Document:

anm_10q-ex1001.htm

    Exhibit 10.1

     

    
      FORM
OF COMMON STOCK PURCHASE WARRANT

      

      THIS WARRANT AND THE COMMON STOCK
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS WARRANT AND THE COMMON STOCK
SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCELERIZE
NEW MEDIA, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

      

      
        	 
      	
                Right
      to Purchase ________ shares of Common Stock of Accelerize New Media, Inc.
      (subject to adjustment as provided
herein)

              

      

      

      FORM
OF COMMON STOCK PURCHASE WARRANT

      
      

       

      
        	No. RW -_
      _ 	
                Issue Date:
      ___________, 2008

              

      

       

      ACCELERIZE
NEW MEDIA, INC., a corporation organized and existing under the laws of the
State of Delaware (the “Company”), hereby certifies that, for value
received, 
or its assigns (the “Holder”) is entitled, subject to the terms set forth below,
to purchase from the Company at any time after the issue date (the “Issue Date”)
until 5:00 p.m., E.S.T on the fifth (5th) anniversary of the Issue Date (the
“Expiration Date”), ________ fully paid and nonassessable shares of Common Stock
at a per share purchase price of $0.35.  The aforedescribed purchase
price per share, as adjusted from time to time as herein provided, is referred
to herein as the “Purchase Price.”  The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.  The Company may reduce the Purchase Price without
the consent of the Holder.

      

      As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:

      

      (a)           The
term “Company” shall include Accelerize New Media, Inc. and any corporation
which shall succeed or assume the obligations of Accelerize New Media, Inc.
hereunder.

      

      (b)           The
term “Common Stock” includes (a) the Company’s Common Stock, $0.001 par value
per share, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.

      

      (c)           The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 herein or otherwise.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (d)           The
term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.

      

      1.           Exercise of
Warrant.

      

      1.1.           Number of Shares Issuable
upon Exercise.  From and after the Issue Date through and
including the Expiration Date, the Holder hereof shall be entitled to receive,
upon exercise of this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, [NUMBER]
of shares of Common Stock of the Company, subject to adjustment pursuant to
Section 4.

      

      1.2.           Full
Exercise.  This Warrant may be exercised in full by the Holder
hereof by delivery of an original or facsimile copy of the form of subscription
attached as hereto Exhibit A (the “Subscription Form”) duly executed by such
Holder and surrender of the original Warrant within four (4) days of exercise,
to the Company at its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common Stock for which
this Warrant is then exercisable by the Purchase Price then in
effect.

       

      1.3.           Partial
Exercise.  This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place
provided in subsection 1.2 except that the amount payable by the Holder on such
partial exercise shall be the amount obtained by multiplying (a) the number of
whole shares of Common Stock designated by the Holder in the Subscription Form
by (b) the Purchase Price then in effect.  On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common
Stock for which such Warrant may still be exercised.

       

      1.4.           Fair Market Value.
Fair Market Value of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:

       

      (a)           If
the Company’s Common Stock is traded on an exchange or is quoted on the Nasdaq
Stock Market, Inc., then the last sale price reported for the last business day
immediately preceding the Determination Date;

       

      (b)           If
the Company’s Common Stock is not traded on an exchange or quoted on the Nasdaq
Stock Market, Inc. but is traded in the over-the-counter market, then the
average of the closing bid and ask prices reported for the last business day
immediately preceding the Determination Date;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c)           Except
as provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree in writing, or in the absence
of such agreement, by arbitration in accordance with the rules then standing of
the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided; or

       

      (d)           If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company’s charter, then all amounts to be payable per share to holders of
the Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.

       

      1.5.           Company
Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights.

       

      1.6.           Delivery of Stock
Certificates, etc. on Exercise.  The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed
to be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within three (3)
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share of Common Stock, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1 or otherwise.

       

      1.7.           Forced Exercise by the
Company.   The Company reserves the right to call the
Warrants, at a redemption price of $.001
per Warrant, commencing on the first trading day after the Common Stock of the
Company has traded for ten (10) consecutive days at an average closing price at
or exceeding $1.25
per share. The call may be made within ten (10) days from the date the Company’s
Common Stock satisfies the average trading price described above, but the
Company is not required to make any such call and may make the call on the terms
described at any future date where the trading price of the common stock
satisfies the above criterion. Investors will have thirty (30) days from the
date of such notice to exercise the Warrants, and in the event the Warrants are
not exercised, the Company may cancel them, and investors will receive payment
of $0.001
per Warrant share.  The Company will also have the right to assign the
right to exercise the Warrant for a period of thirty (30) days to another
Purchaser in this offering or to any other person whether or not such person is
an existing shareholder of the Company.  Investors will not receive
any proceeds in the event such other person exercises the Warrant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.8           Cashless
Exercise.

       

      (a)           Except
as described below, if a Registration Statement (as herein after defined) is
effective and the Holder may sell its Warrant Shares upon exercise hereof
pursuant to the Registration Statement, this Warrant may be exercisable in whole
or in part for cash only as set forth in this Section 1. If no such Registration
Statement is available, then payment upon exercise may be made at the option of
the Holder either in (i) cash, wire transfer or by certified or official bank
check payable to the order of the Company equal to the applicable aggregate
Purchase Price, (ii) by cashless exercise in accordance with Section (b) below
or (iii) by a combination of any of the foregoing methods, for the number of
Warrant Shares specified in such form (as such exercise number shall be adjusted
to reflect any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant) and the holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.

       

      (b)           If
the Fair Market Value of one share of Common Stock is greater than the Purchase
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the holder may elect to receive shares equal to the value
(as determined below) of this Warrant (or the portion thereof being cancelled)
by surrender of this Warrant at the principal office of the Company together
with the properly endorsed Subscription Form in which event the Company shall
issue to the holder a number of shares of Common Stock computed using the
following formula:

       

      X=Y (A-B)

                A

       

      
        	
                Where  
      

              	X=	the
      number of shares of Common Stock to be issued to the holder
	 	 	 
	
                 
      

              	
                Y=

              	
                the
      number of shares of Common Stock purchasable under the Warrant or, if only
      a portion of the Warrant is being exercised, the portion of the Warrant
      being exercised (at the date of such
  calculation)

              

      

       

      
        	
                 
      

              	
                A=

              	
                the
      Fair Market Value of one share of the Company’s Common Stock (at the date
      of such calculation)

              

      

       

      
        	
                 
      

              	
                B=

              	
                Purchase
      Price (as adjusted to the date of such
  calculation)

              

      

       

      (c)           For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.           Adjustments.

       

      2.1.           Reorganization,
Consolidation, Merger, etc.  In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 3.

      

      2.2.           Dissolution.  In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and
other securities and property (including cash, where applicable) receivable in
accordance with Section 2.1 by the Holder of the Warrants upon their exercise
after the effective date of such dissolution pursuant to this Section
2.

      

      2.3           Adjustment of Warrant
Exercise Price and Number of Shares upon Issuance of Common Stock or Common
Stock Derivatives.  So long as this Warrant is outstanding, if
Company (a) issues or sells, or is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company); or (b) issues or sells or reprices
any options or convertible securities (but excluding shares of Common Stock,
options or convertible securities issued or deemed to have been issued by the
Company in connection with an Approved Stock Plan) for a consideration per share
less than a price (the “Applicable Price”) equal to the  Purchase
Price in effect immediately prior to such issuance or sale or repricing, then
immediately after such issue or sale the Purchase Price shall be reduced to the
Applicable Price.  “Approved Stock Plan” means any employee benefit
plan which has been approved by the Board of Directors of the Company, pursuant
to which the Company’s securities may be issued to any employee, officer or
director for services provided to the Company in that capacity.

