Material Adverse Change. 
Since the date as of which information is given in the Offering Circular
(without giving effect to any amendment thereto or supplement thereto), there
shall not have been any Material Adverse Change.

 

(vi)                              PORTAL.  The Notes shall
have been designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the PORTAL market. 

 

(vii)                           Contribution.  The Contribution shall have occurred.

 

(viii)                        Officers’, Secretary’s and Solvency Certificates.  The Initial Purchaser shall have received on
the Closing Date:

 

(A)                              certificates
dated the Closing Date, signed by (1) the Chief Executive Officer, and (2) the
principal financial or accounting officer of each of the Issuers and Parent, on
behalf of the Issuers and Parent, confirming the matters set forth in paragraphs
(i), (iii), (iv), (v), (vii) and (xi)
of this Section 9(a), and of DJL, on behalf of DJL, confirming the
matters set forth in paragraph (i) of this Section 9(a),

 

24

 

(B)                                a
certificate, dated the Closing Date, signed by the (1) Chief Executive
Officer and (2) the principal financial or accounting officer of each of
the Issuers, on behalf of the Issuers, stating that the industry, statistical
and market-related data included in the Offering Circular has been reviewed by
such persons and, to the knowledge of such persons, subject to the risks and
limitations described in the Offering Circular, is true and accurate in all
material respects and is based on or derived from sources which the Issuers
believe to be reliable and accurate, which certificate shall be in form and
substance reasonably satisfactory to counsel for the Initial Purchaser and may
specifically reference certain industry, statistical and market-related data
contained in the Offering Circular,

 

(C)                                a
certificate, dated the Closing Date, signed by the Secretary or Secretaries of
each of the Issuers, Parent, and DJL certifying such matters as the Initial
Purchaser may reasonably request, and

 

(D)                               a
certificate of solvency, dated the Closing Date, signed by the principal
financial or accounting officer of the Issuers substantially in the form
previously approved by the Initial Purchaser.

 

(ix)                                Opinions of Counsel. 
The Initial Purchaser shall have received (in form and substance
satisfactory to the Initial Purchaser and counsel to the Initial Purchaser) the
following: 

 

(A)                              from
Mayer, Brown, Rowe & Maw LLP, special counsel to the Issuers and
Parent, a favorable opinion, dated the Closing Date, containing opinions
substantially to the effect of the opinions set forth in Exhibit 9(a)(ix)(A) hereto,
and a negative assurance letter, dated the Closing Date, substantially in the
form set forth in Exhibit 9(a)(ix) hereto;

 

(B)                                from
Lane & Waterman, special Iowa counsel and special Iowa gaming counsel
to the Issuers and Parent, a favorable opinion, dated the Closing Date,
containing opinions substantially to the effect of the opinions set forth in Exhibit 9(a)(ix)(B) hereto,
and a negative assurance letter, dated the Closing Date, substantially in the
form set forth in Exhibit 9(a)(ix) hereto; and

 

 (C)                             from
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Initial Purchaser a favorable opinion, dated the Closing Date, and a negative
assurance letter, dated the Closing Date, substantially in the form set forth
in Exhibit 9(a)(x) hereto.

 

(x)                                   Permits.  All Permits
required to be obtained from, and all notices or declarations required to be
made with, any Gaming Authority or other Governmental Authority to permit the
issuance and sale of the Notes in accordance with the terms of, and in the
aggregate principal amount set forth in, this Agreement and to permit the
consummation of the other Transactions shall have been obtained and made, in
each case free of any conditions other than those set forth in this Agreement.

 

(xi)                                Execution and Delivery of Note Documents and Consummation of
Transactions.  The Note
Documents shall have been executed and delivered by all parties

 

25

 

thereto, and
the Initial Purchaser shall have received a fully executed original of each
Note Document.  The terms of each of the
Operative Documents shall conform in all material respects to the description
thereof in the Offering Circular, and the Transactions to be consummated on or
prior to the Closing Date shall have been consummated on terms that conform in
all material respects to the description thereof in the Offering Circular.

 

(xii)                             Execution and Delivery of Other Operative Documents and Consummation of
Other Transactions. Each of Parent and the Issuers has been (A) designated
as an “Unrestricted Subsidiary” under the Indenture, dated as of April 16,
2004 (the “Peninsula Indenture”), among
Parent, Diamond Jo, LLC (“DJL”),
Peninsula Capital Corp. (formerly known as The Old Evangeline Downs Capital
Corp.) and U.S. Bank, National Association as Trustee, and (B) released
from any and all obligations under, and has received any and all waivers for
the Transactions required under, the Loan and Security Agreement, dated as of June 16,
2004 (the “Existing Credit Agreement”), by
and among the lenders signatory thereto, Wells Fargo Foothill, Inc., as
agent, and DJL and The Old Evangeline Downs, L.L.C., as borrowers, and any and
all other agreements and documents related or ancillary thereto.

 

(xiii)                          Additional Documents. 
The Initial Purchaser or its counsel shall have received copies of all
opinions, certificates, letters and other documents delivered under or in
connection with the Transactions consummated on or prior to the Closing Date.

 

(xiv)                         Security Documents. 
The Issuers shall have furnished to the Initial Purchaser the Security
Documents duly executed by the Issuers and Parent, in each case, to the extent
party thereto, together with:

 

(A)                              proper financing
statements, each in the form to be filed on the Closing Date under the Uniform
Commercial Code of all jurisdictions that may be necessary in order to perfect
the Liens created by the Security Documents, covering the Collateral and naming
the Secured Party as secured party, which financing statements shall be so
filed on or about the Closing Date; 

 

(B)                                proper instruments to
be filed in the U.S. Patent and Trademark Office that may be necessary in order
to perfect the liens granted on trademarks, which liens have been created by
the Security Documents; 

 

(C)                                contemplated requests
for information and lien search results, listing as of a recent date all
effective financing statements filed in Iowa and Delaware that name either of
the Issuers or Parent as debtor, together with copies of such financing
statements;

 

(D)                               copies of duly executed
payoff letters, UCC-3 termination statements, mortgage releases, intellectual
property releases and other collateral releases and terminations, each in form and
substance reasonably satisfactory to the Initial Purchaser evidencing the
release of any Liens on any of the Collateral (other than Liens created by the
Indenture and the Security Documents or Permitted Liens), and each such payoff
letter, release and termination shall be in full force and effect.

 

(E)                                 the original
membership interest certificates and stock

 

26

 

certificates pledged to the Secured Party pursuant to the Security
Documents, together with undated stock powers or endorsements duly executed in
blank in connection therewith;

 

(F)                                 mortgages and fixture
filings in form and substance approved by the Initial Purchaser, to be recorded
on or about the Closing Date in all jurisdictions that may be deemed necessary
or desirable in order to perfect the liens created by the Security Documents,
covering the Collateral, which mortgages and fixture filings shall be so
recorded on or about the Closing Date; 

 

(G)                                irrevocable commitment
by one or more title insurance companies approved by the Initial Purchaser in
the Initial Purchaser’s reasonable discretion to issue one or more lender’s
policies of title insurance insuring the liens created by the Security
Documents, subject only to those title matters and exceptions approved by the
Initial Purchaser, together with fully executed reinsurance agreements in form
and substance reasonably approved by the Initial Purchaser, providing for
reinsurance in the amounts required by the Initial Purchaser with title insurance
companies approved by the Initial Purchaser in its reasonable discretion; 

 

(H)                               the title insurance policy set forth in subsection (G) above
for the Facility that does not take exception for items that would be displayed
by an A.L.T.A. survey, provided, however, if the Issuers are unable to satisfy
the Closing requirement set forth in this Section 9(a)(xiv)(H),
then such requirement shall be deemed waived on the condition that Issuer shall
comply with the covenant set forth in Section 5(i)(B); and

 

(I)                                    any other documents
required to be delivered to the Secured Party pursuant to the Security
Documents and reasonable evidence that all other actions necessary to perfect
and protect the Liens created by the Security Documents have been taken.

 

(xv)                            Insurance.  

 

(A)                        The
Issuers, at their sole cost and expense, shall have in full force and effect
the insurance coverage of the types and minimum limits required by the
Indenture, including but not limited to the following coverages:

 

(1)                                  Property Insurance.  Insurance with respect to the improvements
and building equipment (if any) against loss customarily included under so
called “All Risk” policies including but not limited to, vandalism and
malicious mischief, and such other perils as is required to be obtained under
the Indenture.

 

(2)                                  Builder’s All-Risk Insurance.  Builder’s “All-Risk” insurance in an amount
equal to not less than the full insurable value of the Facility against such
risks (including so called “All Risk” perils coverage to agreed limits as the Initial
Purchaser may reasonably request, in form and substance reasonably acceptable
to Initial Purchaser) and otherwise in satisfaction of the Company’s
requirements to provide insurance under the Construction Contract.

 

(3)                                  Liability Insurance.  Commercial general liability

 

27

 

insurance and umbrella liability coverage including, but not limited
to, personal injury, bodily injury, death, accident and property damage. 

 

(B)                                A certificate of
insurance with respect to all of the above-mentioned insurance policies has
been delivered to the Initial Purchaser prior to the Closing.  All policies shall name the Initial Purchaser
as a mortgagee or loss payee and shall provide that all proceeds therefrom
shall be payable in accordance with the Indenture.

 

(xvi)                         Additional Documents. 
Counsel to the Initial Purchaser shall have been furnished with such
documents as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Section 9 and
in order to evidence the accuracy, completeness and satisfaction of the
representations, warranties and conditions contained in this Agreement. 

 

(b)                                 Conditions
to the Issuers’ Obligations. 
The obligations of the Issuers to
sell the Notes under this Agreement are subject to the satisfaction or waiver
of each of the following conditions:

 

(i)                                     Payment.  The Initial
Purchaser shall have delivered payment to the Issuers for the Notes pursuant to Sections 2 and 4
of this Agreement.

 

(ii)                                  Representations and Warranties.  All of the representations and warranties of
the Initial Purchaser in this Agreement shall be true and correct in all
material respects at and as of the Closing Date, with the same force and effect
as if made on and as of such date.  

 

(iii)                               No Injunctions.  No
injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that would prevent or
interfere with the issuance and sale of the Notes; and no stop order suspending
the qualification or exemption from qualification of any of the Notes in any
jurisdiction shall have been issued and no Proceeding for that purpose shall
have been commenced or be pending or contemplated as of the Closing Date.

 

(iv)                              Execution and Delivery of Note Documents.  The Note Documents shall have been executed
and delivered by all parties thereto (other than the Issuers, Parent and the
Guarantors (if any)), and the Issuers shall have received a fully executed
original of each Note Document.  On or
prior to the Closing Date, the Initial Purchaser and each other party to the
Note Documents (other than the Issuers, Parent and the Guarantors (if any))
shall have performed or complied in all material respects with all of the
agreements and satisfied in all material respects all conditions on their
respective parts to be performed, complied with or satisfied pursuant to the
Note Documents. 

 

(v)                                 Execution and Delivery of Other Operative Documents and Consummation of
Other Operative Transactions. Each of Parent and the Issuers has
been (A) designated as an “Unrestricted Subsidiary” under the Peninsula
Indenture, and (B) released from any and all obligations under, and has
received any and all waivers for the Transactions required under, the Existing
Credit Agreement and any and all other agreements and documents related or 

 

28

 

ancillary
thereto.

 

(vi)                              Accredited Investor Letter. 
The Initial Purchaser shall have delivered to the Issuers a letter, dated
as of the Closing Date, listing as of such date any and all Accredited
Investors to whom the Initial Purchaser will make Exempt Resales of the Notes
and the aggregate principal amount of Notes to be sold by the Initial Purchaser
to each such Accredited Investor in such Exempt Resales.

 

10.                               Termination.  This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.  The
Initial Purchaser may terminate this Agreement at any time prior to the Closing
Date by written notice to the Issuers
if any of the following has occurred:

 

(a)                                  Material Adverse Effect.  Since the date as of which information is
given in the Offering Circular, any Material Adverse Effect or any Material
Adverse Change that could, in the Initial Purchaser’s judgment, be reasonably
expected to (i) make it impracticable or inadvisable to proceed with the
Offering or delivery of the Notes, including the Exempt Resales, on the terms
and in the manner contemplated in the Offering Circular or (ii) materially
impair the investment quality of the Notes.

 

(b)                                 Failure to Satisfy Conditions.  The failure of any of the Issuers to satisfy
the conditions contained in Section 9(a) on or prior to the
Closing Date.

 

(c)                                  Outbreak of Hostilities.  Any outbreak or escalation of hostilities,
any declaration of war by the United States, any other calamity, emergency or
crisis, any material adverse change in economic conditions in or the financial
markets of the United States or elsewhere or any change or development
involving a prospective change in national or international political,
financial or economic conditions, in each case the effect of which could make
it, in the Initial Purchaser’s judgment, impracticable or inadvisable to market
or proceed with the offering or delivery of the Notes on the terms and in the
manner contemplated in the Offering Circular or to enforce contracts for the
sale of any of the Notes.

 

(d)                                 Suspension of Trading.  The suspension or limitation of trading
generally in securities on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market or any setting of limitations on prices
for securities on any such exchange or on the Nasdaq National Market.

 

(e)                                  Enactment of Adverse Law.  The enactment, publication, decree or other
promulgation after the date hereof of any Applicable Law that in the Initial
Purchaser’s opinion materially and adversely affects, or could materially and
adversely affect, the properties, business, prospects, operations, earnings,
assets, liabilities or condition (financial or otherwise) of the Issuers taken
as a whole.

 

(f)                                    Downgrade of Securities.  On or after the date hereof, (i) there
shall not have occurred any downgrading, suspension or withdrawal of, nor shall
any notice have been given of any potential or intended downgrading, suspension
or withdrawal of, or of any review (or of any potential or intended review) for
a possible change that does not indicate the direction of the possible change
in, any rating of either of the Issuers or any securities of either of the
Issuers (including, without limitation, the placing of any of the foregoing
ratings on credit watch

 

29

 

with negative or developing implications or
under review with an uncertain direction) by any “nationally recognized
statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under
the Act, (ii) there shall not have occurred any adverse change, nor shall
any notice have been given of any potential or intended adverse change, in the
outlook for any rating of either of the Issuers or any securities of either of
Issuers (by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is considering
assigning) a lower rating to the Notes than that on which the Notes were
marketed.

 

(g)                                 Banking Moratorium.  The declaration of a banking moratorium by
any Governmental Authority; or the taking of any action by any Governmental
Authority after the date hereof in respect of its monetary or fiscal affairs
that in the Initial Purchaser’s opinion could reasonably be expected to have a
material adverse effect on the financial markets in the United States or
elsewhere.

 

The respective
indemnities, contribution and expense reimbursement provisions and agreements,
and representations, warranties and other statements of the Issuers, Parent and
the Guarantors (if any) and the Initial Purchaser set forth in or made pursuant
to this Agreement shall remain operative and in full force and effect, and will
survive, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchaser or any of the
Issuers, Parent or the Guarantors (if any), or any of their respective officers,
directors, members or managers or any of their respective controlling persons, (ii) acceptance
of the Notes, and payment for them hereunder, and (iii) any termination of
this Agreement (including, without limitation, any termination pursuant to this
Section 10).  Without
limiting the foregoing, notwithstanding any termination of this Agreement, (i) the
Issuers, Parent and the Guarantors (if any) shall be and shall remain jointly
and severally liable (x) for all expenses that they have agreed to pay pursuant
to Section 5(f), and (y) for their obligations pursuant to Section 8,
and (ii) Initial
Purchaser shall be and shall remain liable for its obligations pursuant to Section 8.

 

11.                               Miscellaneous.

 

(a)                                  Notices. 
Notices given pursuant to any provision of this Agreement shall be
delivered or sent by mail or facsimile transmission as follows:  

 

(i)                                     if
to any of the Issuers, Parent, DJL and the Guarantors (if any), to Diamond Jo
Worth, LLC, 3rd Street Ice Harbor, P.O. Box 1750, Dubuque, Iowa
52001, facsimile number (563) 557-0549, Attention:  Chief Financial Officer, with a copy to
Peninsula Gaming Partners, LLC, 7137 Mission Hills Drive, Las Vegas, Nevada
89113, facsimile number (702) 247-6822, Attention:  Michael S. Luzich, and another copy to Mayer,
Brown, Rowe & Maw, LLP, 1675 Broadway, New York, New York 10019,
facsimile number (212) 262-1910, Attention: 
Nazim Zilkha, Esq., and 

 

(ii)                                  if
to the Initial Purchaser, to Jefferies & Company, Inc., 520
Madison Avenue, 12th Floor, New York, New York 10022, Attention:  Lloyd Feller, Esq., with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400,
Los Angeles, California 90071, facsimile number (213) 687-5600, Attention:  Rod A. Guerra, Esq. 

 

(provided,  that any notice pursuant to Section 8
hereof will be mailed, delivered, telegraphed or sent by facsimile and
confirmed to the party to be notified and its counsel), or in any case to such
other address as the person to be notified may have requested in writing.

 

30

 

(b)                                 Successors and Assigns.  This Agreement has been and is made solely
for the benefit of and shall be binding upon each of the Issuers, Parent, DJL
and the Guarantors (if any), the Initial Purchaser and, to the extent provided
in Section 8, the controlling persons, officers, directors,
partners, employees, representatives and agents referred to in Section 8,
and their respective heirs, executors, administrators, successors and assigns,
all as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement.  The term “successors and assigns” shall not
include a purchaser of any of the Notes from the Initial Purchaser merely
because of such purchase.  

 

(c)                                  GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED, AND THE RIGHTS OF THE PARTIES SHALL BE DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAWS AND RULE 327(b) OF
THE NEW YORK CIVIL PRACTICE LAWS AND RULES. 
EACH OF THE ISSUERS, PARENT, DJL AND THE GUARANTORS (IF ANY) HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE ISSUERS, PARENT, DJL AND THE
GUARANTORS (IF ANY) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDINGS BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE ISSUERS, PARENT, DJL AND THE
GUARANTORS (IF ANY) IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH ISSUER,
PARENT, DJL OR SUCH GUARANTOR, AS THE CASE MAY BE, AT THE ADDRESS SET
FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
INITIAL PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE ISSUERS,
PARENT, DJL OR THE GUARANTORS (IF ANY) IN ANY OTHER JURISDICTION.

 

(d)                                 Counterparts.  This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.

 

(e)                                  Headings. 
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.  When a reference is made in this Agreement to
a Section, paragraph, subparagraph, Schedule or Exhibit, such

 

31

 

reference shall mean a Section, paragraph,
subparagraph, Schedule or Exhibit to this Agreement unless otherwise
indicated.

 

(f)                                    Interpretation.  The words “include,”
“includes,” and “including”
when used in this Agreement shall be deemed in each case to be followed by the
words “without limitation.”  The phrases “the date of
this Agreement,” “the date hereof,”
and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to June 30, 2005. 
The words “hereof,” “herein,” “herewith,”  “hereby” and “hereunder” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement. 
The phrase “to the knowledge of the
Issuers” means the actual knowledge, after due inquiry, of any of
the members, managers, directors or officers of either of the Issuers, or any
of their respective controlling persons. 
For purposes of this Agreement and the representations, warranties,
covenants and agreements herein, the Initial Purchaser shall not be deemed to
be an affiliate of the Issuers.  Unless the context otherwise requires,
defined terms shall include the singular and plural and the conjunctive and
disjunctive forms of the terms defined.

 

(g)                                 Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

(h)                                 Amendment. 
This Agreement may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be given, provided that the same are in writing
and signed by each of the signatories hereto.

 

[signature pages follow]

 

32

 

Please confirm
that the foregoing correctly sets forth the agreement among the Issuers, Parent (solely with respect
to Sections  5(i), 6(c), 6(g), 6(h), 6(k),
6(n), 6(o), 6(p), 6(q), 6(y), 8 and 11
hereof), DJL (solely with respect
to Sections  6(c), 6(g), 6(h), 6(o), 6(p),
6(q), 8 and 11 hereof) and the Initial Purchaser.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Diamond Jo Worth, LLC 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Schramm 

  	
   

  
	
   

  	
   

  	
  Name: Natalie Schramm

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Diamond Jo Worth Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name: Natalie Schramm

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Diamond Jo Worth Holdings, LLC

  
	
   

  	
  (solely with
  respect to Sections  5(i), 6(c), 6(g), 6(h),
  6(k), 6(n),

  6(o), 6(p), 6(q), 6(y), 8 and 11
  hereof)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name: Natalie Schramm

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Diamond Jo, LLC

  
	
   

  	
  (solely with
  respect to Sections  6(c), 6(g), 6(h), 6(o),
  6(p), 6(q),

  8 and 11 hereof)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name: Natalie Schramm

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  

 

 

	
  Accepted and Agreed to:

  
	
   

  
	
  Jefferies & Company, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Chris Kanoff

  	
   

  
	
   

  	
  Name: Chris Kanoff

  
	
   

  	
  Title: Executive Vice President

  

 

 

Exhibit 9(a)(ix)

Form of Negative Assurance Letter

 

In addition, we have
participated in conferences with officers and other representatives of the
Issuers and Parent, representatives of the independent accountants of the
Issuers, representatives of the Initial Purchaser and counsel for the [Initial Purchaser]  [the
Issuers and Parent], at which the
contents of the Offering Circular and related matters were discussed.  We do not pass upon, or assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Offering Circular and have not made any independent check or
verification thereof (except to the limited extent referred to in paragraph(s) [for
opinion of Mayer, Brown, Rowe & Maw:  9(b) and 11]  [for opinion of Lane & Waterman:  3]
of our opinion to the Initial Purchaser dated the date hereof).  On the basis of the foregoing, no facts have
come to our attention that have caused us to believe that the Offering
Circular, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except that in each case we do not express any view as to the
financial statements, schedules and other financial information included
therein or excluded therefrom).  For
purposes of the foregoing, we note that the Offering Circular was prepared in
the context of a Rule 144A transaction and not as a part of a registration
statement under the Securities Act and does not contain all of the information
that would be required in a registration statement under the Securities Act.

 

 

Exhibit 9(a)(ix)(A)

Form of Opinion of Mayer, Brown, Rowe &
Maw

 

1.                                       Due Organization; Good Standing.  Each of the Issuers, Parent and DJL is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware or is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
as applicable.

 

2.                                       No Registration Rights.  To our knowledge, except for the
Purchase Agreement, there are no contracts, commitments, agreements,
arrangements, understandings or undertakings of any kind to which either of the
Issuers is a party, or by which either of the Issuers is bound, granting to any
person the right (i) to require either of the Issuers to file a
registration statement under the Act with respect to any securities of either
of the Issuers or requiring either of the Issuers to include such securities
with the Notes registered pursuant to any registration statement, or (ii) to
purchase or offer to purchase any securities of either of the Issuers or any of
their respective affiliates.

 

3.                                       Power.  Each
of the Issuers, Parent and DJL has all requisite corporate power and authority
or limited liability company power and authority, as applicable, to execute and
deliver, and to perform its obligations under, each of the Opinion Documents to
which it is a party and to consummate the transactions contemplated thereby.

 

4.                                       Authorization and Enforceability.

 

(a)                                  Purchase Agreement. 
The Purchase Agreement has been duly authorized, validly executed and
delivered by each of the Issuers, Parent and DJL.  The issuance and sale of the Notes in
accordance with the Purchase Agreement have been duly authorized by each of the
Issuers.

 

(b)                                 Indenture. 
The Indenture has been duly authorized, validly executed and delivered
by each of the Issuers.  The Indenture is
the legal, valid and binding obligation of each of the Issuers, enforceable
against each of the Issuers in accordance with its terms.  The Indenture conforms to the requirements of
the TIA applicable to an indenture that is required to be qualified under the
TIA.

 

(c)                                  Notes. 
The Notes are in the form contemplated by the Indenture, have been duly
authorized by each of the Issuers for issuance and sale to the Initial
Purchaser pursuant to the Purchase Agreement and have been validly executed and
delivered by each of the Issuers.  The
Notes, when authenticated by the Trustee in the manner provided in the
Indenture and delivered by the Issuers against payment therefor, will be legal,
valid and binding obligations of each of the Issuers, entitled to the benefits
of the Indenture and enforceable against each of the Issuers in accordance with
their terms.

 

(d)                                 Security Documents. 
Each of the security documents (other then the Iowa Security Documents)
(the “Security Documents”) and the
transactions contemplated thereby (including, without limitation the creation,
grant, recording and perfection of the Security Interests, the execution and
filing of financing statements and the payment of any fees and taxes in
connection therewith) have been duly authorized by the Issuers and Parent, as
applicable, and each of the Security Documents has been duly executed and
delivered by the Issuers and Parent, as applicable.  Each of the Security Documents (other than
the Mortgage) which is governed by New York Law and the Mortgage (solely with
respect to those specific provisions thereof governed by New York law) is the
legal, valid and binding obligation of each of the Issuers and 

 

1

 

Parent,
as applicable, enforceable against each of the Issuers and Parent, as
applicable, in accordance with its terms.

 

(e)                                  Management Services Agreement. 
The Management Services Agreement and the transactions contemplated
thereby have been duly authorized by the Issuers and PGP, as applicable, and
the Management Services Agreement has been duly executed and delivered by the
Issuers and PGP, as applicable.  The
Management Services Agreement is the legal, valid and binding obligation of
each of the Issuers and PGC, as applicable, enforceable against each of the
Issuers and PGC, as applicable, in accordance with its terms.

 

5.                                       No Conflict.  Neither the execution, delivery or
performance of any of the Opinion Documents will conflict with, violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, (i) the Charter Documents; (ii) the Peninsula Indenture, the
Existing Credit Agreement or any other Applicable Agreements (as defined on Schedule I
hereto) or (iii) any Applicable Laws (excluding the federal securities
laws); or require any consents, approvals, authorizations or registrations by
the Issuers or Parent under any Applicable Laws except such as may be required
under federal securities laws (which we address exclusively in paragraph 10
hereof) and state securities laws (as to which we express no opinion) in
connection with the purchase and sale of the Notes or as may be required for
the perfection of any security interests (which we address exclusively in
paragraph 10 hereof).

 

6.                                       No Registration.  Assuming (i) the accuracy of the
representations, warranties and agreements of the Issuers and of the Initial
Purchaser contained in the Purchase Agreement, (ii) the due performance by
the Issuers and the Guarantors and the Initial Purchaser of their respective
covenants and agreements under the Purchase Agreement, (iii) the accuracy
of the representations and warranties made by each Accredited Investor that
purchases the Notes pursuant to Exempt Resales, as set forth in the letters of
representation executed by each of such Accredited Investors in the form of
Annex A to the Offering Circular, (iv) your compliance with the offering
and transfer procedures and restrictions described in the Offering Circular and
(v) the purchasers to whom you initially resell the Notes receive a copy
of the Offering Circular prior to such sale, it is not necessary in connection
with the offer, sale and delivery of the Notes to the Initial Purchaser as
contemplated in the Offering Memorandum and the Purchase Agreement or the
initial resale of the Notes by the Initial Purchaser in the manner contemplated
by the Purchase Agreement and described in the Offering Circular, to register
such sales or resales of the Notes under the Act, and it is not necessary,
prior to the Registered Exchange Offer or the effectiveness of the Shelf
Registration Statement, to qualify the Indenture under the TIA.  We express no opinion, however, as to when or
under what circumstances any Notes initially sold by you may be reoffered or
resold.

 

7.                                       Rule 144A(d)(4) Information.  The Offering Circular as of its date (except
for the financial statements, including the notes thereto, and other financial
and statistical data included therein or omitted therefrom, as to which we
express no opinion), contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act (it being understood that
the Issuers have no past or current operations and that, accordingly, only an
unaudited balance sheet (and no profit and loss and retained earnings
statements) of the Issuers is included in the Offering Circular).

 

8.                                       Investment Company Act.  Neither of the Issuers is, and after giving
effect to the sale of the Notes in accordance with the Purchase Agreement and
the application of the proceeds as described in the Offering Circular under the
caption “Use of Proceeds,” neither will be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

 

2

 

9.                                       Offering Circular.

 

(a)                                  Each of the Opinion Documents and
the terms of the Notes conform in all material respects to the descriptions
thereof contained in the Offering Circular.

 

(b)                                 The statements in the Offering
Circular under each of the headings [(i) ”Risk
Factors—Risks Relating to this Offering—Value of Collateral,” (ii) ”Risk
Factors—Risks Relating to this Offering—Lien Subordination,” (iii) the
second paragraph of “Risk Factors—Risks Relating to this Offering—Ability to
Realize on Collateral,” (iv) ”Risk Factors—Risks Relating to this
Offering—Fraudulent Transfer,” (v) ”The Transactions” and (vi) ”Notice
to Investors”] [to be updated based on Offering Circular]
has been reviewed by us and, solely to the extent that such statements
constitute matters of law, summaries of legal matters, summaries of
proceedings, or legal conclusions (exclusive of the laws of any jurisdiction other
than Applicable Laws), such information is correct in all material respects.

 

10.                                 UCC Opinions.

 

(a)                                  The Security Agreement creates a
valid security interest in favor of the Trustee in the Collateral (as that term
is defined in the Security Agreement) in which a security interest may be
created under the Uniform Commercial Code as now in effect in the State of New
York (the “New York UCC”) or, to
the extent such a security interest may not be created under the New York UCC,
under the applicable laws of the United States of America with respect to any
copyrights, patents or trademarks that are part of such Collateral in which a
security interest may be created under such laws (that portion of the
Collateral constituting the assets and properties of the Issuers (together, the
“UCC Collateral”).