      

      2.4.           Continuation of
Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 2, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the Other Securities and property receivable on
the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 3.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3.           Extraordinary Events
Regarding Common
Stock.  In the event that the Company shall (a) issue
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock,
or (c) combine its outstanding shares of the Common Stock into a smaller number
of shares of the Common Stock, then, in each such event, the Purchase Price
shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 3. The number of
shares of Common Stock that the Holder of this Warrant shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 3) be
issuable on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this Section 3)
be in effect, and (b) the denominator is the Purchase Price in effect on the
date of such exercise.

       

      4.           Certificate as to
Adjustments.  In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder of the Warrant and any Warrant Agent
of the Company (appointed pursuant to Section 9 hereof).

       

      5.           Reservation of Stock, etc.
Issuable on
Exercise of Warrant; Financial Statements.   The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the
Warrant.  This Warrant entitles the Holder hereof to receive copies of
all financial and other information distributed or required to be distributed to
the holders of the Company’s Common Stock.

       

      6.           Assignment; Exchange of
Warrant.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a “Transferor”). On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with an opinion
of counsel reasonably satisfactory to the Company that the transfer of this
Warrant will be in compliance with applicable securities laws, the Company at
its expense, once, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.  No such transfers shall result in a
public distribution of the Warrant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7.           Replacement of
Warrant.  On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

      

      8.           Warrant
Agent.  The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section
1, exchanging this Warrant pursuant to Section 6, and replacing this Warrant
pursuant to Section 7, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

      

      9.           Transfer on the
Company’s
Books.  Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.

       

      10.           Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur or (c) three
business days after deposited in the mail if delivered pursuant to subsection
(ii) above.  The addresses for such communications shall be: (i) if to
the Company to:  12121 WILSHIRE BLVD., SUITE 322, LOS ANGELES,
CALIFORNIA 90025, telecopier:  (310) 903 4001, and (ii) if to the
Holder, to the addresses and telecopier number set forth in the first paragraph
of this Warrant.  The Company may change its address for notices but
only to an address and fax number located in the United States.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      11.           Miscellaneous.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant shall
be construed and enforced in accordance with and governed by the laws of New
York.  Any dispute relating to this Warrant shall be adjudicated in
New York County in the State of New York.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability of
any other provision.

      

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

       

      ACCELERIZE NEW MEDIA,
INC.

      

      

      By:_______________________________

      

      Name:_____________________________

      

      Title:______________________________

      Witness:

      

       

      ______________________________

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit
A

      FORM OF
SUBSCRIPTION

      (to be
signed only on exercise of Warrant)

       

      TO:           ACCELERIZE
NEW MEDIA, INC.

       

      The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):

                

      
        	___ 	________
      shares of the Common Stock covered by such Warrant; or
	 	 
	
                ___

              	
                the
      maximum number of shares of Common Stock covered by such Warrant pursuant
      to the cashless exercise procedure set forth in Section
  1.

              

      

      

      The
undersigned herewith makes payment of the full purchase price for such shares at
the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or
boxes):

                 

      
        	___	$__________
      in lawful money of the United States; and/or
	 	 
	
                ___

              	
                the
      cancellation of the Warrant to the extent necessary, in accordance with
      the formula set forth in Section 1, to exercise this Warrant with respect
      to the maximum number of shares of Common Stock purchasable pursuant to
      the cashless exercise procedure set forth in Section
  1.

              

      

      

      The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to _____________________________________________________ whose
address
is__________________________________________________________________________

      

      The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act, or
pursuant to an exemption from registration under the Securities
Act.

      

      Dated:_________________________________ 

      _______________________________________________________________

      (Signature must conform to name of
holderas specified on the fact of the Warrant.)

      

      _______________________________________________________________

      _______________________________________________________________

      (Address)

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
B

      

      FORM OF
TRANSFEROR ENDORSEMENT

      (To be
signed only on transfer of Warrant)

       

      For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of ACCELERIZE NEW MEDIA, INC. to which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of ACCELERIZE NEW
MEDIA, INC. with full power of substitution in the premises.

       

      
        	
                  Transferees

              	
                  Percentage
    Transferred

              	
                  Number
Transferred

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

      

      

      
        	
                Dated:  ______________,
      ___________

                 

                 

                 

                Signed
      in the presence of:

                 

                _________________________________________

                (Name)

                 

                 

                ACCEPTED
      AND AGREED:

                [TRANSFEREE]

                 

                ___________________________________

                (Name)

              	
                ________________________________________

                (Signature
      must conform to name of holder as

                specified
      on the face of the warrant)

                 

                 

                 

                ________________________________________

                ________________________________________

                (address)

                 

                
                  ________________________________________

                  ________________________________________

                

                (address)americantrust.htm

     

    
      

    

    IMPORTANT:  READ
BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY
BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY
ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER
WRITTEN AGREEMENT.

    

    

    LOAN AND SECURITY
AGREEMENT

    

    

    This Loan and Security
Agreement (this “Agreement”) is
effective May 1, 2008, between PENINSULA GAMING, LLC, a limited liability
company organized and existing under the laws of Delaware (“PGL”), DIAMOND JO,
LLC, a limited liability company organized and existing under the laws of
Delaware (“DJL”), and THE OLD
EVANGELINE DOWNS, L.L.C., a limited liability company organized and existing
under the laws of Louisiana (“OED”, and together
with PGL and DJL, collectively referred to as “Borrowers”, and each
a “Borrower”),
and AMERICAN TRUST & SAVINGS BANK (“Bank”).

    

    
      	
               1. 
      

            	
              Recitals.  The
      Borrowers have requested Bank to lend them up to the sum of Eight Million
      and no/100s ($8,000,000.00) on a draw down and term loan
      basis.  Bank is willing to provide such financing based upon the
      terms and conditions set forth below.  Therefore, in
      consideration of the promises herein contained, and each intending to be
      legally bound hereby, the parties agree as provided in this
      Agreement.

            

    

    

    
      	
              2. 
      

            	
              Definitions.  Terms
      used in the Uniform Commercial Code presently in effect in the State of
      Iowa (the “Iowa
      UCC”) and not otherwise defined in this Agreement shall have the
      meanings assigned to such terms in the Iowa UCC.  In addition,
      as used in this Agreement, the following capitalized terms shall have the
      meanings set forth in this Section
2:

            

    

    

    “Agreement” has the
meaning set forth in the introductory paragraph hereof.

     

    “Affiliate” means, as
to any Person, each other Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with,
such Person.

     

    “Bank” has the meaning
set forth in the introductory paragraph hereof.

     

    “Borrower” and “Borrowers” have the
meanings set forth in the introductory paragraph hereof.

     

    “Business Day” means a
day other than a Saturday, a Sunday, or a day on which commercial banks in
Dubuque, Iowa are authorized to close.

     

    “Closing” has the
meaning set forth in Section 4.1.

     

    “Collateral” has the
meaning set forth in Section 5.

     

    
      
        
          

          
            	
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    “DJL” has the meaning
set forth in the introductory paragraph hereof.

     

    “Draw Down Period”
means the period commencing on the date of the Note’s execution, or the date
funds are first provided thereunder, whichever is later, until December 31,
2008.

     

    “Event of Default”
means each of the events described in Section 9.

     

    “FF&E” means
furniture, fixtures and equipment (including, without limitation, slot machines,
video poker machines, and all other gaming equipment and related signage,
accessories and peripheral equipment) acquired by the Borrowers in the ordinary
course of business for use in the construction and business operations of the
Borrowers and that are purchased with the proceeds of the Loan.

     

    “GAAP” means the
generally accepted accounting principles in effect from time to time in the
United States of America.  Unless this Agreement specifically provides
otherwise all accounting terms used and not otherwise defined in this Agreement
have the meanings determined by, and all calculations with respect to accounting
or financial matters shall be computed in accordance with, GAAP.

     

    “Indebtedness” means,
as to any Borrower or any Subsidiary, all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, including (without implied
limitation):

     

    
      	
              (i)  

            	
              All
      indebtedness guaranteed, directly, in any manner, or endorsed (other than
      for collection or deposit in the ordinary course of business) or
      discounted with recourse;

            

    

     

    
      	
              (ii)  

            	
              All
      indebtedness in effect guaranteed, directly or indirectly, through
      agreements, contingent or otherwise (a) to purchase such indebtedness, (b)
      to purchase, sell, or lease (as lessee or lessor) property, products,
      materials, or supplies or to purchase or sell services, primarily for the
      purpose of enabling the debtor to make payment of such indebtedness or to
      insure the owner of the indebtedness against loss, or (c) to supply funds
      to, or in any other manner invest in, the
  debtor;

            

    

     

    
      	
              (iii)  

            	
              All
      indebtedness secured by (or for which the holder of such indebtedness has
      a right, contingent or otherwise, to be secured by) any mortgage, deed of
      trust, pledge, lien, security interest, or other charge or encumbrance
      upon property owned or acquired subject thereto, whether or not the
      liabilities secured thereby have been assumed;
  and

            

    

     

    
      	
              (iv)  

            	
              All
      indebtedness incurred as the lessee of goods or services under leases
      that, in accordance with GAAP, should not be reflected on the lessee’s
      balance sheet.

            

    

     

    “Iowa UCC” means the
Uniform Commercial Code presently in effect in the State of Iowa.

     

    
      
        
          

          
            	
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    “Law” means any
statute, law, regulation, ordinance, rule, judgment, order, decree, permit,
concession, grant, franchise, license, agreement or other governmental
restriction or any interpretation or administration of any of the foregoing by
any governmental authority.

     

    “Loan” has the meaning
set forth in Section 3.

     

    “Maturity Date” means
December 1, 2013.

     

    “Note” means the
promissory note executed and delivered pursuant to Section 3, and any and all
extensions, substitutions, amendments and renewals thereof.

     

    “Obligations” means
the obligations of the Borrowers:

     

    
      	
              (i)  

            	
              Liens
      permitted under any of the Senior Debt Documents (other than any such
      Liens securing any Indebtedness or other obligations evidenced thereby or
      arising thereunder on any
Collateral);

            

    

     

    
      	
              (ii)  

            	
              Liens
      for taxes, assessments, or similar charges, incurred in the ordinary
      course of business, that are not yet due and
  payable;

            

    

     

    
      	
              (iii)  

            	
              Pledges
      or deposits made in the ordinary course of business to secure payment of
      worker’s compensation or to participate in any fund in connection with
      worker’s compensation, unemployment insurance, old-age pensions, or other
      social security programs;

            

    

     

    
      	
              (iv)  

            	
              Liens
      of mechanics, materialmen, warehousemen, carriers or other like liens,
      securing obligations incurred in the ordinary course of business that are
      not yet due and payable;

            

    

     

    
      	
              (v)  

            	
              Good
      faith pledges or deposits made in the ordinary course of business to
      secure performance of bids, tenders, contracts (other than for the
      repayment of borrowed money) or leases, or to secure statutory
      obligations, or surety, appeal, indemnity, performance, or other similar
      bonds required in the ordinary course of
  business;

            

    

     

    
      	
              (vi)  

            	
              Liens
      in favor of Bank under this Agreement;
and

            

    

     

    
      	
              (vii)  

            	
              The
      following, if the validity or amount thereof is being contested in good
      faith by appropriate and lawful proceedings, so long as levy and execution
      thereon have been stayed and continue to be stayed and they do not, in the
      aggregate, materially detract from the value of the Collateral, or
      materially impair the use thereof in the operation of its business: (a)
      Claims or liens for taxes, assessments, or charges due and payable and
      subject to interest or penalty, (b) claims, liens, and encumbrances upon,
      and defects of title to the Collateral, including any attachment of
      Collateral or other legal process prior to adjudication of a dispute on
      the merits, (c) claims or liens of mechanics, materialmen, warehousemen
      carriers
      or other like liens, (d) adverse judgments on appeal, and (e) any
      other liens to which Bank has consented in
  writing.

            

    

     

    
      
        
          

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

     

    “PGL” has the meaning
set forth in the introductory paragraph hereof.

     

    “Prepayment Fee” has
the meaning set forth in Section 3.5 hereof.

     

    “Records” means
correspondence, memoranda, tapes, discs, papers, books and other documents, or
transcribed information of any type, whether expressed in ordinary or
machine-readable language.

     

    “Senior Debt
Documents” means, collectively, (i) the Loan and Security Agreement,
dated as of June 16, 2004, among DJL, OED, the Lenders (as defined in such Loan
and Security Agreement) and Wells Fargo Foothill, Inc., a California
corporation, as the arranger and agent for the Lenders, as such Loan and
Security Agreement was subsequently amended as of November 10, 2004; July 12,
2005; December 6, 2006; and December 22,
2006, (ii) the Indenture, dated as of April 16, 2004, among DJL, PGL, Peninsula
Gaming Corp., the guarantors named therein and U.S. Bank National Association,
as trustee, as such Indenture was subsequently amended as of June 16, 2004 and
June 30, 2005, and (iii) any other agreement, document or instrument entered
into by any Borrower in connection with such Loan and Security Agreement or such
Indenture.

     

    “Subsidiary” means any
Affiliate that is directly, or indirectly through one or more intermediaries,
controlled by any Borrower or not less than fifty per cent (50%) of the voting
capital stock of which is owned, directly or through one or more intermediaries,
by any Borrower.

     

    “Term Period” means
the period commencing on January 1, 2009, until the Maturity Date.

     

    “Wall Street Journal Prime
Rate” means that certain interest rate published from time to time in the
Wall Street Journal,
and consisting of the base rate on corporate loans posted by at least
seventy-five percent (75%) of the nation’s thirty (30) largest
banks.

     

    
      	
               
      3.  

            	
              The
      Loan.  Subject to all of the terms and provisions of this
      Agreement, Bank agrees to grant a loan to the Borrowers, concurrently with
      the execution of this Agreement, in the principal amount of up to Eight
      Million & 00/100 Dollars ($8,000,000.00), due December 1, 2013 (the
      “Loan”).

            

    

    

    
      	
              3.1  

            	
              Note.  The
      Loan shall be evidenced by the Note which shall be dated the date of this
      Agreement, and shall mature on the Maturity Date, when the full amount of
      principal and unpaid interest shall be due and payable.  Any
      extension of time for payment of principal or interest on the Note
      resulting from any date on which any such payment is due falling on a
      Saturday, Sunday or legal holiday, shall be included in the computation of
      interest.

            

    

    
      
        
          

          
            	
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              3.2  

            	
              Interest.  Interest
      on the unpaid principal balance of this Note shall be (i) payable monthly
      beginning June 1, 2008, and on the first of each month thereafter until
      the Maturity Date, which payment of interest shall consist of all interest
      billed and unpaid through the last day of the month preceding the month in
      which such payment of interest is due, and (ii) calculated as
      follows:

            

    

    

    
      	
              3.2.1  

            	
              Interest
      during the Draw Down Period shall accrue from the date of the Note’s
      execution, or the date funds are first provided, whichever is later, until
      December 31, 2008, on the unpaid principal balance of the Note from time
      to time outstanding, computed on the basis of a year of three hundred
      sixty (360) days and the actual number of days lapsed, at a rate equal to
      the Wall Street Journal Prime Rate per annum;
  and

            

    

    

    
      	
              3.2.2  

            	
              Interest
      on the Term Period of the Note shall be calculated at a rate of six and a
      half percent (6.5%) per annum from January 1, 2009 until the Maturity
      Date.