 

(b)                                 Pursuant to the provisions of the
Security Agreement, each of the Issuers and, in the case of the stock
certificates specified on Schedule II hereto (the “Pledged Shares”), Parent, has authorized
the filing of a financing statement in the form attached hereto as Annex 10(b) naming
each of the Issuers and, in the case of the Pledged Shares, Parent, as debtors
for purposes of Section 9-509 of the Uniform Commercial Code as now in
effect in the State of Delaware (the “Delaware
UCC”).

 

(c)                                  Each of the Financing Statements
includes not only all of the types of information required by Section 9-502(a) of
the Delaware UCC but also the types of information without which the Office of
the Secretary of State of the State of Delaware may refuse to accept such
financing statement pursuant to Section 9-516 of the Delaware UCC.  Each of the Financing Statements is in
appropriate form for filing in the Office of the Secretary of State of the
State of Delaware.  Upon the later of the
attachment of the security interest and the proper filing of the Financing
Statement with respect to each of the Issuers and, in the case of the Pledged
Shares, Parent, in the Office of the Secretary of State of the State of
Delaware, the security interest in favor of the Trustee in the UCC Collateral
described in each said financing statement will be perfected to the extent a
security interest in such UCC Collateral can be perfected under the Delaware
UCC by the filing of a financing statement in that office.

 

(d)                                 [The provisions of the Account
Control Agreement(s) are effective to perfect the security interest of the
Trustee in the Company’s rights in the Securities Accounts (as defined in the
Securities Account Control Agreement).]  [If Account
Control Agreements executed at Closing for deposit accounts other than the
Interest Reserve Account and Construction Disbursement Account.]

 

(e)                                  Assuming (i) the delivery to,
and the continued possession by, the Trustee, in the State of New York, of the
certificates representing the Pledged Shares, together with stock

 

3

 

powers
or other instruments of transfer executed in blank, and (ii) none of the
the Trustee or any Holder has notice of any adverse claim to the Pledged
Shares, the Trustee will have the status of a “protected purchaser” with
respect to the Pledged Shares under (and as defined in) Section 8-303(a) of
the New York UCC.

 

11.                                 [We confirm that the statements made in the
Offering Circular under the heading “Certain Federal Income Tax Considerations,”
to the extent that they describe matters of law or legal conclusions, are
correct in all material respects.]  [If the
Offering Circular contains this section.]

 

 “Opinion Documents” is defined as
the Purchase Agreement, the Indenture, the Notes, the Security Documents and
the Management Services Agreement.

 

4

 

Schedule I

 

[TO COME]

 

5

 

Schedule II

 

	
  Name

  	
   

  	
  Security

  	
   

  	
  Certificate

  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Diamond Jo Worth Corp.

  	
   

  	
  [   ] shares of Common Stock

  	
   

  	
  [     ]

  

 

6

 

Exhibit 9(a)(ix)(B)

Form of Opinion of Lane &
Waterman,

Special Iowa Counsel and Special Iowa Regulatory Counsel

 

Our opinions expressed below are limited to the laws of the State of
Iowa, and to the extent applicable, the Federal Law of the United States, and
only to the Iowa operations and activities of the Issuers.

 

1.                                       Assuming the
due authorization, execution and delivery of each of the Mortgage and any other
Security Document governed by Iowa Law (the “Iowa
Security Documents”) by the Issuers, each of the Iowa Security
Documents constitutes a valid and binding agreement of the Issuers, enforceable
against the Issuers in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, fraudulent
conveyance, equitable subordination, reorganization, readjustment of debt,
moratorium or other similar laws affecting creditor’s rights generally, (ii) the
effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity); or (iii) limitations on the availability
or enforceability of the remedies of specific performance or injunctive relief
contained in the Operative Documents, all of which may be limited by equitable
principles or applicable laws, rules, regulations, court decisions and
constitutional requirements.

 

2.                                       Except as
disclosed in the Offering Circular, there is no Proceeding before or by any
Governmental Authority now pending or to the best of our knowledge, without
special inquiry beyond that stated in the opinion, threatened either (a) that
seeks to restrain, enjoin, prevent the consummation of or otherwise challenge
any of the Operative Documents or any of the Transactions or (b) that
could, singly or in the aggregate, have a Material Adverse Effect.

 

3.                                       The terms of
the Security Documents conform in all material respects to the descriptions
thereof contained in the Offering Circular. 
The information in the Offering Circular under [“Offering Circular Summary—The
Company—Limited Competition,” “Risk Factors—Risks Relating to Our
Business—Competition,” “Risk Factors—Risks Relating to Our
Business—Governmental Regulation,” “Risk Factors—Risks Relating to this
Offering—Required Regulatory Redemption,” “Risk Factors—Risks Relating to Our
Business—Liquor Regulation,” “Risk Factors—Risks Relating to Our
Business—Environmental Matters,” “Risk Factors—Risks Relating to Our Business—Taxation,”
“Risk Factors—Risks Relating to this Offering—Ability to Realize on Collateral,”
“Risk Factors—Risks Relating to this Offering—Mechanics’ Liens,” “The
Transactions,” “Business—Competition,” “Business— Properties” and “Regulatory
Matters”] [to be updated based on Offering
Circular] to the extent that it constitutes matters of law,
summaries of legal matters, summaries of securities, instruments, agreements or
other documents, summaries of proceedings or legal conclusions, is complete and
correct in all material respects.

 

4.                                       Neither of the
Issuers nor Parent is in violation of or is in default under, to the best of
our knowledge, any Applicable Law, except for such violations or defaults that
could not, singly or in the aggregate, have a Material Adverse Effect.

 

5.                                       No
authorization, approval, consent, license or order of, or filing, registration
or qualification with, any Governmental Authority (including, without
limitation, any Iowa gaming authority or regulatory body), other than have been
obtained on or before the Closing Date, is required in connection with, or as a
condition to, the execution, delivery or performance of the Operative Documents
or for the consummation of the Transactions.

 

6.                                       Neither the
execution or delivery of any of the Operative Documents nor the consummation of
any of the Transactions will conflict with, violate, constitute a breach of or
a default

 

1

 

under
(with the passage of time or otherwise), require the consent of any person
under (other than consents already obtained), or result in the imposition of a
Lien on any properties of either of the Issuers or Parent (other than as
contemplated by the Offering Circular or the Security Documents) or an
acceleration of indebtedness pursuant to, any Applicable Law (including,
without limitation any applicable provision of law or regulation of the State
of Iowa).

 

7.                                       Each of the
Issuers possesses all Permits required or necessary to own or lease, as
appropriate, and to operate its properties and to carry on its business as now
or proposed to be conducted as set forth in the Offering Circular, except where
the failure to obtain such Permits would not, individually or in the aggregate,
have a Material Adverse Effect.  Each of
the Issuers has fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit.  To the best of our knowledge, neither of the
Issuers has received any notice of any proceeding relating to revocation or
modification of any such Permit, except where such revocation or modification
would not, individually or in the aggregate, have a Material Adverse
Effect.  The execution, delivery and
performance by each of the Issuers of the Operative Documents, to the extent
they are a party thereto, and the consummation by each of the Issuers of the
Operative Transactions will not result in the condition, termination,
suspension or revocation of any Permit of either of the Issuers or result in
any other impairment of the rights of the holder of any such Permit.

 

8.                                       The Company
possesses a validly authorized and issued riverboat gaming license from the
State of Iowa and is in good standing with Iowa gaming regulators.

 

9.                                       Neither the
Trustee nor any present or future owner of a Note is or will be required to
qualify to do business as a foreign corporation in the State of Iowa or to
comply with the requirements of any foreign lender statute, or is or will
become subject to any income, franchise or similar tax imposed by the State of
Iowa or any subdivision thereof, solely by reason of the execution, delivery
and performance of the Operative Documents and the acquisition and retention of
the Liens created and perfected under the Security Documents.

 

10.                                 The Mortgage
creates in favor of the Trustee a valid and enforceable mortgage lien on, and
security interest in, the right, title and interest of the Company in the
Mortgaged Property (as defined in the Mortgage), all as security for the
payment of the Obligations (as such term is defined in the Mortgage).  The Mortgage is in appropriate form for
recording in the office of the County Recorder of Worth County, Iowa (the
county in which the Land (as such term is defined in the Mortgage) is located),
both as a mortgage and as a “fixture filing” within the meaning of the Iowa UCC
(as defined below).  Upon such
recordation, the mortgage Lien of the Mortgage will be perfected with respect
to the Company’s right, title and interest in and to the Land and Improvements
(as such terms are defined in the Mortgage) and Proceeds (as such terms is
defined in the Mortgage), and no other filing or recording of the Mortgage or
any other instrument will be necessary to continue the perfection of the
mortgage Lien of the Mortgage.  Upon such
recordation, the security interest in Fixtures (as such term is defined in the
Mortgage), and Proceeds of Fixtures (as such term is defined in the Mortgage)
will be perfected, and no other filing or recording of the Mortgage or any
other instrument will be necessary to continue the perfection of such security
interest of the Mortgage in Fixtures and Proceeds of Fixtures.

 

11.                                 The Security
Agreement creates a valid security interest in favor of the Trustee in all
right, title and interest of DJL in the Collateral under Article 9 of the
Iowa Uniform Commercial Code (the “Iowa UCC”),
all as security for the payment of the Secured Obligations (as such term is
defined in the Security Agreement).  The
Financing Statement (as such term in defined in the Mortgage), is in
appropriate form for filing with the Iowa Secretary of State pursuant to the
Iowa UCC.  Upon the filing of

 

2

 

the
Financing Statement in the office of the Iowa Secretary of State, the security
interest created by the Security Agreement in those items and types of such
Collateral in which a security interest may be perfected by filing Iowa UCC
financing statements with the Iowa Secretary of State will be perfected.

 

15.                                 No documentary,
stamp or intangible tax, transfer tax or similar charge is payable under Iowa
law in connection with the execution, delivery, filing, recordation or
performance of the Security Documents in the State of Iowa.  However, such counsel advises you that
statutory filing fees are payable, calculated on a per document or per page basis,
or a combination thereof.

 

16.                                 The Security
Documents contain terms and provisions necessary to permit the Trustee,
following the occurrence of an Event of Default (as such term is defined in the
Indenture), to exercise the rights and remedies commonly and customarily
available to secured lenders in the State of Iowa holding mortgages and
security interests in properties similar to the Mortgaged Property and
Collateral under the laws of the State of Iowa in transactions involving
substantial amounts of credit.

 

17.                                 Certain of the
Operative Documents provide that they are governed by the laws of the State of
New York.  An Iowa court or a federal
court in Iowa applying Iowa principles of choice of law, in a properly
presented case, would uphold the aforesaid choice-of-law provision.  Moreover, in the event that the laws of the
State of Iowa were applied to govern such Operative Documents, such Operative
Documents will not violate any applicable laws (including usury laws) of the
State of Iowa.

 

18.                                 The
Construction Contract and the transactions contemplated thereby have been duly
authorized by the Issuers, as applicable, and the Construction Contract has
been duly executed and delivered by the Issuers, as applicable.  The Construction Contract is the legal, valid
and binding obligation of each of the Issuers, as applicable, enforceable
against each of the Issuers, as applicable, in accordance with its terms.

 

3Exhibit 10.4

 

PLEDGE AND SECURITY AGREEMENT

 

dated as of July 19,
2005

 

among

 

DIAMOND JO WORTH,
LLC,

 

DIAMOND JO WORTH
CORP.,

 

and

 

DIAMOND JO WORTH
HOLDINGS, LLC,

 

and

 

U.S. BANK NATIONAL
ASSOCIATION, as Trustee,

as Secured Party.

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  1.1

  	
  General Definitions

  	
   

  
	
   

  	
  1.2

  	
  Definitions; Interpretation

  	
   

  
	
  2.

  	
  GRANT OF SECURITY

  	
   

  
	
   

  	
  2.1

  	
  Grant of Security

  	
   

  
	
   

  	
  2.2

  	
  Certain Limited Exclusions

  	
   

  
	
   

  	
  2.3

  	
  Intercreditor Agreement

  	
   

  
	
  3.

  	
  SECURITY FOR OBLIGATIONS

  	
   

  
	
   

  	
  3.1

  	
  Security for Obligations

  	
   

  
	
   

  	
  3.2

  	
  Obligations Remain

  	
   

  
	
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
  4.1

  	
  Generally

  	
   

  
	
   

  	
  4.2

  	
  Equipment and Inventory

  	
   

  
	
   

  	
  4.3

  	
  Receivables Contracts

  	
   

  
	
   

  	
  4.4

  	
  Investment Related Property

  	
   

  
	
   

  	
  4.5

  	
  Intellectual Property

  	
   

  
	
   

  	
  4.6

  	
  Commercial Tort Claims

  	
   

  
	
   

  	
  4.7

  	
  Judgments

  	
   

  
	
  5.

  	
  FURTHER
  ASSURANCES; ADDITIONAL DEBTORS

  	
   

  
	
   

  	
  5.1

  	
  Further Assurances

  	
   

  
	
   

  	
  5.2

  	
  Additional Debtors

  	
   

  
	
  6.

  	
  ATTORNEY-IN-FACT

  	
   

  
	
   

  	
  6.1

  	
  Power of Attorney

  	
   

  
	
   

  	
  6.2

  	
  No Duty on the
  Part of Secured Party

  	
   

  
	
  7.

  	
  REMEDIES

  	
   

  
	
   

  	
  7.1

  	
  Generally

  	
   

  
	
   

  	
  7.2

  	
  Application of Proceeds

  	
   

  
	
   

  	
  7.3

  	
  Investment Related Property

  	
   

  
	
   

  	
  7.4

  	
  Intellectual Property

  	
   

  
	
   

  	
  7.5

  	
  Cash Proceeds

  	
   

  
	
   

  	
  7.6

  	
  Regulatory Matters

  	
   

  
	
  8.

  	
  CONTINUING
  SECURITY INTEREST; TRANSFER OF NOTES

  	
   

  
	
  9.

  	
  STANDARD OF
  CARE; SECURED PARTY MAY PERFORM

  	
   

  
	
  10.

  	
  INDEMNITY

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  11.1

  	
  Notices

  	
   

  
	
   

  	
  11.2

  	
  Expenses

  	
   

  
	
   

  	
  11.3

  	
  Subrogation

  	
   

  
	
   

  	
  11.4

  	
  Debtor Waivers

  	
   

  
	
   

  	
  11.5

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  11.6

  	
  Successors and Assigns

  	
   

  
	
   

  	
  11.7

  	
  Independence of Covenants

  	
   

  
	
   

  	
  11.8

  	
  Survival
  of Representations, Warranties and Agreements

  	
   

  
	
   

  	
  11.9

  	
  No Waiver; Remedies
  Cumulative

  	
   

  

 

i

 

	
   

  	
  11.10

  	
  Severability

  	
   

  
	
   

  	
  11.11

  	
  Headings

  	
   

  
	
   

  	
  11.12

  	
  APPLICABLE LAW

  	
   

  
	
   

  	
  11.13

  	
  SUBMISSION TO JURISDICTION

  	
   

  
	
   

  	
  11.14

  	
  Counterparts

  	
   

  
	
   

  	
  11.15

  	
  Gaming Laws

  	
   

  
	
   

  	
  11.16

  	
  Effectiveness

  	
   

  
	
   

  	
  11.17

  	
  Entire Agreement

  	
   

  
	
   

  	
  11.18

  	
  The Mortgages

  	
   

  
	
   

  	
  11.19

  	
  Indenture Controls

  	
   

  
	
   

  	
  11.20

  	
  Trust Indenture Act
  Controls

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Diligence Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Supplement to Security Agreement

  	
   

  
	
  Exhibit B

  	
  Control Agreement (Securities Accounts)

  	
   

  
	
  Exhibit C

  	
  Control Agreement (Deposit Accounts)

  	
   

  

 

ii

 

This PLEDGE AND SECURITY
AGREEMENT, dated as of July 19, 2005 (this “Agreement”), among Diamond Jo Worth, LLC, a Delaware limited
liability company (the “Company”),
Diamond Jo Worth Corp., a Delaware corporation (“DJW Corp.”
and, together with the Company, the “Issuers”),
Diamond Jo Worth Holdings, LLC, a Delaware limited liability company (“Parent”), and each Subsidiary Guarantor (as defined in the
Indenture referred to below) from time to time party hereto pursuant to Section 5.2
(the Issuers, Parent and each such Subsidiary Guarantor, each a “Debtor” and collectively, the “Debtors”),
and U.S. Bank National Association, as Trustee (together with any successor
Trustee pursuant to the terms of the Indenture, the “Secured
Party”), acting in the capacity of
collateral agent for the benefit of itself and the Holders.

 

R  E
C  I  T  A  L  S:

 

WHEREAS, the Debtors and the
Secured Party, have entered into an Indenture, dated as of July 15, 2005 (as
amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), pursuant to which the Issuers incurred
indebtedness for certain notes (such notes, together with all additional notes
and all other notes issued thereunder in exchange for such notes and additional
notes, the “Notes”) and the other Debtors that
are Subsidiary Guarantors have guaranteed the payment of the Notes and the
other Obligations thereunder;

 

WHEREAS, each Issuer desires to
secure the Notes and its other Obligations under the Indenture, Parent desires
to secure the Obligations of the Issuers under the Notes and the Indenture and
each other Debtor desires to secure its guarantee under the Indenture by
granting to the Secured Party, for the benefit of itself and the Holders,
security interests in the Collateral as set forth herein;

 

WHEREAS, certain of the Debtors
may enter into a Senior Credit Facility pursuant to clause (i) of Section 4.7(b) of
the Indenture and in connection therewith, also enter into an intercreditor
agreement, substantially in the form of Exhibit F to the Indenture, with
the Secured Party and the Credit Facility Secured Party (as amended, restated,
supplemented, replaced or otherwise modified from time to time, the “Intercreditor Agreement”), which agreement, among other
things, will set forth, as between the Secured Party and the Credit Facility
Secured Party, the relative priority of their respective Liens in the
Collateral and their rights with respect thereto; and

 

WHEREAS, to induce the Initial
Purchaser to purchase the Notes, each Holder to hold the Notes to be held by it
and U.S. Bank National Association to act in its capacity as the Secured Party,
each Debtor desires to pledge, grant, transfer, and assign to the Secured
Party, for its benefit and the benefit of the Holders, a security interest in
the Collateral to secure the Secured Obligations of such Debtor, as provided
herein.

 

NOW, THEREFORE,
in consideration of the premises and the agreements, provisions and covenants
herein contained, each Debtor and the Secured Party agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               General Definitions.  In this Agreement, the following terms shall
have the following meanings:

 

“Account  Debtor” shall mean each Person who is obligated on a
Receivables Contract or any Supporting Obligation related thereto.

 

“Accounts” shall
mean all “accounts” as defined in Article 9 of the UCC.

 

1

 

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

 

“Bankruptcy  Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Cash  Proceeds” shall mean all proceeds of any Collateral received
by any Debtor consisting of cash, checks and other near-cash items.

 

“Chattel  Paper” shall mean all “chattel paper” as defined in Article 9
of the UCC, including, without limitation, “electronic chattel paper” or “tangible
chattel paper”, as each term is defined in Revised Article 9 of the UCC.

 

“Collateral”
shall have the meaning set forth in Section 2.1 hereof.

 

“Collateral  Records” shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.

 

“Collateral  Support” shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.

 

“Commercial  Tort  Claims” shall
mean all “commercial tort claims” as defined in the UCC, including, without
limitation, all commercial tort claims listed and described with specification
on Schedule E of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time).

 

“Commodities
Accounts” (i) shall mean all “commodity
accounts” as defined in Article 9 of the UCC and (ii) shall include,
without limitation, all of the accounts listed on Schedule A of the
Diligence Certificate under the heading “Commodities Accounts” (as such schedule may
be amended or supplemented from time to time).

 

“Company”
shall have the meaning set forth in the preamble.

 

“Controlled  Foreign  Corporation”
shall mean “controlled foreign corporation” as defined in the Tax Code.

 

“Copyright  Licenses” shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time).

 

“Copyrights”
shall mean all United States, state and foreign copyrights, including but not
limited to copyrights in software and databases, and all Mask Works (as defined
under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, and, with respect to any and all of the foregoing: (i) all
registrations and applications therefor including, without limitation, the
applications referred to in Schedule B of the Diligence Certificate (as
such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) all rights corresponding thereto

 

2

 

throughout the world, (iv) all rights to sue for past, present and
future infringements thereof, (v) all licenses, claims, damages and
proceeds of suit arising therefrom, and (vi) all payments and rights to
payments arising out of the sale, lease, license, assignment, or other
disposition thereof.

 

“Credit  Facility  Secured  Party” shall mean, as the context may require, all or any of
the Senior Lien Creditor Representatives (as defined in the Intercreditor
Agreement).

 

“Debtor” and “Debtors” shall have the meanings set forth in the preamble.

 

“Deposit Accounts”
shall mean all (i) ”deposit accounts” as defined in Article 9 of the
UCC and (ii) shall include, without limitation, all other accounts listed
on Schedule A of the Diligence Certificate under the heading “Deposit
Accounts” (as such schedule may be amended or supplemented from time to
time).

 

“Diligence
Certificate” shall mean the Pre-Closing UCC
Diligence Certificate dated as of the date of this Agreement and executed by each Debtor.

 

“DJW Corp.”
shall have the meaning set forth in the preamble.

 

“Documents”
shall mean all “documents” as defined in Article 9 of the UCC.

 

“Equipment”
shall mean:  (i) all “equipment” as
defined in the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC), (iii) slot machines, electronic
gaming devices and related equipment and (iv) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.

 

“Gaming Laws”
shall mean the gaming laws of any jurisdiction or jurisdictions to which the
Company, any of its Restricted Subsidiaries or any of the Subsidiary Guarantors
is, or may at any time after the date hereof, be subject.

 

“General  Intangibles” (i) shall mean all “general intangibles”
as defined in Article 9 of the UCC and (ii) shall include, without
limitation, all interest rate or currency protection or hedging arrangements,
all tax refunds, all licenses, permits, concessions and authorizations, and all
Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC) and exclude all Gaming Licenses held by a
Debtor.

 

“Goods” (i) shall
mean all “goods” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).

 

“Governmental Authority”
shall mean any agency, authority, board, bureau, commission, department,
office, public entity, or instrumentality of any nature whatsoever of the
United State federal or foreign government, any state, province or any city or
other political subdivision or otherwise, whether now or hereafter in
existence, or any officer or official thereof, including, without limitation,
any Gaming Authority.

 

3

 

“Indemnitee”
shall mean the Secured Party, and its and its Affiliates’ officers, directors,
employees and agents, and including, if the Secured Party or its agent is a
partnership, its partners, and if the Secured Party or its agent is a trust,
its trustee.

 

“Indenture”
shall have the meaning set forth in the first recital.

 

“Indenture  Documents” shall mean the Indenture, the Notes, the Security
Documents and the Registration Rights Agreement, and such other agreements,
instruments and certificates executed and delivered (or issued) by the Debtors
pursuant to the Indenture or any of the foregoing, as any or all of the same
may be amended, restated, supplemented or otherwise modified from time to time.

 

“Instruments”
shall mean all “instruments” as defined in Article 9 of the UCC.

 

“Insurance”
shall mean:  (i) all insurance
policies covering any or all of the Collateral (regardless of whether the
Secured Party is the loss payee thereof) and (ii) any key man life
insurance policies.

 

“Intellectual Property”
shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents,
the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets,
and the Trade Secret Licenses.

 

“Intercreditor Agreement”
shall have the meaning set forth in the third recital.

 

“Inventory”
shall mean:  (i) all “inventory” as
defined in the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw materials,
work in process, finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Debtor’s
business; all goods in which any Debtor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Debtor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).

 

“Investment  Related  Property” shall
mean:  (i) all “investment property”
(as such term is defined in Article 9 of the UCC); and (ii) all of
the following (regardless of whether classified as investment property under
the UCC): all Pledged Equity Interests, Pledged Debt, the Deposit Accounts,
Securities Accounts, Commodities Accounts and certificates of deposit.

 

“Issuers” shall
have the meaning set forth in the preamble.

 

“Legal Requirements” means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all applicable
health and environmental laws and regulations, all applicable Gaming Laws and
applicable regulations, and all other applicable laws, ordinances, rules,
regulations, judicial decisions, administrative orders and other requirements
of any Governmental Authority having jurisdiction over any Debtor, the
Collateral and/or any Affiliate of such Debtor, in effect either at the time of
execution of this Agreement or at any time during the term hereof.

 

“Letter of Credit
Right”  shall mean “letter-of-credit
right” as defined in the UCC.

 

4

 

“Material
Collateral Contract”
shall mean any contract or other arrangement to which any Debtor is a party for
which breach, nonperformance, cancellation or failure to renew could reasonably
be expected to have a Material Adverse Effect.

 

“Money” shall mean “money” as defined
in the UCC.

 

“Notes” shall have
the meaning set forth in the first recital.

 

“Parent” shall
have the meaning set forth in the preamble.

 

“Patent  Licenses” shall mean all agreements providing for the
granting of any right in or to Patents (whether such Debtor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule B of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time).

 

“Patents” shall mean all United States
and foreign patents and certificates of invention, or similar industrial property
rights, including, but not limited to each patent referred to in Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time), and with respect to any and all of the
foregoing, (i) all applications therefore including, without limitation,
the patent applications referred to in Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time), (ii) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, (iii) all rights
corresponding thereto throughout the world, (iv) all inventions and
improvements described therein, (v) all rights to sue for past, present
and future infringements thereof, (vi) all licenses, claims, damages, and
proceeds of suit arising therefrom, and (vii) all payments and rights to
payments arising out of the sale, lease, license, assignment, or other
disposition thereof.

 

“Payment  Intangible” shall have the meaning specified in the UCC.

 

“Pledged  Debt” shall mean all Indebtedness owed to such Debtor,
including, without limitation, all Indebtedness described on Schedule A of
the Diligence Certificate under the heading “Pledged Debt and Instruments” (as
such schedule may be amended or supplemented from time to time), issued by
the obligors named therein, the instruments evidencing such Indebtedness, and
all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Indebtedness.

 

“Pledged  Equity  Interests”
shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership
Interests and Pledged Trust Interests.

 

“Pledged  LLC  Interests”
shall mean all interests in any limited liability company including, without
limitation, all limited liability company interests listed on Schedule A
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
limited liability company interests and any interest of such Debtor on the
books and records of such limited liability company or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company interests.

 

“Pledged  Partnership  Interests”
shall mean all interests in any general partnership, limited partnership,
limited liability partnership or other partnership including, without
limitation, all

 

5

 

partnership interests listed on Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) and the certificates, if any, representing such partnership interests and
any interest of such Debtor on the books and records of such partnership or on
the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such partnership interests.

 

“Pledged  Trust  Interests”
shall mean all interests in a Delaware business trust or other trust including,
without limitation, all trust interests listed on Schedule A of the
Diligence Certificate (as such schedule may be amended or supplemented
from time to time) and the certificates, if any, representing such trust
interests and any interest of such Debtor on the books and records of such
trust or on the books and records of any securities intermediary pertaining to
such interest and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such trust interests.

 

“Pledged  Stock” shall mean all shares of capital stock owned by such
Debtor, including, without limitation, all shares of capital stock described on
Schedule A of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Debtor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.

 

“Proceeds” shall
mean:  (i) all “proceeds” as defined
in Article 9 of the UCC, (ii) payments or distributions made with
respect to any Investment Related Property and (iii) whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.

 

“Receivables
Contracts” shall mean all (i) Accounts,
(ii) Chattel Paper, (iii) Payment Intangibles, (iv) Instruments
and (v) to the extent not otherwise covered above, all other rights to
payment, whether or not earned by performance, for goods or other property
sold, leased, licensed, assigned or otherwise disposed of, or services rendered
or to be rendered, regardless of how classified under the UCC; together with
all of such Debtors’ rights, if any, in any goods or other property giving rise
to such right to payment and all Collateral Support and Supporting Obligations
related thereto and all Receivables Records; provided, however,
that Receivables Contracts shall not include any Investment Related Property.

 

“Receivables  Records” shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables Contracts, (ii) all books, correspondence,
credit or other files, Records, ledger sheets or cards, invoices, and other
papers relating to Receivables Contracts, including, without limitation, all
tapes, cards, computer tapes, computer discs, computer runs, record keeping
systems and other papers and documents relating to the Receivables Contracts,
whether in the possession or under the control of Debtor or any computer bureau
or agent from time to time acting for Debtor or otherwise, (iii) all
evidences of the filing of UCC financing statements and the registration of
other instruments in connection therewith, and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without
limitation, lien search reports, from filing or other registration officers,

 

6

 

(iv) all credit information, reports and memoranda relating
thereto and (v) all other written or non-written forms of information
related in any way to the foregoing or any Receivable.

 

“Record” shall
have the meaning specified in Article 9 of the UCC.

 

“Secured  Obligations” shall have the meaning set forth in Section 3.1
hereof.

 

“Secured  Party” has the meaning set forth in the preamble.

 

“Securities”
shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.

 

“Securities  Accounts” (i) shall mean all “securities accounts” as
defined in Article 8 of the UCC and (ii) shall include, without
limitation, all of the accounts listed on Schedule A of the Diligence
Certificate under the heading “Securities Accounts” (as such schedule may
be amended or supplemented from time to time).

 

“Software
Embedded in Goods”
means, with respect to any Goods, any computer program embedded in Goods and
any supporting information provided in connection with a transaction relating
to the program if (i) the program is associated with the Goods in such a
manner that it customarily is considered part of the Goods or (ii) by
becoming the owner of the Goods a person acquires a right to use the program in
connection with the Goods.

 

“Supplement to Security
Agreement” shall mean any supplement to this agreement in
substantially the form of Exhibit A.