            

    

    

    

    
      	
              3.3  

            	
              Principal.  No
      principal payments shall be due during the Draw Down
      Period.  During the Term Period the Borrowers shall pay the
      outstanding balance of principal plus accrued interest in equal monthly
      installments commencing on February 1, 2009, and on the first day of each
      month thereafter, in an amount that will amortize the loan through the
      Maturity Date, at which time the entire principal balance and accrued
      interest shall be due.

            

    

    

    
      	
              3.4  

            	
              Payment.  All
      sums payable to Bank under the Note or this Agreement shall be paid in
      immediately available funds.  Bank shall send to the Borrowers
      periodic statements of all amounts due under the Note or this Agreement,
      which shall be considered correct and conclusively binding on the
      Borrowers unless one or more Borrowers notify Bank to the contrary within
      thirty (30) days of the Borrowers’ receipt of any statement that any
      Borrower deems to be incorrect.

            

    

    

    
      	
              3.5  

            	
              Prepayment.  The
      Borrowers have the right at any time to prepay the Loan in whole or in
      part, provided, that
      interest accrued to the date of such prepayment plus a fee equal to the
      applicable amount set forth in this Section 3.5 (the “Prepayment
      Fee”) shall be paid on such prepayment date; provided further
      however, that the Borrowers shall only pay a Prepayment Fee if such
      prepayment of the Loan is being financed with proceeds from a loan issued
      by a financial institution other than the Bank or an affiliate
      thereof.

            

    

    

    
      	
              3.5.1  

            	
              If
      the Borrowers prepay the Loan prior to the first anniversary of the
      Closing, the Prepayment Fee shall be equal to three percent (3%) of the
      amount prepaid on such prepayment
date.

            

    

    

    
      	
              3.5.2  

            	
              If
      the Borrowers prepay the Loan on or after the first anniversary of the
      Closing but before the second anniversary of the Closing, the Prepayment
      Fee shall be equal to two percent (2%) of the amount prepaid on such
      prepayment date.

            

    

    
      
        
          

          
            	
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              3.5.3  

            	
              If
      the Borrowers prepay the Loan on or after the second anniversary of the
      Closing, the Prepayment Fee shall be equal to one percent (1%) of the
      amount prepaid on such prepayment
date.

            

    

    

    
      	
              3.6  

            	
              Purpose.  The
      purpose of this Loan is to provide the Borrowers with some of the funds
      necessary to finance the purchase of the FF&E for the Diamond Jo
      Casino located in Dubuque, Dubuque County, Iowa, and the funds provided
      hereunder will be used only such
purpose.

            

    

    

    
      	
              3.7  

            	
              Cost of
      Purchase.

            

    

    

    
      	
              3.7.1  

            	
              The
      total purchase price of the FF&E purchased with the proceeds of the
      Loan is estimated to be $8,000,000.  Any amount owed for such
      purchase in excess of this Loan shall be the sole responsibility of the
      Borrowers.

            

    

    

    
      	
              3.7.2  

            	
              Each
      Borrower agrees that no liability shall attach to Bank, its agents or
      employees in connection with the purchase of the FF&E, it being
      understood that the Borrowers shall continue to be liable for the payment
      of any and all debts, actions, claims, demands, accounts or causes of
      action which may arise hereunder, liability on the part of Bank being
      expressly waived and released.

            

    

    

    
      	
              3.8  

            	
              Disbursement.

            

    

    

    
      	
              3.8.1  

            	
              Bank
      shall disburse to the Borrowers the Loan proceeds for the purchase of
      FF&E.  The net proceeds of the Loan shall be conclusively
      deemed a full and complete consideration for the
  Note.

            

    

    

    
      	
              3.8.2  

            	
              The
      Borrower shall use the proceeds of the Loan for the purposes set out in
      this Agreement.

            

    

    

    
      	
              4.  

            	
              Conditions
      Precedent.  The obligation of Bank to make the Loan is
      subject to the conditions precedent set forth in this Section
      4.

            

    

    

    
      	
              4.1  

            	
              Documents
      Required for the Initial Disbursement.  The Borrowers shall have
      delivered to Bank, in form and content acceptable to Bank, prior to the
      initial disbursement of the Loan (the “Closing”), the
      following:

            

    

    

    
      	
              4.1.1  

            	
              The
      Note, duly executed by the
Borrowers;

            

    

    

    
      	
              4.1.2  

            	
              The
      financing statements and other instruments required to be delivered by the
      Borrowers pursuant to Section
5;

            

    

    
      
        
          

          
            	
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              4.1.3  

            	
              A
      copy, certified as of the date of the Closing, of resolutions of the
      members of each Borrower authorizing the execution, delivery and,
      performance of this Agreement and the Note and each other document to be
      delivered pursuant hereto;

            

    

    

    
      	
              4.1.4  

            	
              A
      certificate (dated the date of the Closing) of the managing members of
      each Borrower as to the incumbency and signature of the Officers of each
      Borrower signing this Agreement and the Note and each other document to be
      delivered pursuant hereto;

            

    

    

    
      	
              4.1.5  

            	
              A
      written opinion of the Borrowers’ counsel, dated the date of the Closing
      and addressed to Bank to the effect
that:

            

    

    

    
      	
              4.1.5.1  

            	
              The
      Borrowers are limited liability companies organized, existing and in good
      standing under the laws of the State of Delaware and Louisiana, as the
      case may be, and are qualified to transact business and are in good
      standing in the States of Delaware, Louisiana, as the case may be, and
      Iowa;

            

    

    

    
      	
              4.1.5.2  

            	
              To
      the knowledge of such counsel, each Borrower has the power to execute and
      deliver this Agreement, to borrow money hereunder, to grant the Collateral
      required hereunder, to execute and deliver the Note, and to perform its
      obligations hereunder and
thereunder;

            

    

    

    
      	
              4.1.5.3  

            	
              All
      actions by the Borrowers and all consents and approvals of any Persons
      necessary to the validity of this Agreement and the Note and such other
      documents to be delivered hereunder do not conflict with any provision of
      the Operating Agreements of the Borrowers, or of any applicable Laws, or
      any other agreement binding the Borrowers or their respective property of
      which, after reasonable inquiry, such counsel has
    knowledge.

            

    

    

    
      	
              4.1.5.4  

            	
              This
      Agreement and the Note and all other documents to be delivered hereunder
      have been duly executed by, and each is a valid and binding obligation of,
      the Borrowers, each of the foregoing documents is in all respects
      sufficient to achieve its purported function and is enforceable in
      accordance with its terms, except as limited by bankruptcy, insolvency,
      reorganization, moratorium, or other similar laws affecting creditors’
      rights generally or by general equitable
  principles.

            

    

    

    
      	
              4.1.6  

            	
              At
      the Closing and at each subsequent disbursement of Loan proceeds, the
      Borrowers shall provide evidence satisfactory to Bank of the total cost of
      the purchase of the FF&E and a description of such
      FF&E.

            

    

    
      
        
          

          
            	
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              4.2  

            	
              Certain
      Events.  As of the date of the Closing and the date of
      each subsequent disbursement of Loan proceeds, and as a condition
      thereof:

            

    

    

    
      	
              4.2.1  

            	
              The
      representations and warranties set forth herein shall be
    true;

            

    

    

    
      	
              4.2.2  

            	
              No
      Event of Default shall have occurred and be continuing, and no event shall
      have occurred and be continuing that, with the giving of notice or passage
      of time or both, would be an Event of
Default;

            

    

    

    
      	
              4.2.3  

            	
              No
      material adverse change shall have occurred in the financial condition of
      the Borrowers or any of their Subsidiaries since the dates of the
      financial statements previously delivered to
  Bank;

            

    

    

    
      	
              4.2.4  

            	
              Approval
      of the FF&E, satisfactory to Bank, by the Iowa Racing and Gaming
      Commission; and

            

    

    

    
      	
              4.2.5  

            	
              All
      legal matters incidental to the transactions contemplated by this
      Agreement shall be satisfactory to Bank and its legal
    counsel.

            

    

    

    
      	
              4.3  

            	
              Loan Financing
      Fee.  A one-time financing fee of 0.25% of the principal
      amount of the Loan shall be paid to Bank by the Borrowers at
      Closing.

            

    

    

    
      	
              4.4  

            	
              Bank’s Obligation to
      Close.  Bank’s obligation to close or otherwise perform
      is excused if, before or at the time of Closing, Bank, in good faith, and
      in its full discretion, believes to its personal satisfaction
      that:  (i) The Borrowers will be unable to perform fully and
      completely the Obligations under the terms of this Agreement, (ii) Bank
      will not have, as of the time of Closing, a first lien priority in the
      Collateral agreed upon to fully secure the Obligations, or (iii) a change
      in circumstances affecting the Borrowers or Bank, or new information has
      been acquired since the delivery of the Commitment Letter dated January
      24, 2008 by Bank or the Borrowers that significantly adversely affects
      Bank’s decision to loan.  For the purposes of this Section, and
      every other provision or duty, express or implied, of this Agreement,
      “good faith” means honesty in fact, determined subjectively, rather than
      by an objective standard.

            

    

    

    
      	
              5.  

            	
              Collateral
      Security.  As further security for the prompt
      satisfaction of all Obligations, the Borrowers hereby assign to Bank all
      of their right, title, and interest in and to, and grant Bank a lien upon,
      and a purchase money security interest in the following assets acquired
      with the proceeds of the Loan (the “Collateral”):  (i)
      the FF&E, wherever located, whether now owned or hereafter acquired,
      together with all parts, accessories and replacements, (ii) any computer
      programs embedded in the FF&E at the time the FF&E is purchased by
      the Borrowers and any supporting information relating to such programs (as
      provided in Section 1(ar) of Article 9 of the Iowa UCC (Iowa Code Ann. §
      554.9102 (2007))), and (iii) all FF&E acquired upon the sale, lease,
      license, exchange, or other disposition of any
  FF&E.

            

    

    
      
        
          

          
            	
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              5.1  
      

            	
              Priority of Liens.  The foregoing
      liens over the Collateral shall be first and prior liens except for
      Permitted Liens.

               

            

    

    
      	
              5.2  

            	
              Financing
      Statements.  The Borrowers
  will:

            

    

    

    
      	
              5.2.1  

            	
              Assist
      the Bank in filing such financing statements (including amendments thereto
      and continuation statements thereof) in form satisfactory to Bank as Bank,
      from time to time, may specify;

            

    

    

    
      	
              5.2.2  

            	
              Pay,
      or reimburse Bank for paying, all costs and taxes of filing or recording
      the same in such public offices as Bank may
  designate;

            

    

    

    
      	
              5.2.3  

            	
              Take
      such other steps as Bank, from time to time, may direct, including the
      noting of Bank’s lien on the Collateral on any certificates of title
      therefor, all to perfect to the satisfaction of Bank, Bank’s interest in
      the Collateral; and

            

    

    

    
      	
              5.2.4  

            	
              In
      addition to the foregoing, and not in limitation thereof:  (i)
      to the extent permitted by law, carbon, photographic, or other
      reproduction of this Agreement shall be sufficient as a financing
      statement and may be filed in any appropriate office in lieu thereof, and
      (ii) to the extent lawful, the Borrowers hereby appoint Bank as their
      attorney-in-fact (without requiring Bank to act as such) to execute any
      financing statement in the name of the Borrowers and to perform all other
      acts that Bank deems appropriate to perfect and continue its security
      interest in, and to protect and preserve, the
  Collateral.

            

    

    

    
      	
              5.3  

            	
              Release of
      Collateral.  Upon the full and final payment of the
      Obligations under this Agreement and the Note, this Agreement shall
      terminate, and all of the liens on the Collateral created hereunder shall
      be released.  In addition, Bank shall release from the liens
      created hereunder any Collateral that is sold, transferred, disbursed or
      otherwise disposed of in accordance with the provisions of this Agreement
      (either in the ordinary course of business or otherwise).  Upon
      compliance with the provisions of this Section 5.3, Bank shall execute,
      deliver or acknowledge any necessary or proper instruments of termination,
      satisfaction or release to evidence the release of the
      Collateral.

            

    

    

    
      	
              6.  

            	
              Representations and
      Warranties.  To induce Bank to enter into this Agreement,
      the Borrowers represent and warrant that, as of the date of the
      Closing:

            

    

    

    
      	
              6.1  

            	
              The
      Borrowers are Peninsula Gaming, LLC (a Delaware limited liability
      company), Diamond Jo, LLC (a Delaware limited liability company), and Old
      Evangeline Downs, L.L.C. (a Louisiana limited liability company), all
      organized, existing and in good standing under the Laws of each of their
      respective jurisdictions of organization and authorized to conduct
      business under the Laws of the State of Iowa; the Borrowers have the power
      to own their respective properties and to engage in the businesses each
      conducts, and are qualified and in good standing under each of their
      respective jurisdictions of organization and in
  good

            

    

    
      
        
          

          
            	
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    standing
in the State of Iowa; the addresses of all places of business of the Borrowers
are as set forth in Schedule A attached hereto; no Borrower has changed its
name, been the surviving corporation in a merger, acquired any business, or
changed its principal executive office within five (5) years and one (1) month
prior to the date hereof other than as has been disclosed to Bank;

    

    
      	
              6.2  

            	
              No
      Borrower is directly or indirectly controlled by, or acting on behalf of,
      any Person which is an “Investment Company,” within the meaning of the
      Investment Company Act of 1940, as
amended;

            

    

    

    
      	
              6.3  

            	
              The
      execution and performance of this Agreement and the Note will not
      (immediately or with the passage of time, the giving of notice, or both)
      (i) violate the Operating Agreement of any Borrower or violate any
      applicable Laws or result in a default under any contract, agreement, or
      instrument to which any Borrower is a party or by which any Borrower or
      its property is bound, or (ii) result in a violation of the terms and
      conditions of any of the Senior Debt Documents, or (iii) result in the
      creation or imposition of any security interest in, or lien or encumbrance
      upon, any of the assets of the Borrowers, except in favor of
      Bank;

            

    

    

    
      	
              6.4  

            	
              Each
      Borrower has the power and authority to enter into and perform this
      Agreement and the Note and to incur the obligations herein and therein
      provided for, and has taken all actions necessary to authorize the
      execution, delivery and performance of this Agreement and the
      Note;

            

    

    

    
      	
              6.5  

            	
              This
      Agreement and the Note are, or when delivered will be, valid, binding and
      enforceable in accordance with their respective
  terms;

            

    

    

    
      	
              6.6  

            	
              Except
      as set forth in the Borrowers’ filings with the Securities and Exchange
      Commission or as previously disclosed in writing to Bank, there is no
      pending order, notice, claim, litigation, proceeding, or investigation
      against or affecting the Borrowers, whether or not covered by insurance,
      that would in the aggregate involve the payment of $50,000.00 or more or
      would otherwise materially or adversely affect the financial condition or
      business prospects of the Borrowers if adversely
    determined;

            

    

    

    
      	
              6.7  

            	
              The
      Borrowers have good and merchantable title to all of the Collateral, none
      of which is subject to any security interest, encumbrance or lien, or
      claim of any third Person, except for Permitted
  Liens;