 

“Supporting  Obligation” shall mean all “supporting obligations” as
defined in the UCC.

 

“Tax  Code” shall mean the United States Internal Revenue Code of
1986, as amended from time to time.

 

“Trademark  Licenses” shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time).

 

“Trademarks”
shall mean all United States, state and foreign trademarks, trade names,
corporate names, company names, business names, fictitious business names,
Internet domain names, service marks, certification marks, collective marks,
logos, other source or business identifiers, designs and general intangibles of
a like nature, all registrations and applications for any of the foregoing
including, but not limited to the registrations and applications referred to in
Schedule B of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time), all extensions or renewals of any
of the foregoing, all of the goodwill of the business connected with the use of
and symbolized by the foregoing, the right to sue for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill,
and all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.

 

7

 

“Trade  Secret  Licenses” shall
mean any and all agreements providing for the granting of any right in or to
Trade Secrets (whether such Debtor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule B of
the Diligence Certificate (as such schedule may be amended or supplemented
from time to time).

 

“Trade  Secrets” shall mean all trade secrets and all other
confidential or proprietary information and know-how now or hereafter owned by
or used in, the business of such Debtor (all of the foregoing being
collectively called a “Trade Secret”), whether or not such Trade Secret has
been reduced to a writing or other tangible form, including all documents and
things embodying, incorporating, or referring in any way to such Trade Secret,
the right to sue for past, present and future infringement of any Trade Secret,
and all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.

 

“UCC” shall mean
the Uniform Commercial Code as in effect from time to time in the State of New
York; provided, if by reason of mandatory provisions of law, the perfection or
the effect of perfection or non-perfection of the security interests in any
Collateral or the priority of security interests in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than New
York, “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection or priority.

 

1.2                               Definitions;
Interpretation.  All capitalized
terms used herein (including the preamble and recitals hereto) and not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture or, if not defined therein, in the UCC.  References to “Sections,” “Exhibits” and “Schedules”
shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided.  Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose or be given
any substantive effect.  Any of the terms
defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference.  The use herein of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.  If any conflict or inconsistency exists
between this Agreement and the Indenture, the Indenture shall govern.  All references herein to provisions of the
UCC shall include all successor provisions under any subsequent version or
amendment to any Article of the UCC.

 

2.                                      GRANT OF SECURITY

 

2.1                               Grant
of Security.  Subject to applicable
Gaming Laws, each Debtor hereby grants to the Secured Party a security interest
and continuing lien on all of such Debtor’s right, title and interest in, to
and under all property of such Debtor including, but not limited to the
following, in each case whether now owned or existing or hereafter acquired or
arising and wherever located (such Debtor’s “Collateral”):

 

(i)                                     Accounts;

 

(ii)                                  Chattel Paper, together with all
returned, rejected or repossessed goods, the sale or lease of which shall have
given or shall give rise to chattel

 

8

 

paper, and all property and goods
both now owned and hereafter acquired by the Debtors which are sold, leased,
secured, or the subject of or otherwise covered by, the Debtors’ Chattel Paper,
together with all reversionary rights embodied therein and all other rights
incident to such property and goods;

 

(iii)                               Documents;

 

(iv)                              Goods (including Documents
Representing Goods and Software Embedded in Goods);

 

(v)                                 Instruments;

 

(vi)                              Insurance;

 

(vii)                           Intellectual Property;

 

(viii)                        Investment Related Property;

 

(ix)                                judgments;

 

(x)                                   Letter of Credit Rights;

 

(xi)                                Money;

 

(xii)                             Receivables Contracts and Receivable
Records;

 

(xiii)                          Commercial Tort Claims;

 

(xiv)                         to the extent not otherwise included
above, all General Intangibles, Material Collateral Contracts and other
personal property of any kind;

 

(xv)                            to the extent not otherwise included
above, all Collateral Records, Collateral Support and Supporting Obligations
relating to any of the foregoing; and

 

(xvi)                         to the extent not otherwise included
above, all Proceeds, products, accessions, rents and profits of or in respect
of any of the foregoing.

 

2.2                               Certain
Limited Exclusions.  Notwithstanding
anything herein to the contrary, in no event shall the Collateral include, and
no Debtor shall be deemed to have granted a security interest in, any of such
Debtor’s right, title or interest in any Excluded Asset.

 

2.3                               Intercreditor
Agreement.  Notwithstanding anything
herein to the contrary, the relative rights and remedies of the Secured Party
hereunder and the Credit Facility Secured Party shall be subject to and
governed by the terms of the Intercreditor Agreement at any time the
Intercreditor Agreement is in effect, and in the event of any inconsistency
between the terms hereof and the Intercreditor Agreement, the Intercreditor
Agreement shall control at any time the Intercreditor Agreement is in effect.

 

9

 

3.                                      SECURITY FOR OBLIGATIONS

 

3.1                               Security
for Obligations.  This Agreement
secures, and the Collateral is collateral security for, the prompt and complete
payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a) (and any successor provision thereof)), of all obligations and
liabilities of every nature of each Debtor now or hereafter existing under the
Indenture Documents to which such Debtor is a party (all such obligations and
liabilities being the “Secured Obligations”).

 

3.2                               Obligations
Remain.  Notwithstanding anything
herein to the contrary,

 

(a)                                  each Debtor
shall remain liable under any partnership agreement or limited liability
company agreement relating to any Pledged Partnership Interest or Pledged LLC
Interest and/or any other contracts and agreements included in the Collateral,
to the extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed;

 

(b)                                 the exercise
by the Secured Party of any of its rights hereunder shall not release any
Debtor from any of its duties or obligations under the contracts and agreements
included in the Collateral until title or all rights thereto has been
transferred from such Debtor in accordance with such contracts or agreements;
and

 

(c)                                  the Secured
Party shall not have any obligation or liability under any partnership
agreement or limited liability company agreement relating to any Pledged
Partnership Interests or Pledged LLC Interests or any other contracts and
agreements included in the Collateral by reason of this Agreement or any other
Security Document, nor shall the Secured Party be obligated to assume or
perform any of the obligations or duties of any Debtor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder by reason
of this Agreement or any other Security Document.

 

4.                                      REPRESENTATIONS AND WARRANTIES AND
COVENANTS

 

4.1                               Generally.

 

(a)                                  Representations
and Warranties.  Each Debtor hereby
represents and warrants, on the Issue Date, that:

 

(i)                                     it owns the Collateral purported to
be owned by it or otherwise has the rights it purports to have in each item of
Collateral and, as to all Collateral whether now existing or hereafter
acquired, will continue to own or have such rights in each item of the
Collateral, in each case free and clear of any and all Liens, rights or claims
of all other Persons other than Permitted Liens, including, without limitation,
liens arising as a result of such Debtor becoming bound (as a result of merger
or otherwise) as debtor under a security agreement entered into by another
Person;

 

(ii)                                  it has indicated in Section I
of the Diligence Certificate (as such section may be amended or
supplemented from time to time): (w) the taxpayer identification number of such
Debtor and the organization identification

 

10

 

number of such Debtor, if any,
provided by the Secretary of State of such Debtor’s state of organization, (x)
the type of organization of such Debtor, (y) the jurisdiction of organization
of such Debtor and (z) the jurisdiction where the chief executive office or its
sole place of business, as the case may be, is, and for the five (5)-year
period preceding the date hereof has been, located.

 

(iii)                               the full legal name of such Debtor
is as set forth in Section I of the Diligence Certificate and it has not
done in the last five (5) years, and does not do, business under any other
name (including any trade-name or fictitious business name) except for those
names set forth in Section I of the Diligence Certificate (as such section may
be amended or supplemented from time to time);

 

(iv)                              the names of all companies with
which such Debtor has merged or consolidated in the last five (5) years,
together with the dates of such mergers or consolidations are set forth in Section I
of the Diligence Certificate;

 

(v)                                 the location(s) at which such Debtor
has kept or maintained Equipment or Inventory in the last five (5) years
that is Collateral under this Agreement is set forth in Section II of the
Diligence Certificate;

 

(vi)                              such Debtor has not within the last
five (5) years become bound (whether as a result of merger or otherwise)
as debtor under a security agreement entered into by another Person, which has
not heretofore or concurrently with the delivery hereof been terminated;

 

(vii)                           the security interests granted by
each Debtor in the Collateral of such Debtor to Secured Party hereunder
constitute valid security interests in such Collateral securing the payment of
the Secured Obligations of such Debtor, and upon the filing of all UCC
financing statements naming such Debtor as “debtor” and the Secured Party as “secured
party” and describing such Collateral in the filing offices set forth opposite
such Debtor’s name in Section I of the Diligence Certificate (as such section may
be amended or supplemented from time to time) and, to the extent not subject to
Article 9 of the UCC, upon the recordation of the security interest
granted hereunder in Patents, Trademarks and Copyrights in the applicable
patent, trademark and copyright registries (including the United States Patent
and Trademark Office and the United States Copyright Office), and the
registration of all unregistered Copyrights and other filings delivered by such
Debtor, the security interests granted to the Secured Party hereunder
constitute perfected Liens (subject in the case of priority only to Permitted
Liens) on all such Collateral (other than Collateral constituting goods covered
by certificates of title, Money, deposit accounts, Letter of Credit Rights and
insurance policies);

 

(viii)                        all actions, consents and approvals,
including all filings, notices, registrations and recordings necessary for the
exercise by the Secured Party of the voting or other rights provided for in
this Agreement or the

 

11

 

exercise of remedies in respect of
the Collateral have been made or obtained except to the extent any actions,
consents or approvals are required (A) in the case of any action, to be
performed by the Secured Party or (B) under applicable Gaming Laws, the
Intercreditor Agreement or any Intellectual Property license, contract or
agreement;

 

(ix)                                other than the UCC financing
statements filed in favor of the Secured Party, no effective UCC financing
statement, fixture filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is on file in any
filing or recording office except for (x) UCC financing statements for which
proper termination statements have been delivered to the Secured Party for
filing and (y) UCC financing statements filed in connection with Permitted
Liens;

 

(x)                                   no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for either (i) the pledge or grant by any Debtor of the Liens
purported to be created in favor of the Secured Party hereunder or (ii) the
exercise by Secured Party of any rights or remedies in respect of any
Collateral (whether specifically granted or created hereunder or created or
provided for by applicable law), except (A) for the filings contemplated
by clause (vii) above, (B) as may be required, in connection with the
disposition of any Investment Related Property, by laws generally affecting the
offering and sale of Securities, (C) to the extent any authorizations,
consents or approvals are required under applicable Gaming Laws, the
Intercreditor Agreement or any Intellectual Property license, contract or
agreement and (D) to the extent any actions are required to be performed
by the Secured Party;

 

(xi)                                all written information supplied by
any Debtor with respect to any of the Collateral (in each case taken as a whole
with respect to any particular Collateral) is accurate and complete in all
material respects; and

 

(xii)                             none of the Collateral constitutes,
or is the Proceeds of, “farm products” (as defined in the UCC).

 

(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:

 

(i)                                     except for the security interest
created by this Agreement, it shall not create or suffer to exist any Lien upon
or with respect to any of the Collateral, except Permitted Liens;

 

(ii)                                  it shall not produce, use or permit
any Collateral to be used unlawfully or in violation of any provision of this
Agreement or any applicable statute, regulation or ordinance or any policy of
insurance covering the Collateral;

 

(iii)                               it shall (A) not change such
Debtor’s name, identity, corporate structure, sole place of business or chief
executive office, as the case may be, or jurisdiction of organization unless it
shall have (1) notified the Secured

 

12

 

Party in writing, by executing and
delivering to the Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, at least thirty (30) days prior to
any such change, identifying such new proposed name, identity, corporate
structure, sole place of business or chief executive office, as the case may
be, or jurisdiction of organization and providing such other information in
connection therewith as the Secured Party may reasonably request or (2) taken
all actions necessary or advisable to maintain the continuous validity and
perfection of the Secured Party’s security interest in the Collateral intended
to be granted and agreed to hereby and (B) notify the Secured Party of any
tradename established by such Debtor within thirty (30) days following such
establishment;

 

(iv)                              upon such Debtor or any officer of
such Debtor obtaining knowledge of any event not generally known to the public
at large, it shall promptly notify the Secured Party in writing of any such
event that could reasonably be expected to have a material adverse effect on (A) the
value of a significant portion of the Collateral, (B) the ability of any
Debtor or the Secured Party to dispose of the Collateral or any significant
portion thereof pursuant to applicable law or agreements that could reasonably
be expected to affect such ability or (C) the rights and remedies of the
Secured Party in relation to the Collateral or any significant portion thereof,
including, without limitation, the levy of any legal process against the
Collateral or any significant portion thereof;

 

(v)                                 it shall use commercially reasonable
efforts (which shall not require the payment of cash to, or the reimbursement
of fees and expenses of, such landlord or the making of any material
concessions under any such lease) to deliver to the Secured Party landlord
consents, to the extent it occupies and has business activities on any premises
as a lessee under a lease, executed by the landlord in respect of such lease
the effect of which would subordinate the claims of such landlord to the Liens
created under this Agreement and enable the Secured Party to access such
premises without delay for the purpose of enforcing such Liens; and

 

(vi)                              it shall, on request of the Secured
Party, cause other Persons (including without limitation those in possession of
any Collateral) to execute and deliver in favor of the Secured Party
acknowledgments, consents and control agreements necessary, or desirable and
commercially reasonable in furtherance of the purposes of this Agreement.  All matters shall be in form and substance
reasonably acceptable to the Secured Party and shall be at such Debtor’s cost.

 

4.2                               Equipment and Inventory.

 

(a)                                  Representations
and Warranties.  Each Debtor represents
and warrants, on the Issue Date, that:

 

13

 

(i)                                     all of the Equipment and Inventory
included in the Collateral is kept only at the locations specified in Schedule C
of the Diligence Certificate; and

 

(ii)                                  any Goods now or hereafter produced
by any Debtor included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as amended.

 

(b)                                 Covenants
and Agreements.  Each Debtor covenants
and agrees that:

 

(i)                                     it shall not deliver any Document
evidencing any Equipment and Inventory to any Person other than the issuer of
such Document to claim the Goods evidenced therefor or the Secured Party or the
Credit Facility Secured Party or any other holder or representative of a holder
of a Permitted Lien; and

 

(ii)                                  if any Equipment or Inventory is in
possession or control of any third party (other than the Credit Facility
Secured Party), it shall join with the Secured Party in notifying the third
party of the Secured Party’s security interest and use its commercially
reasonable efforts (which shall not require the payment of cash to, or the
reimbursement of fees and expenses of, such third party or the making of any
material concessions under any contract or agreement relating to such Equipment
or Inventory) in obtaining an acknowledgment from the third party that it is
holding the Equipment and Inventory for the benefit of the Secured Party and
other holders of Permitted Liens.

 

4.3                               Receivables Contracts. 
Covenants and Agreements:  Each
Debtor hereby covenants and agrees that until the Secured Obligations have been
paid in full, it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables Contracts.