            

    

    

    
      	
              6.8  

            	
              Except
      as set forth in the Borrowers’ filings with the Securities and Exchange
      Commission or in Schedule B attached hereto, no Borrower has material
      Indebtedness of any nature, including, but without limitation, liabilities
      for taxes and any interest or penalties relating thereto (except to the
      extent such taxes, interest or penalties are being contested by the
      Borrowers in good faith or to the extent permitted by this Agreement), and
      the Borrowers do not know or have reasonable ground to know of any basis
      for the assertion against them of any such
  Indebtedness;

            

    

    
      
        
          

          
            	
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              6.9  

            	
              Except
      as otherwise permitted herein, each Borrower has filed all federal, state
      and local tax returns and other reports required by any applicable Laws to
      have been filed prior to the date hereof, has paid or caused to be paid
      all taxes, assessments, and other governmental charges that are due and
      payable prior to the date hereof except to the extent any such taxes,
      assessments and other governmental charges are being contested by the
      Borrowers in good faith, and has made adequate provision for the payment
      of such taxes, assessments, or other charges accruing but not yet payable,
      and the Borrowers have no knowledge of any deficiency or additional
      assessment in any materially important amount in connection with any
      taxes, assessments, or charges not provided for on its
    books;

            

    

    

    
      	
              6.10  

            	
              Except
      to the extent that the failure to comply would not materially interfere
      with the conduct of the business of such Borrower, each Borrower has
      complied with all applicable Laws with respect to (i) any restrictions,
      specifications, or other requirements pertaining to the services it
      performs, (ii) the conduct of its business, and (iii) the use,
      maintenance, and operation of the real and personal properties owned or
      leased by it in the conduct of its
business;

            

    

    

    
      	
              6.11  

            	
              No
      representation or warranty by, or with respect to, the Borrowers contained
      herein or in any certificate or other document furnished by the Borrowers
      pursuant hereto contains any untrue statement of a material fact or omits
      to state a material fact necessary to make such representation or warranty
      not misleading in light of the circumstances under which it was
      made;

            

    

    

    
      	
              6.12  

            	
              Each
      consent, approval, or authorization of, or filing, registration, or
      qualification with, any Person required to be obtained or effected by each
      Borrower in connection with the execution and delivery of this Agreement
      and the Note or the undertaking or performance of any obligation hereunder
      or thereunder has been duly obtained or
  effected;

            

    

    

    
      	
              6.13  

            	
              A
      list of all existing Indebtedness of the Borrowers for money borrowed, or
      under any security agreement, mortgage, or agreement covering the lease by
      any Borrower as lessee of real or personal property, is attached hereto as
      Schedule B attached hereto;

            

    

    

    
      	
              6.14  

            	
              Except
      as set forth in the Borrowers’ filings with the Securities and Exchange
      Commission or as previously disclosed to Bank in writing, no Borrower has
      material leases, contracts, or commitments of any kind (including, without
      limitation, employment agreements, collective bargaining agreements,
      powers of attorney, distribution arrangements, patent license agreements,
      contracts for future purchase or delivery of goods or rendering of
      services, bonuses, pension, and retirement plans, or accrued vacation pay,
      insurance, and welfare agreements).  To the best of each
      Borrower’s knowledge no party is in default under any material agreement
      to which it is a party, and no event has occurred which, but for the
      giving of notice or the passage of time, or both, would constitute a
      default;

            

    

    

    
      	
              6.15  

            	
              No
      Borrower has made any agreement or taken any action which may cause anyone
      to become entitled to a commission or finder’s fee as a result of, or in
      connection with, the making of the Loan;
and

            

    

    
      
        
          

          
            	
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              6.16  

            	
              None
      of the Borrowers or any Subsidiary maintains or contributes to any
      employee pension benefit plans, as defined in the Employee Retirement
      Income Security Act of 1974, as
amended.

            

    

    

    
      	
              7.  

            	
              Affirmative Covenants of
      Borrower.  Each Borrower hereby covenants and agrees with
      Bank that so long as any of the Obligations remain unsatisfied or any
      commitments hereunder remain outstanding, it will comply at all times with
      the following affirmative
covenants:

            

                               

    
      	7.1  	
              Use of Proceeds.  The Borrowers will
      use the proceeds of the Loan only for the purposes set forth herein and
      will furnish Bank such evidence as it may reasonably require with respect
      to such use; 

               

            
	
              7.2  

            	
              Reports to
      Bank.  The Borrowers will furnish
  Bank:

            

    

    

    
      	
              7.2.1  

            	
              Within
      sixty (60) days after the close of each quarterly accounting period in
      each fiscal year the Borrowers’ consolidated income statements for such
      quarter and balance sheets as of the end of such quarter.  All
      such statements shall be in reasonable detail, and certified by the
      Borrowers’ authorized representative to have been prepared in accordance
      with GAAP;

            

    

    

    
      	
              7.2.2  

            	
              Within
      ninety (90) days after the close of each fiscal year the Borrowers’
      consolidated income statements for such fiscal year and balance sheets as
      of the end of such fiscal year.  All such statements and balance
      sheets shall be in reasonable detail, including all supporting schedules
      and comments; and the statements and balance sheets shall be audited by
      independent certified public accountants selected by the Borrowers and
      acceptable to Bank, and certified by such accountants to have been
      prepared in accordance with GAAP and to present fairly the financial
      position and results of operations of the Borrowers.  In
      addition, the Borrowers will obtain from such independent certified public
      accountants and deliver to Bank, within ninety (90) days after the close
      of each fiscal year, their written statement that in making the
      examination necessary for their certification they have obtained no
      knowledge of any Event of Default by the Borrowers, or disclosing all
      Events of Default of which they have obtained knowledge (it being
      understood and agreed by Bank that in making their examination such
      accountants shall not be required to go beyond the bounds of generally
      accepted auditing procedures for the purpose of certifying financial
      statements).  Bank shall have the right, from time to time, to
      discuss the affairs of the Borrowers directly with such independent
      certified public accountants after notice to the Borrowers and opportunity
      of the Borrowers to be represented at any such
  discussions;

            

    

    

    
      	
              7.3  

            	
              Agreements,
      Etc.  Upon Bank’s request, from time to time, copies of
      any or all agreements, contracts or commitments referred to herein
      relating to the FF&E;

            

    

    
      
        
          

          
            	
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              7.4  

            	
              Maintenance.  The
      Borrowers will maintain the FF&E in good condition and repair (normal
      wear and tear excepted) and will pay and discharge or cause to be paid and
      discharged when due, the cost of repairs to, or maintenance of, the same,
      and will pay or cause to be paid in a timely manner all rental or mortgage
      payments due on such FF&E.  The Borrowers hereby agree that,
      in the event they fail to make or cause to be made any such payment, they
      will promptly notify Bank thereof, and Bank, in its discretion, may make
      such payment and on demand be reimbursed therefor by the
      Borrowers;

            

    

    

    
      	
              7.5  

            	
              Insurance.  The
      Borrowers will maintain public liability insurance (subject to a maximum
      of $50,000.00 in deductibles for each claim) and fire and extended
      coverage insurance on all FF&E, all in form and amount sufficient to
      indemnify the Borrowers for one hundred percent (100%) of the appraised
      value of any such lost or damaged FF&E (subject to any deductible
      customary in the Borrowers’ industry) or in an amount consistent with the
      amount of insurance generally carried on comparable assets within the
      industry and with such insurers as may be satisfactory to
      Bank.  The Borrowers shall deliver copies of such insurance
      policies to Bank.  Such policies shall contain a provision
      whereby they cannot be canceled except after thirty (30) days written
      notice to Bank.  The Borrowers will cause all such insurance
      policies to name Bank as a loss payee as its interests may appear and will
      furnish to Bank such evidence of insurance as Bank may
      require.  The Borrowers hereby agree that, in the event it fails
      to pay or cause to be paid the premium on any such insurance when due,
      Bank, in its discretion, may pay such premium and be reimbursed by
      Borrower therefor.

            

    

    

    In the
event of any loss or damage to any FF&E, the Borrowers will give Bank
written notice thereof as soon as practicable, promptly file proof of loss with
the insurer and take all other steps necessary to collect such
insurance.  In the event of any casualty covered by insurance over the
FF&E from which the insurance proceeds do not exceed $1,000,000, and
provided that no Event of Default shall have occurred and be continuing, the
Borrowers and Bank agree that the Borrowers may apply such insurance proceeds in
their discretion, provided that the
Borrowers first repair any damage to, or replace the FF&E for which such
proceeds apply.  Subject to the foregoing reservation, Bank is hereby
appointed as the Borrowers’ attorney-in-fact (without requiring Bank to act as
such) to endorse any check which may be payable to the Borrowers and to collect
any premiums or the proceeds of such insurance (other than proceeds of public
liability insurance) if an Event of Default has occurred and is continuing, and
any amount so collected may be applied by Bank toward satisfaction of any of the
Obligations.  If Bank receives any proceeds from insurance in the
absence of an Event of Default or from policies covering other assets of any
Borrower not constituting Collateral hereunder, Bank shall remit such proceeds
to such Borrower within three (3) Business Days after Bank’s receipt of such
proceeds;

    
      
        
          

          
            	
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              7.6  

            	
              Books &
      Records.  The Borrowers will keep accurate and complete
      Records of their respective accounts, inventory, and the FF&E,
      consistent with sound business practice.  The Borrowers, when
      requested to do so, will make available for inspection by authorized
      representatives of Bank any of its books and Records which relate to the
      Collateral and will deliver to Bank any information regarding their
      business affairs and financial condition within a reasonable time after
      written request therefor; provided that
      Bank shall keep confidential all such information
  obtained;

            

    

    

    
      	
              7.7  

            	
              Preservation of Existence;
      Compliance with Laws.  Each Borrower will take all
      necessary steps to preserve its corporate existence and comply with all
      present and future Laws applicable to it in the operation of its business
      and all material agreements to which it is
  subject;

            

    

    

    
      	
              7.8  

            	
              Notices.  The
      Borrowers will give immediate notice to Bank of (i) any litigation or
      proceeding in which it is a party if an adverse decision therein would
      require them to pay more than $100,000.00 or deliver assets the value of
      which exceeds such sum (whether or not the claim is considered to be
      covered by insurance), (ii) the loss of or casualty damage to any item
      that is not covered by the insurance described in Section 7.5 or for which
      a claim is being asserted in excess of the insured coverage, and (iii) the
      institution of any other suit or proceeding involving the Borrowers that
      might materially and adversely affect their operations, financial
      condition, property, or business
prospects;

            

    

    

    
      	
              7.9  

            	
              Taxes.  The
      Borrowers will pay when due all taxes, assessments, and charges or levies
      imposed upon them or on any of their respective property or which they are
      required to withhold and pay, except when contested in good faith by
      appropriate proceedings with adequate reserves therefor having been set
      aside on their books.  However, the Borrowers shall pay all such
      taxes, assessments, charges or levies forthwith whenever foreclosure on
      any lien that may have attached (or security therefor) appears
      imminent;

            

    

    

    
      	
              7.10  

            	
              Income Tax Returns and
      Notices.  The Borrowers will furnish Bank with copies of
      federal income tax returns filed by the Borrowers within twenty (20) days
      after the filing thereof.  The Borrowers will notify Bank
      immediately of the receipt of any notices from the Internal Revenue
      Service, or any other taxing authority (including any notice of proposed
      assessment, notice of assessment and demand for payment, or notice of
      delinquency in payment of payroll taxes), and shall immediately provide
      Bank with a copy of the same;

            

    

    

    
      	
              7.11  

            	
              Events of
      Default.  The Borrowers will notify Bank immediately if
      they become aware of the occurrence of any Event of Default or of any
      fact, condition, or event that only with the giving of notice or passage
      of time or both could become an Event of Default or if they become aware
      of any material adverse change in the business prospects, financial
      condition (including, without limitation, proceedings in bankruptcy,
      insolvency, reorganization, or the appointment of a receiver of trustee),
      or results of operations of the Borrowers or of the failure of any
      Borrower to observe any of its undertakings
  hereunder;

            

    

    
      
        
          

          
            	
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              7.12  

            	
              Places of
      Business.  The Borrowers will notify Bank thirty (30)
      days in advance of any change in the location of any of their places of
      business or of the establishment of any new, or the discontinuance of any
      existing, place of business; and

            

    

    

    
      	
              7.13  

            	
              Value of
      Collateral.  The Borrowers shall promptly transmit to
      Bank all information that they may have or receive with respect to the
      Collateral which may affect in any way the value of the Collateral or
      Bank’s rights or remedies with respect
thereto.

            

    

    

    
      	
              8.
       

            	
              Negative
      Covenants.  The Borrowers do hereby covenant and agree
      with Bank that, so long as any of the Obligations remain unsatisfied or
      any commitments hereunder remain outstanding, they will comply at all
      times with the following negative covenants and no Borrower shall, unless
      Bank shall otherwise have agreed in
writing:

            

    

    

    
      	
              8.1  

            	
              Name,
      Etc.  Change its name, enter into any merger,
      consolidation, reorganization, or recapitalization, or reclassify its
      capital stock;

            

    

    

    
      	
              8.2  

            	
              Disposition of
      Assets.  Except as otherwise permitted by the Senior Debt
      Documents, sell, transfer, lease, or otherwise dispose of all or (except
      in the ordinary course of business) any material part of its
      assets;

            

    

    

    
      	
              8.3  

            	
              Disposition of
      Collateral.  Sell, lease, transfer, assign, or otherwise
      dispose of any of the Collateral except in the ordinary course of
      business;

            

    

    

    
      	
              8.4  

            	
              Disposition of Business,
      Etc.  Except as otherwise permitted by the Senior Debt
      Documents, sell or otherwise dispose of, or for any reason cease
      operating, any of its divisions, franchises, or lines of
      business;

            

    

    

    
      	
              8.5  

            	
              Liens.  Mortgage,
      pledge, grant, or permit to exist a security interest in, or a lien upon,
      any of the Collateral, except for the liens granted hereunder and
      Permitted Liens.  Not in limitation but in furtherance of the
      immediately preceding sentence and for the avoidance of doubt, no
      Indebtedness evidenced by any Senior Debt Document shall be permitted to
      be secured by any Lien on any
Collateral;

            

    

    

    
      	
              8.6  

            	
              Liability.  Except
      as otherwise permitted by the Senior Debt Documents, become liable,
      directly or indirectly, as guarantor or otherwise for any obligation of
      any other Person, except as set forth in the Senior Debt Documents or for
      the endorsement of commercial paper for deposit or collection in the
      ordinary course of business;

            

    

    

    
      	
              8.7  

            	
              Indebtedness.  Incur,
      create, assume, or permit to exist any Indebtedness except (i) the Loan,
      (ii) trade indebtedness incurred in the ordinary course of business
      (provided, however, that no Borrower nor any Subsidiary may acquire
      inventory other than for cash or on open account except as expressly
      approved in writing and in advance by Bank), (iii) Indebtedness secured by
      Permitted Liens, and (iv) any indebtedness permitted under any of the
      Senior Debt Documents;

            

    

    
      
        
          

          
            	