 

4.4                               Investment Related Property.

 

(a)                                  Representations
and Warranties.  Each Debtor hereby
represents and warrants, on the Issue Date, that:

 

(i)                                     Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all of the Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests owned by any Debtor and such
Pledged Equity Interests constitute the percentage of issued and outstanding
shares of stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective issuers
thereof indicated on such Schedule;

 

(ii)                                  it is the record and beneficial
owner of the Pledged Equity Interests free of all Liens, rights or claims of
other Persons other than Permitted Liens;

 

(iii)                               without limiting the generality of Section 4.1(a)(v),
no consent of any Person including any other general or limited partner, any
other member

 

14

 

of a limited liability company, any
other shareholder or any other trust beneficiary is necessary in connection
with the creation or perfection of the security interest of the Secured Party
in any Pledged Equity Interests or the exercise by the Secured Party of the
voting or other rights provided for in this Agreement or the exercise of
remedies in respect thereof;

 

(iv)                              none of the Pledged LLC Interests
nor Pledged Partnership Interests are or represent interests in issuers that
are:  (a) registered as investment
companies, (b) are dealt in or traded on securities exchanges or markets
or (c) have opted to be treated as securities under the UCC of any
jurisdiction;

 

(v)                                 Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth under the heading “Pledged Debt” all of the Pledged Debt owned
by any Debtor and all of such Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default and constitutes all of
the issued and outstanding inter-company Indebtedness evidenced by an
instrument or certificated security of the respective issuers thereof owing to
such Debtor;

 

(vi)                              Schedule A of the Diligence
Certificate sets forth under the headings “Securities Accounts,” “Deposit
Accounts,” and “Commodities Accounts,” respectively, all of the Securities
Accounts, Deposit Accounts and Commodities Accounts in which each Debtor has an
interest.  Each Debtor is the sole
entitlement holder of each such Securities Account, Deposit Account and
Commodities Account, and such Debtor has not consented to, and is not otherwise
aware of, any Person having “control” (as defined in the UCC) over, or any
other interest in, any such Securities Account, Deposit Account or Commodity
Account, or any securities or other property credited thereto (other than
Secured Party and the Credit Facility Secured Party); and

 

(vii)                           The Secured Party has valid and
enforceable control agreements with all Persons with whom each Debtor has
Deposit Accounts or with all securities intermediaries maintaining any
Securities Accounts of, or on behalf of, such Debtor.  As to other Collateral in which perfection of
a security interest may be obtained by control, all actions have been taken so
as to ensure that the Secured Party has control of such Collateral, other than
as permitted hereby in the absence of an Event of Default.

 

(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:

 

(i)                                     in the event it acquires rights in
any Investment Related Property after the date hereof, it shall deliver to the
Secured Party a completed Supplement to Security Agreement, substantially in
the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto,

 

15

 

reflecting such new Investment
Related Property and all other Investment Related Property.  Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Secured Party shall
attach to all Investment Related Property immediately upon any Debtor’s
acquisition of rights therein and shall not be affected by the failure of any
Debtor to deliver a supplement to Schedule A of the Diligence Certificate
as required hereby;

 

(ii)                                  except as provided in the next
sentence, in the event such Debtor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or other
property upon the merger, consolidation, liquidation or dissolution of any
issuer of any Investment Related Property, then (a) such dividends,
interest or distributions and securities or other property shall be included in
the definition of Collateral without further action and (b) such Debtor
shall immediately take all steps, if any, necessary, or advisable and
commercially reasonable to ensure the validity and perfection of the Secured
Party over such Investment Related Property (including, without limitation,
delivery thereof to the Secured Party);

 

(iii)                               it shall comply with all of its
obligations under any partnership or limited liability company agreement or
limited liability company agreement relating to Pledged Partnership Interests
or Pledged LLC Interests and shall enforce all of its rights with respect to
any Investment Related Property related to Persons that are not Subsidiary
Guarantors;

 

(iv)                              each Debtor consents to the grant by
each other Debtor of a security interest in all Investment Related Property to
the Secured Party and, without limiting the foregoing, consents to the transfer
of any Pledged Partnership Interest and any Pledged LLC Interest to the Secured
Party or its nominee following an Event of Default and to the substitution of
the Secured Party or its nominee as a partner in any partnership or as a member
in any limited liability company with all the rights and powers related
thereto;

 

(v)                                 with respect to any Investment
Related Property consisting of Securities Accounts or Securities Entitlements,
it shall cause the securities intermediary maintaining such Securities Account
or Securities Entitlement to enter into an agreement substantially in the form
of Exhibit B hereto pursuant to which the securities intermediary
shall agree to comply with the Secured Party’s “entitlement orders” without
further consent by such Debtor.  With
respect to any Investment Related Property that is a “Deposit Account”, it
shall cause the depositary institution maintaining such account to enter into
an agreement substantially in the form of Exhibit C hereto,
pursuant to which the Secured Party shall have both sole dominion and control
over such Deposit Account and “control” (within the meaning of Section 9-104
of the UCC) over such Deposit Account.  
Such Debtor shall have entered into such control agreement or agreements
with respect to: (i) any Securities Accounts, Securities Entitlements or
Deposit Accounts that

 

16

 

exist on the Issue Date and (ii) any
Securities Accounts, Securities Entitlements or Deposit Accounts that are
created or acquired after the Issue Date, as of or prior to the deposit or
transfer of any such Securities Entitlements or funds, whether constituting
moneys or investments, into such Securities Accounts or Deposit Accounts (provided,
however, that no Debtor shall be obligated to comply with the terms of
this clause (v) with respect to any Deposit Account or Securities Account
if the average closing balance for a period of five consecutive Business Days
of such Deposit Account or Securities Account, when taken together with the
average closing balance for such period of all other Deposit Accounts and
Securities Accounts of all of the Debtors (including such Debtor) with respect
to which such terms have not been complied with, does not exceed $500,000 in the
aggregate); and

 

(vi)                              with respect to any Investment
Related Property in which it currently has rights, it shall have complied with
the provisions of this Section on or before the Closing Date and with
respect to any Investment Related Property hereafter acquired by such Debtor it
shall comply with the provisions of this Section immediately upon
acquiring rights therein, in each case in form and substance satisfactory to
the Secured Party.   With respect to any
Investment Related Property that is represented by a certificate or that is an “instrument”
(other than any Investment Related Property credited to a Securities Account)
it shall cause such certificate or instrument to be delivered to the Secured
Party, indorsed in blank by an “effective indorsement” (as defined in Section 8-107
of the UCC), regardless of whether such certificate constitutes a “certificated
security” for purposes of the UCC.   With
respect to any Investment Related Property that is an “uncertificated security”
for purposes of the UCC (other than any “uncertificated securities” credited to
a Securities Account), it shall cause the issuer of such uncertificated
security to register the Secured Party as the registered owner thereof on the
books and records of the issuer.

 

(c)                                  Voting and
Distributions.

 

(i)                                     So long as no Event of Default shall
have occurred and be continuing, and subject to applicable Gaming Laws, each
Debtor shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Indenture.

 

(ii)                                  Upon the occurrence and during the
continuation of an Event of Default subject to Section 7.6:

 

(A)                              all rights of each Debtor to
exercise or refrain from exercising the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant hereto shall cease
and all such rights shall thereupon become vested in the Secured Party who

 

17

 

shall thereupon have the sole right
to exercise such voting and other consensual rights; and

 

(B)                                in order to permit the Secured Party
to exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions
which it may be entitled to receive hereunder: (1) each Debtor shall
promptly execute and deliver (or cause to be executed and delivered) to the
Secured Party all proxies, dividend payment orders and other instruments as the
Secured Party may from time to time reasonably request and (2) each Debtor
acknowledges that the Secured Party may utilize the power of attorney set forth
in Section 6.

 

4.5                               Intellectual Property.

 

(a)                                  Representations
and Warranties.  Except as disclosed in Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time), each Debtor hereby represents and warrants, on
the Issue Date, that:

 

(i)                                     Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth a true and complete list of (i) all active United States
and foreign registrations of and applications for Patents, Trademarks, and
Copyrights owned by each Debtor and (ii) all Patent Licenses, Trademark
Licenses and Copyright Licenses material to the business of such Debtor;

 

(ii)                                  it is the sole and exclusive owner
of the entire right, title, and interest in and to all Intellectual Property
listed as “owned” by such Debtor on Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time), and owns or has the valid right to use all other Intellectual Property
used in or necessary to conduct its business, free and clear of all Liens,
claims, encumbrances and licenses, except for Permitted Liens and the licenses
set forth on Schedule B of the Diligence Certificate (as each may be
amended or supplemented from time to time);

 

(iii)                               to each Debtor’s knowledge, all
Intellectual Property is valid and enforceable; no holding, decision, or
judgment has been rendered in any action or proceeding before any court or
administrative authority challenging the validity of, such Debtor’s right to
register, or such Debtor’s rights to own or use, any Intellectual Property and
no such action or proceeding is pending or, to the best of such Debtor’s
knowledge, threatened;

 

(iv)                              all registrations and applications
for Copyrights, Patents and Trademarks are standing in the name of each Debtor,
and none of the Trademarks, Patents, Copyrights or Trade Secret Collateral has
been licensed by any Debtor to any affiliate or third party, except as
disclosed on Schedule B

 

18

 

of the Diligence Certificate (as each
may be amended or supplemented from time to time); and

 

(v)                                 there is no effective UCC financing
statement or other document or instrument now executed, or on file or recorded
in any public office that has not been released or terminated, granting a
security interest in or otherwise encumbering any part of the Intellectual
Property, other than in favor of the Secured Party.

 

(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:

 

(i)                                     it shall promptly (but in no event
more than thirty (30) days after any Debtor obtains knowledge thereof) report
to the Secured Party (i) the filing of any application to register any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or any state registry or foreign counterpart of
the foregoing (whether such application is filed by such Debtor or through any
agent, employee, licensee, or designee thereof) and (ii) the registration
of any Intellectual Property by any such office, in each case by executing and
delivering to the Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto;

 

(ii)                                  it shall, promptly upon the
reasonable request of the Secured Party, execute and deliver to the Secured
Party any document required to acknowledge, confirm, register, record, or
perfect the Secured Party’s interest in any part of the Intellectual Property,
whether now owned or hereafter acquired;

 

(iii)                               it shall hereafter use commercially
reasonable efforts (which shall not require the payment of cash to, or the
reimbursement of fees and expenses of, the counterparty to any such contract or
the making of any material concessions under any such contract) so as not to
permit the inclusion in any contract to which it hereafter becomes a party of
any provision that could or might in any way materially impair or prevent the
creation of a security interest in, or the assignment of, such Debtor’s rights
and interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;

 

4.6                               Commercial Tort Claims.

 

(a)                                  Representations
and Warranties.  Each Debtor hereby represents
and warrants, on the Issue Date, that Schedule E of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all Commercial Tort Claims of each Debtor.

 

(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full,
with respect to any Commercial Tort Claim hereafter arising it shall deliver to
the Secured Party a completed Supplement to Security Agreement, substantially

 

19

 

in the
form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, identifying such new Commercial Tort Claims.

 

4.7                               Judgments.

 

(a)                                  Representations
and Warranties.  Each Debtor hereby represents
and warrants, on the Issue Date, that Schedule E of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all judgments in favor of each Debtor.

 

(b)                                 Covenants
and Agreements.  Each Debtor hereby covenants
and agrees that until the Secured Obligations have been paid in full, with
respect to any judgment hereafter arising in its favor it shall deliver to the
Secured Party a completed Supplement to Security Agreement, substantially in
the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, identifying such new judgments.

 

5.                                      FURTHER ASSURANCES; ADDITIONAL
DEBTORS

 

5.1                               Further Assurances.

 

(a)                                  Each Debtor
agrees that from time to time until the Secured Obligations have been paid in
full, at the expense of such Debtor, that it shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary, or desirable and commercially reasonable, in order to create and/or
maintain the validity, perfection or priority of and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, each Debtor
shall:

 

(i)                                     execute and file such financing or
continuation statements, or amendments thereto, and execute and deliver such
other agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, in order to perfect and preserve the security
interests granted or purported to be granted hereby;

 

(ii)                                  take all actions necessary to ensure
the recordation of appropriate evidence of the Liens and security interest
granted hereunder in the Intellectual Property with any intellectual property
registry in which said Intellectual Property is registered or in which an
application for registration is pending including, without limitation, the
United States Patent and Trademark Office, the United States Copyright Office,
the various Secretaries of State, and the foreign counterparts on any of the
foregoing;

 

(iii)                               at any reasonable time, upon request
by the Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by the Secured Party, or persons designated by the Secured Party;
and

 

(iv)                              at the Secured Party’s reasonable
request and subject to the Intercreditor Agreement, appear in and defend any
action or proceeding that may affect the Secured Party’s security interest in
all or any part of the Collateral.

 

20

 

(b)                                 Each Debtor
hereby authorizes the Secured Party to file, until the Secured Obligations have
been paid in full, a Record or Records, including, without limitation, UCC
financing or continuation statements, and amendments thereto, in all
jurisdictions and with all filing offices as the Secured Party may determine,
in its sole discretion, are necessary or advisable to perfect the security
interest granted to the Secured Party herein. 
Such UCC financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as the Secured
Party may determine, in its sole discretion, is necessary, advisable or prudent
to ensure the perfection of the security interest in the Collateral granted to
the Secured Party herein, including, without limitation, describing such
property as “all assets other than the excluded assets” or other substantially
similar descriptions.  Each Debtor shall
furnish to the Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party may reasonably request, all in
reasonable detail.

 

(c)                                  Each Debtor
hereby authorizes the Secured Party to modify this Agreement after obtaining
such Debtor’s approval of or signature to such modification by amending Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Debtor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Debtor no longer has or claims any right, title or interest

 

(d)                                 Unless (i) the
Secured Party shall have failed to comply with Section 9-513(c) of
the UCC with respect to any Debtor, (ii) otherwise permitted under Section 4.1(b)(iii)(b) to
ensure the continued effectiveness of any UCC financing statement relating to
such Debtor or (iii) otherwise required under Section 5.1(a) to
ensure the continued effectiveness of any UCC financing statement relating to
such Debtor or perfect the security interest of the Secured Party hereunder in
any Collateral of such Debtor, such Debtor agrees not to file any termination
statements, amendments, corrections or supplements relative to the UCC
financing statements filed in connection with this Agreement without the prior
written consent of the Secured Party.

 

5.2                               Additional
Debtors.  From time to time
subsequent to the date hereof, Subsidiary Guarantors (as defined in the
Indenture) may become additional Debtors pursuant to the terms of the
Indenture, by executing a Supplement to Security Agreement, substantially in
the form attached hereto as Exhibit A.  Upon delivery of any such counterpart
agreement to the Secured Party, notice of which is hereby waived by Debtors, (a) each
additional Debtor shall be a Debtor and shall be as fully a party hereto as if
additional Debtor were an original signatory hereto and (b) the
supplemental schedules thereto shall be incorporated into and become a part of
and supplement the respective schedules to this Agreement; and each reference
to such Schedules shall mean and be a reference to such Schedules as
supplemented pursuant to each Supplement to Security Agreement.  Each Debtor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Debtor hereunder, nor by any election of
Secured Party not to cause any Restricted Subsidiary of the Company to become
an additional Debtor hereunder.  This
Agreement shall be fully effective as to any Debtor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Debtor hereunder.

 

6.                                      ATTORNEY-IN-FACT

 

6.1                               Power
of Attorney.  Each Debtor hereby
irrevocably appoints the Secured Party (such appointment being coupled with an
interest) as such Debtor’s attorney-in-fact, with full authority in the

 

21

 

place and stead of such Debtor and in the name of such
Debtor, the Secured Party, from time to time in its discretion to take any
action and to execute any instrument that it may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement and the Intercreditor
Agreement, including, without limitation, the following:

 

(a)                                  upon the
occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Debtor pursuant to the
Indenture;

 

(b)                                 upon the
occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;

 

(c)                                  upon the
occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel
paper in connection with clause (b) above subject in all respects to the
rights of any lender under the Credit Agreement to receive, endorse and collect
the same;

 

(d)                                 upon the
occurrence and during the continuance of any Event of Default, to file any
claims or take any action or institute any proceedings necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of the Secured Party with respect to any of the Collateral;

 

(e)                                  to prepare
and file any UCC financing statements against such Debtor as debtor;

 

(f)                                    to prepare,
sign, and file for recordation in any intellectual property registry,
appropriate evidence of the lien and security interest granted herein in the
Intellectual Property in the name of such Debtor as assignor;

 

(g)                                 to take or
cause to be taken all actions necessary to perform or comply or cause performance
or compliance with the terms of this Agreement, including, without limitation,
access to pay or discharge taxes or Liens (other than Permitted Liens) levied
or placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same, any such payments made
by the Secured Party to become obligations of such Debtor to the Secured Party,
due and payable immediately without demand;

 

(h)                                 upon the
occurrence and during the continuance of any Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes, and to do, at the Secured
Party’s option and such Debtor’s expense, at any time or from time to time, all
acts and things that the Secured Party deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Secured Party’s security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Debtor might do; and

 

(i)                                     upon the
occurrence and during the continuance of any Event of Default, to enforce all
Supporting Obligations with respect to any Collateral.

 

6.2                               No
Duty on the Part of Secured Party. 
The powers conferred on the Secured Party hereunder are solely to
protect the interests of the Secured Party in the Collateral and shall not
impose any duty upon the Secured Party to exercise any such powers.  The Secured Party shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its

 

22

 

officers,
directors, employees or agents shall be responsible to any Debtor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.

 

7.                                      REMEDIES

 

7.1                               Generally.

 

(a)                                  If any Event
of Default shall have occurred and be continuing, the Secured Party may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it at law or in equity,
all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or
otherwise, and also may pursue any of the following separately, successively or
simultaneously:

 

(i)                                     require any Debtor to, and each
Debtor hereby agrees that it shall at its expense and promptly upon request of
the Secured Party forthwith, assemble all or part of the Collateral as directed
by the Secured Party and make it available to the Secured Party at a place to
be designated by the Secured Party that is reasonably convenient to both
parties;

 

(ii)                                  enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process;

 

(iii)                               prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent the Secured
Party deems appropriate;

 

(iv)                              without notice except as specified
below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive
basis) or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Secured Party’s offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the Secured Party may
deem commercially reasonable; and

 

(b)                                 The Secured
Party may be a purchaser of any or all of the Collateral at any public or, to
the extent permitted under the UCC, private sale in accordance with the UCC and
the Secured Party, as Secured Party for and representative of the Holders,
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
sale made in accordance with the UCC, to use and apply any of the Secured
Obligations of such Debtor as a credit on account of the purchase price for any
Collateral payable by the Secured Party at such sale.  To the extent provided under the UCC or other
applicable law, each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Debtor and Debtor hereby waives (to the extent permitted by applicable law)
all rights of redemption stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted until payment in full of the Obligations.  Each Debtor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days notice to such
Debtor of the time and place of any public or private sale shall constitute
reasonable notification.  The Secured
Party shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given.  The
Secured Party may

 

23

 

adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor and by notice to the Company, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.  Each Debtor hereby waives any
claims against the Secured Party arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if the Secured
Party accepts the first offer received and does not offer such Collateral to
more than one offeree.  If the proceeds
of any sale or other disposition of the Collateral of any Debtor are insufficient
to pay all the Secured Obligations of such Debtor, such Debtor shall be liable
for the deficiency and the fees of any attorneys employed by the Secured Party
to collect such deficiency.  Each Debtor
further agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to the Secured Party, that the Secured Party has no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against such Debtor, and such Debtor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated
maturities.  Nothing in this Section shall
in any way alter the rights of the Secured Party hereunder.

 

(c)                                  The Secured
Party may sell the Collateral following the occurrence and during the
continuance of an Event of Default without giving any warranties as to the
Collateral.  The Secured Party may
specifically disclaim or modify, in its sole discretion, any warranties of
title or the like as to any Collateral. 
This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of any of the Collateral.  The Secured Party may comply with any
applicable state or federal law requirements in connection with a disposition
of the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.  Leasing and licensing of Collateral by the
Secured Party to third Persons are types of sales permitted hereunder.

 

(d)                                 If the
Secured Party sells any of the Collateral of any Debtor on credit, the Secured
Obligations of such Debtor will be credited only with payments actually made by
the purchaser and received by the Secured Party and applied to the indebtedness
of the purchaser.  In the event the
purchaser fails to pay for the Collateral, the Secured Party may resell the
Collateral.

 

(e)                                  The Secured
Party shall have no obligation to marshal any of the Collateral.

 

(f)                                    All amounts
and proceeds (including checks and other instruments) received by any Debtor in
respect of amounts due to such Debtor in respect of the Collateral or any
portion thereof following the occurrence and during the continuance of an Event
of Default shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of such Debtor and shall be
forthwith paid over or delivered (subject to the Intercreditor Agreement to the
extent then in effect) to the Secured Party in the same form as so received
(with any necessary endorsement) to be held as cash Collateral and applied as
provided by Section 7.5 following the occurrence and during the
continuance of an Event of Default.  Upon
demand from the Secured Party following the occurrence and during the
continuance of an Event of Default, Debtors shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount thereon.

 

7.2                               Application
of Proceeds.  Except as expressly
provided elsewhere in this Agreement, all Proceeds received by the Secured
Party in respect of any sale, any collection from, or other realization upon
all or any part of the Collateral of any Debtor shall be applied in full or in
part by the Secured Party against the Secured Obligations of such Debtor in the
order specified in Section 6.10 of the Indenture.

 

24

 

7.3                               Investment Related Property. 
Each Debtor recognizes that, by reason of certain prohibitions contained
in the Securities Act and applicable state securities laws, the Secured Party
may be compelled, with respect to any sale of all or any part of the Investment
Related Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof.  Each Debtor acknowledges that any such
private sale may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including a public offering
made pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, each Debtor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Secured Party shall have no obligation to engage in public sales and
no obligation to delay the sale of any Investment Related Property for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree
to so register it.  If the Secured Party
determines to exercise its right to sell any or all of the Investment Related
Property, upon written request, each Debtor shall and shall cause each issuer
of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company from time to time to furnish to the Secured Party all such
information as the Secured Party may reasonably request in order to determine
the number and nature of interest, shares or other instruments included in the
Investment Related Property which may be sold by the Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to
time in effect.  Notwithstanding any
other provision of this Agreement to the contrary, with respect to any deposit
accounts that constitute part of the Collateral, the Secured Party may only
exercise remedies with respect to such deposit accounts at the earliest of (i) the
date that an Event of Default shall be continuing for 180 consecutive days
after the delivery of written notice to the Company of such Event of Default
under the Indenture, (ii) the date on which a declaration of acceleration
has been made under Section 6.2 of the Indenture or an Event of Default
under Section 6.1(a)(xii) or (xiii) of the Indenture has occurred, and (iii) any
other date to the extent permitted under the Intercreditor Agreement at any
time the Intercreditor Agreement is in effect.

 

7.4                               Intellectual Property.

 

(a)                                  Anything
contained herein to the contrary notwithstanding, upon the occurrence and
during the continuation of an Event of Default:

 

(i)                                     the Secured Party shall have the
right (but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Debtor, the Secured Party or otherwise, in the
Secured Party’s sole discretion, to enforce any Intellectual Property, in which
event such Debtor shall, at the request of the Secured Party, do any and all
reasonable, lawful acts and execute any and all documents reasonably required
by the Secured Party in aid of such enforcement and such Debtor shall promptly,
upon demand, reimburse and indemnify the Secured Party as provided in Section 10
hereof in connection with the exercise of its rights under this Section, and,
to the extent that the Secured Party shall elect not to bring suit to enforce
any Intellectual Property as provided in this Section, each Debtor agrees to
use all reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the commercially material infringement of any of the material
Intellectual Property by others and for that purpose agrees to diligently

 

25

 

maintain any action, suit or
proceeding against any Person so infringing as shall be reasonably necessary to
prevent such infringement;

 

(ii)                                  upon reasonable written demand from
the Secured Party, each Debtor shall grant, assign, convey or otherwise
transfer to the Secured Party all of such Debtor’s right, title and interest in
and to the Intellectual Property and shall execute and deliver to the Secured
Party such documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement;

 

(iii)                               each Debtor agrees that such an
assignment and/or recording shall be applied to reduce the Secured Obligations
of such Debtor outstanding only to the extent that the Secured Party receives
cash proceeds in respect of the sale of, or other realization upon, the Intellectual
Property of such Debtor;

 

(iv)                              within five (5) Business Days
after written notice from the Secured Party, each Debtor shall make available
to the Secured Party, to the extent within such Debtor’s power and authority,
such personnel in such Debtor’s employ on the date of such Event of Default as
the Secured Party may reasonably designate, by name, title or job
responsibility, to permit such Debtor to continue, directly or indirectly, to
produce, advertise and sell the products and services sold or delivered by such
Debtor under or in connection with the Intellectual Property, such persons to
be available to perform their prior functions on the Secured Party’s behalf and
to be compensated by the Secured Party at such Debtor’s expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default; and

 

(v)                                 the Secured Party shall have the
right to notify, or require each Debtor to notify, any obligors with respect to
amounts due or to become due to such Debtor in respect of the Intellectual
Property, of the existence of the security interest created herein, to direct
such obligors to make payment of all such amounts directly to the Secured
Party, and, upon such notification and at the expense of such Debtor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Debtor might have done.

 

(b)                                 If (i) an
Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no
other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Secured Party of any rights, title and interests
in and to the Intellectual Property shall have been previously made and shall
have become absolute and effective, and (iv) the Secured Obligations shall
not have become immediately due and payable, upon the written request of any
Debtor, the Secured Party shall promptly execute and deliver to such Debtor, at
such Debtor’s sole cost and expense, such assignments or other transfer as may
be necessary to reassign to such Debtor any such rights, title and interests as
may have been assigned to the Secured Party as aforesaid, subject to any
disposition thereof that may have been made by the Secured Party; provided,
after giving effect to such reassignment, the Secured Party’s security interest
granted

 

26

 

pursuant
hereto, as well as all other rights and remedies of the Secured Party granted
hereunder, shall continue to be in full force and effect; and provided further,
the rights, title and interests so reassigned shall be free and clear of any
Liens granted by or on behalf of the Secured Party.

 

(c)                                  Solely for
the purpose of enabling the Secured Party to exercise rights and remedies under
this Section 7 following the occurrence and during the continuance of an
Event of Default, each Debtor hereby grants to the Secured Party, to the extent
it has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor), subject, in
the case of Trademarks, to sufficient rights to quality control and inspection
in favor of such Debtor to avoid the risk of invalidation of said Trademarks,
to use, operate under, license, or sublicense any Intellectual Property now
owned or hereafter acquired by such Debtor, and wherever the same may be
located.

 

7.5                               Cash
Proceeds.  Cash Proceeds shall,
following the occurrence and during the continuance of an Event of Default, be
held by such Debtor in trust for the Secured Party, segregated from other funds
of such Debtor, and shall, forthwith upon receipt by such Debtor, unless
otherwise provided pursuant to Section 4.4, be turned over to the Secured
Party in the exact form received by such Debtor (duly indorsed by such Debtor
to the Secured Party, if required).  Any
Cash Proceeds received by the Secured Party (whether from a Debtor or
otherwise), following the occurrence and during the continuance of an Event of
Default, shall be applied by the Secured Party in accordance with Section 7.2.

 

7.6                               Regulatory
Matters.  The Secured Party
acknowledges and agrees that the approval of the applicable Gaming Authorities
of this Agreement shall not act or be construed as the approval, either express
or implied, for the Secured Party to take any actions or steps provided for in
this Agreement for which prior approval of such Gaming Authority is required,
without first obtaining such prior and separate approval to the extent then
required by applicable law.

 

8.                                      CONTINUING SECURITY INTEREST;
TRANSFER OF NOTES

 

This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect until the
payment in full of all Secured Obligations, be binding upon each Debtor, its
successors and assigns (except to the extent otherwise provided in the
Indenture), and inure, together with the rights and remedies of the Secured
Party hereunder, to the benefit of the Secured Party and its successors,
transferees and assigns.  Without
limiting the generality of the foregoing, but subject to the terms of the
Indenture, any Holder may assign or otherwise transfer any Note held by it to
any other Person to the extent permitted under the Indenture, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Holders.  Upon the payment
in full of all Secured Obligations, the security interest granted hereby shall
terminate hereunder and all rights to the Collateral granted hereunder shall
revert to Debtors.  Upon any such
termination the Secured Party shall, at Debtors’ expense, execute and deliver
to Debtors such documents as Debtors shall reasonably request to evidence such
termination.

 

9.                                      STANDARD OF CARE; SECURED PARTY MAY PERFORM

 

The powers conferred on the Secured Party hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. 
Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. 
The Secured Party shall be deemed to have exercised reasonable care in
the custody and

 

27

 

preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Secured Party accords its own
property.  Neither the Secured Party nor
any of its directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Debtor or otherwise.  If any Debtor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance
of, such agreement, and the expenses of the Secured Party incurred in
connection therewith shall be payable by each Debtor under Section 11.2
hereof.

 

10.                               INDEMNITY

 

(a)                                  Each Debtor
agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay
and hold harmless each Indemnitee, from and against any and all claims, losses
and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result from such Indemnitee’s gross negligence or willful
misconduct as finally and unappeallably determined by a court of competent
jurisdiction, and to pay to the Secured Party promptly following written demand
the amount of any and all reasonable costs and reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents
in accordance with the terms and conditions of the Indenture.

 

(b)                                 The
obligations of each Debtor in this Section 10 shall survive the
termination of this Agreement and the discharge of such Debtor’s other
obligations under this Agreement and the Indenture.

 

11.                               MISCELLANEOUS

 

11.1                        Notices.  Unless
otherwise specifically provided herein, any notice or other communication
herein required or permitted to be given to a Debtor or the Secured Party,
shall be sent to such Person’s address and in the manner as set forth in the
Indenture.

 

11.2                        Expenses.  Debtors
agree to pay promptly all the actual and reasonable costs and expenses of
preparation of the Indenture Documents and any consents, amendments, waivers or
other modifications thereto; all the costs of furnishing all opinions by
counsel for the Debtors; the reasonable fees, expenses and disbursements of
counsel to Secured Party (in each case including allocated costs of internal
counsel) in connection with the negotiation, preparation, execution and
administration of the Indenture Documents and any consents, amendments, waivers
or other modifications thereto and any other documents or matters requested by
Debtors; all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Secured Party, for the benefit of the Holders,
including filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, title insurance premiums and reasonable fees, expenses and
disbursements of counsel to Secured Party and of counsel providing any opinions
that Secured Party may reasonably request in respect of the Collateral or the
Liens created pursuant to the Indenture Documents; all the actual costs and
reasonable fees, expenses and disbursements of any auditors, accountants,
consultants or appraisers; all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Secured Party and its
counsel) in connection with the custody or preservation of any of the
Collateral; and after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel), keeper’s fees and costs of settlement, incurred by Secured
Party in enforcing any Secured Obligations of or in collecting any payments due
from any Debtor hereunder or under the other Indenture Documents by

 

28

 

reason of an Event of Default (including in connection
with the sale of, collection from, or other realization upon any of the
Collateral) or in connection with any refinancing or restructuring of the
credit arrangements provided hereunder in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy cases or proceedings.

 

11.3                        Subrogation.  Each Debtor further agrees to waive any and
all rights of subrogation it may have against any other Debtor upon the sale or
disposition of all or any portion of the Collateral by Secured Party pursuant
to the terms of this Agreement until all of the Secured Obligations have been
paid in full, and following the payment in full of all Secured Obligations, the
Secured Party agrees that, at such Debtor’s reasonable request, the Secured
Party will execute and deliver to such Debtor appropriate documents necessary
to evidence the transfer by subrogation to such Debtor of an interest in the
Secured Obligations resulting from such payment by such Debtor.

 

11.4                        Debtor
Waivers.  Each Debtor hereby waives
to the fullest extent permitted by applicable law, for the benefit of Secured
Party: (i) any right to require Secured Party, as a condition of payment
or performance by such Debtor, to (A) proceed against any other Debtor or
any other Person, (B) proceed against or exhaust any other security held
from any other Debtor or any other Person, (C) proceed against or have
resort to any balance of any deposit account or credit on the books of Secured
Party attributable to any other Debtor or any other Person, or (D) pursue
any other remedy in the power of Secured Party whatsoever, (ii) any
defense arising by reason of the incapacity, lack of authority or any
disability or other defense of any other Debtor including, without limitation,
any defense based on or arising out of the lack of validity or the
unenforceability of any of the Indenture Documents or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
any other Debtor from any cause other than indefeasible payment in full of the
Secured Obligations; (iii) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (iv) any
defense based upon Secured Party’s errors or omissions in the administration of
the Indenture Documents, except as a result of the gross negligence, bad faith
or willful misconduct of the Secured Party, (v) (A) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Agreement and any legal or equitable discharge of such
Debtor’s obligations hereunder, (B) the benefit of any statute of
limitations affecting such Debtor’s liability hereunder or the enforcement
hereof, (C) any rights to set-offs, recoupments and counterclaims, and (D) promptness,
diligence and any requirement that Secured Party protect, secure, perfect or
insure any other security interest or lien or any property subject thereto; (vi) notices,
demands, presentments, protests, notices of dishonor and notices of any action
or inaction, notices of default under the Indenture Documents or any agreement
or instrument related thereto, notices of any renewal, extension or
modification of the Indenture Documents or any agreement related thereto,
notices of any extension of credit to any other Debtor and notices of any of
the matters referred to in this paragraph and any right to consent to any
thereof, and (vii) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Agreement.

 

11.5                        Amendments and Waivers

 

(a)                                  Secured
Party’s Consent.  Subject to Section 11.5(b) and
11.5(c) and the terms of the Indenture, no amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Debtor therefrom, shall in any event be effective without the
written concurrence of the Secured Party and, in the case of any such amendment
or modification, by each of the Debtors; provided, that this Agreement
may be modified by the execution of a Supplement to Security Agreement by (i) Subsidiary
Guarantors (as defined in the Indenture) to become parties hereto as Debtors in
accordance with Section 5.2 this Agreement and (ii) existing Debtors
pursuant to Section 4.1(b)(iii),

 

29

 

4.4(b)(i),
4.5(b)(i), 4.6(b) or 4.7(b), and each other Debtor hereby waives any
requirement of notice of or consent to any such amendment.  Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.

 

(b)                                 Other
Consents.  No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Debtor therefrom, shall amend, modify, terminate or waive any
provision herein as the same applies to Secured Party without the consent of
the Secured Party except as provided in accordance with the Indenture.

 

(c)                                  Waiver.   Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.  No notice to or demand on any
Debtor in any case shall entitle any Debtor to any other or further notice or
demand in similar or other circumstances.

 

11.6                        Successors
and Assigns.   This Agreement shall be binding upon the
parties hereto and their respective successors and assigns including all
persons who become bound as debtor to this Agreement.  No Debtor shall, except as permitted under
the Indenture, assign any right, duty or obligation hereunder. This Agreement
is for the benefit of the Secured Party and for such other Person or Persons as
may from time to time become or be Holders, and this Agreement shall be
transferrable with the same force and effect and to the same extent as the
Secured Obligations may be transferrable, and the Collateral shall secure any
and all of the then existing and thereafter arising Secured Obligations in
favor of such a transferee that has effectuated such transfer in accordance
with the terms of the Indenture, with retroactive rank.

 

11.7                        Independence
of Covenants.  All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.

 

11.8                        Survival
of Representations, Warranties and Agreements.  All representations, warranties and
agreements made herein shall survive the execution and delivery hereof.  Notwithstanding anything herein or implied by
law to the contrary, the agreements of each Debtor set forth in Sections 10 and
11.2 shall survive the payment of the Secured Obligations and the termination
hereof.

 

11.9                        No Waiver;
Remedies Cumulative.  No failure or
delay on the part of the Secured Party in the exercise of any power, right or
privilege hereunder or under any other Indenture Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege.  All
rights, powers and remedies existing under this Agreement and the other
Indenture Documents are cumulative, and not exclusive of, any rights or
remedies otherwise available. Any forbearance or failure to exercise, and any
delay in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall
it preclude the further exercise of any such right, power or remedy.  Without limiting the generality of the
foregoing, each Debtor waives any right such Debtor may have to require the
Secured Party and the Holders to pursue any third Person for any of the Secured
Obligations.

 

11.10                 Severability.  In case any provision in or obligation
hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.

 

30

 

11.11                 Headings.  Section headings herein are included
herein for convenience of reference only and shall not constitute a part hereof
for any other purpose or be given any substantive effect.

 

11.12                 APPLICABLE LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.

 

11.13                 SUBMISSION TO
JURISDICTION.  ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY DEBTOR ARISING OUT OF OR RELATING HERETO OR ANY
OTHER INDENTURE DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK.  BY EXECUTING AND DELIVERING
THIS AGREEMENT, EACH DEBTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY SUBMITS TO AND ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;  WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;  AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE DEBTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 11.1; 
AGREES THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE DEBTOR IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND AGREES SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE
COURTS OF ANY OTHER JURISDICTION HAVING JURISDICTION OVER SUCH DEBTOR.

 

11.14                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument.

 

11.15                 Gaming Laws.  The Secured Party acknowledges, understands
and agrees that the Gaming Laws may impose certain licensing or transaction
approval requirements prior to the exercise of the rights and remedies granted
to it under this Agreement with respect to the Collateral subject to the Gaming
Laws.

 

(a)                                  If any
consent under the Gaming Laws is required in connection with the taking of any
of the actions which may be taken by the Secured Party in the exercise of its
rights hereunder, then each Debtor agrees to use its commercially reasonable
best efforts to secure such consent and to cooperate with the Secured Party in
obtaining any such consent.  Upon the
occurrence and during the continuation of any Event of Default, each Debtor
shall promptly execute and/or cause the execution of all applications,
certificates, instruments, and other documents and papers that the Secured
Party may be required to file in order to obtain any necessary approvals under
the Gaming Laws, and if such Debtor fails or refuses to execute such documents,
the Secured Party or the court with jurisdiction may execute such documents on
behalf of such Debtor.

 

31

 

(b)                                 Notwithstanding
any other provision of this Agreement to the contrary other than as set forth
in Section 7.5, nothing in this Agreement shall (i) effect any
transfer of any ownership interest in a Debtor or (ii) effect any
transfer, sale, purchase, lease or hypothecation of, or any borrowing or
loaning of money against, or any establishment of any voting trust agreement or
other similar agreement with respect to any certificate of suitability or any
owner’s license heretofore issued to any person, including any Debtor, under
any of the Gaming Laws.

 

(c)                                  Debtors and
Secured Party each acknowledge that the Gaming Licenses held by the Company are
not part of the Collateral of this Agreement and that, under the above
described legislation and rules promulgated thereunder, Secured Party may
be precluded from or otherwise limited in taking possession of or selling the
Collateral of this Agreement under the Defaults and Remedies provisions of this
Agreement.  Debtors and Secured Party
each also acknowledge that due to various legal restrictions, including,
without limitation, licensing of operators of pari-mutuel wagering facilities
and prior approval of the sale or disposition of assets of a licensed
pari-mutuel wagering operation, the sale of Collateral may be denied by Gaming
Authorities or delayed pending Gaming Authority action or approval.

 

11.16                 Effectiveness.  Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
the Secured Party of written or telephonic notification of such execution and
authorization of delivery thereof.

 

11.17                 Entire Agreement.  This Agreement, the other Indenture Documents
and the Intercreditor Agreement embody the entire agreement and understanding
between the Debtors and the Secured Party and supersede all prior agreements
and understandings between such parties relating to the subject matter hereof
and thereof.  Accordingly, the Indenture
Documents and the Intercreditor Agreement may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements
between the parties.

 

11.18                 The Mortgages.  In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of
any Mortgage and the terms of such Mortgage are inconsistent with the terms of
this Agreement, then with respect to such Collateral, the terms of such
Mortgage shall be controlling in the case of fixtures and leases, letting and
licenses of, and contracts and agreements relating to real property or leases
of real property and vessels registered with the U.S. Coast Guard, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.

 

11.19                 Indenture Controls.  All terms, covenants, conditions, provisions
and requirements of the Indenture are incorporated by reference in this
Agreement.   In the event of any conflict
or inconsistency between the provisions of this Agreement and those of the
Indenture, including, without limitation, any conflicts or inconsistencies in
any definitions herein or therein, the provisions or definitions of the
Indenture shall govern.

 

11.20                 Trust Indenture Act Controls.  If any provision of this Agreement limits,
qualifies or conflicts with the duties imposed by the Trust Indenture Act of
1939 as in effect on the date of this Agreement, the imposed duties shall
control.

 

32

 

IN WITNESS WHEREOF, each Debtor
and the Secured Party have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date
first written above.

 

	
   

  	
  DEBTORS:

  
	
   

  	
  DIAMOND
  JO WORTH, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:
   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIAMOND
  JO WORTH CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIAMOND
  JO WORTH HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED PARTY:

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee,

  as Secured Party

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Richard H. Prokosch

  	
   

  
	
   

  	
   

  	
  Name:
  Richard H. Prokosch

  
	
   

  	
   

  	
  Title:  Vice President

  
					

 

 

EXHIBIT A

TO PLEDGE AND
SECURITY AGREEMENT

 

FORM OF SUPPLEMENT TO SECURITY AGREEMENT

 

This
SUPPLEMENT TO SECURITY AGREEMENT, dated [                
    , 20    ], is delivered by the
undersigned in favor of U.S. Bank National Association, as Trustee (together
with any successor Trustee pursuant to the terms of the Indenture, the “Secured  Party”), acting
in the capacity of collateral agent for the benefit of itself and the Holders,
pursuant to the Pledge and Security Agreement, dated as of July 15, 2005
(as it may be from time to time amended, restated, modified or supplemented,
the “Security Agreement”), among Diamond Jo
Worth, LLC, a Delaware limited liability company (the “Company”),
Diamond Jo Worth Corp., a Delaware corporation (“DJW Corp.”
and, together with the Company, the “Issuers”),
Diamond Jo Worth Holdings, LLC, a Delaware limited liability company (“Parent”), and each Subsidiary Guarantor (as defined in the
Indenture referred to therein) from time to time party thereto pursuant to Section 5.2
thereof, and the Secured Party. 
Capitalized terms used herein not otherwise defined herein shall have
the meanings ascribed thereto in the Security Agreement.

 

The
undersigned [hereby confirms, as of the date first written above, the grant to
the Secured Party set forth in the Security Agreement](1) [does hereby grant to
the Secured Party a security interest in, all of the undersigned’s right, title
and interest in and to all Collateral to secure the Secured Obligations of the
undersigned, in each case whether now or hereafter existing or in which the undersigned
now has or hereafter acquires an interest and wherever the same may be located](2).  The undersigned hereby further agrees, as of
the date first written above, to [continue to] be bound by all of the terms and
provisions of the Security Agreement, as supplemented by this Supplement to
Security Agreement.  The undersigned
hereby makes all of the representations and warranties set forth in the
Security Agreement, and hereby represents and warrants that the attached
supplements to Schedules accurately and completely set forth all [additional]
information required pursuant to the Security Agreement and hereby agrees that
such Supplements to Schedules shall constitute part of the schedules to the
Security Agreement.

 

IN
WITNESS WHEREOF, the undersigned has caused this Supplement to Security
Agreement to be duly executed and delivered by its duly authorized officer.

 

	
   

  	
  [NAME OF DEBTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  

 

 

(1)  Use bracketed language for
existing Debtor.

(2)  Use bracketed language for
new Debtor.

 

A-1

 

	
  ACCEPTED AND AGREED TO
  BY:

  
	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
  as Trustee, as Secured
  Party

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-2

 

EXHIBIT B

TO PLEDGE AND
SECURITY AGREEMENT

 

FORM OF CONTROL AGREEMENT (SECURITIES ACCOUNTS)

 

[ATTACH SECURITIES CONTROL AGREEMENT]

 

B-1

 

EXHIBIT C

TO PLEDGE AND
SECURITY AGREEMENT

 

FORM OF CONTROL AGREEMENT (DEPOSIT ACCOUNTS)

 

[ATTACH DEPOSIT ACCOUNT CONTROL AGREEMENT]

 

C-1

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