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              8.8  

            	
              Subsidiaries,
      Etc.  Except as otherwise permitted by the Senior Debt
      Documents, form any subsidiary, make any investment in (including any
      assignment of inventory or other property), or make any loan in the nature
      of an investment to, any Person, other than investments of the Borrowers
      in any Subsidiaries and as previously disclosed to Bank in
      writing;

            

    

    

    
      	
              8.9  

            	
              Loans,
      Etc.  Except as otherwise permitted by the Senior Debt
      Documents, make any loan or advance to any officer, shareholder, director,
      or employee of any Borrower, except for business travel and similar
      temporary advances in the ordinary course of
  business;

            

    

    

    
      	
              8.10  

            	
              Prepayment.  Prepay
      any Indebtedness for borrowed money except the Obligations, or enter into
      or modify any agreement as a result of which the terms of payment of any
      of the foregoing Indebtedness are waived or modified; provided, that
      the Borrowers may (i) prepay any Indebtedness permitted to be prepaid
      under the Senior Debt Documents, and (ii) enter into or modify any
      agreement as a result of which the terms of payment of any Indebtedness
      incurred pursuant to any of the Senior Debt Documents are waived or
      modified;

            

    

    

    
      	
              8.11  

            	
              Acquisitions.  Except
      as otherwise permitted by the Senior Debt Documents, acquire or agree to
      acquire any stock in, or all or substantially all of the assets of, any
      Person;

            

    

    

    
      	
              8.12  

            	
              Misrepresentations.  Furnish
      Bank any certificate or other document that will contain any untrue
      statement of material fact or that will omit to state a material fact
      necessary to make it not misleading in light of the circumstances under
      which it was furnished; and

            

    

    

    
      	
              8.13  

            	
              Margin
      Stock.  Directly or indirectly apply any part of the
      proceeds of the Loan to the purchasing or carrying of any “margin stock”
      within the meaning of Regulation U of the Board of Governors of the
      Federal Reserve System, or any regulations, interpretations, or rulings
      thereunder.

            

    

    

    
      	
              9.   

            	
              Default.  The
      occurrence of any one or more of the following events constitutes an Event
      of Default hereunder:

            

    

    

    
      	
              9.1  

            	
              Payments.  The
      Borrowers fail to pay when due any installment of principal or interest or
      fee payable hereunder and such failure shall continue for a period of ten
      (10) days;

            

    

    

    
      	
              9.2  

            	
              Observance of
      Obligations.  The Borrowers fail to observe or perform
      any other obligation to be observed or performed by it hereunder and such
      failure shall continue for thirty (30) days after Bank’s notice of such
      failure to Borrower;

            

    

    
      
        
          

          
            	
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              9.3  

            	
              Misrepresentation.  Any
      financial statement, representation, warranty, or certificate made or
      furnished by, or with respect to, the Borrowers to Bank in connection with
      this Agreement, or as inducement to Bank to enter into this Agreement, or
      in any separate statement or document to be delivered to Bank hereunder is
      materially false, incorrect, or incomplete when
  made.

            

    

    

    
      	
              9.4  

            	
              Inability to Pay
      Debts.  Any Borrower admits its inability to pay its
      debts as they mature or makes an assignment for the benefit of itself or
      any of its creditors;

            

    

    

    
      	
              9.5  

            	
              Bankruptcy,
      Etc.  Proceedings in bankruptcy or for reorganization of
      any Borrower, or for the readjustment of any of its debts, under the
      Bankruptcy Reform Act of 1978, as amended and codified as 11 U.S.C. §§ 101
      et seq., or any
      part thereof, or under any other Laws, whether state or federal, for the
      relief of debtors, now or hereafter existing, shall be commenced against
      or by any Borrower and, except with respect to any such proceedings
      instituted by a Borrower, are not discharged within thirty (30) days of
      their commencement.

            

    

    

    
      	
              9.6  

            	
              Receiver,
      Etc.  A receiver or trustee is appointed for a Borrower
      or for any substantial part of its assets, or any proceedings shall be
      instituted for the dissolution or the full or partial liquidation of a
      Borrower, and, except with respect to any such appointments requested or
      instituted by a Borrower, such receiver or trustee is not discharged
      within thirty (30) days of his appointment, and, except with respect to
      any such proceedings instituted by a Borrower, such proceedings are not
      discharged within thirty (30) days of their commencement, or a Borrower
      discontinues business or materially changes the nature of its business, or
      the Collateral becomes, in the reasonable judgment of Bank, insufficient
      in value to satisfy the
Obligations;

            

    

    

    
      	
              9.7  

            	
              Judgments.  Any
      Borrower suffers a final judgment for payment of money aggregating in
      excess of $500,000.00 (other than to the extent of any judgment as to
      which a reputable insurance company has accepted liability) and does not
      discharge the same within a period of sixty (60) days unless, pending
      further proceedings, execution has not been commenced or, if commenced,
      has been effectively stayed;

            

    

    

    
      	
              9.8  

            	
              Levy, Etc.  A
      judgment creditor of a Borrower obtains possession of any of the
      Collateral by any means, including (without implied limitation) levy,
      distraint, replevin, or self-help;

            

    

    

    
      	
              9.9  

            	
              Liens.  If any
      of the FF&E is purchased on conditional bills of sale, or otherwise,
      so that ownership of such FF&E will not vest unconditionally in one or
      more of the Borrowers, free from encumbrance, on delivery to the
      Borrowers; and

            

    

    

    
      	
              9.10  

            	
              Government
      Action.  If any governmental authority restricts the
      ability of any Borrower to operate, or restricts, limits or prohibits any
      Borrower from operating, its gaming business as conducted as of the date
      hereof and such restriction has a material adverse effect on the
      Borrowers’ operation of their
businesses.

            

    

    
      
        
          

          
            	
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              10.   

            	
              Materiality and
      Acceleration.  Each of the Events of Default is a
      material term of this Agreement.  Upon the occurrence and the
      continuance of an Event of Default, Bank may, after the end of any
      applicable cure period, with five (5) days notice to the Borrowers,
      declare the unpaid principal and interest of the Loan due and payable and
      pursue any and all remedies provided hereunder or by law; provided that
      upon the occurrence of any of the events specified in Sections 9.4, 9.5
      and 9.6, all Obligations shall immediately become due and payable without
      further action of any kind.  Bank’s failure to act on any such
      breach, or tolerating the same for any period of time, does not waive the
      breach or otherwise modify or affect the terms or conditions of this
      Agreement or Bank’s rights thereunder.  In no event can the
      terms or conditions of this Agreement be waived or modified, expressly or
      implicitly by any conduct of one or both parties, other than by a writing
      signed by both of them.

            

    

    

    
      	
              11.   

            	
              Remedies.  After
      any acceleration pursuant to Section 10, Bank shall have, in addition to
      the rights and remedies given to it by this Agreement, all those allowed
      by all applicable Laws, including, but without limitation, the Uniform
      Commercial Code as enacted in any jurisdiction in which any Collateral may
      be located.  Without limiting the generality of the foregoing,
      Bank may immediately after such acceleration, without demand of
      performance and without other notice (except as may be specifically
      required hereunder) or demand whatsoever to the Borrowers, all of which
      are hereby expressly waived, and without advertisement, sell at public or
      private sale or otherwise realize upon, in Dubuque County, Iowa, or in any
      other place where the Collateral may be located, or in such other place or
      places as Bank may designate, the whole or, from time to time, any part of
      the Collateral, or any interest that the Borrowers may have
      therein.  After deducting from the proceeds of sale or other
      disposition of the Collateral all expenses (including all reasonable
      expenses for legal services), Bank shall apply such proceeds toward the
      satisfaction of the Obligations.  Any remainder of the proceeds
      after satisfaction in full of the Obligations shall be distributed as
      required by applicable Laws.  Notice of any sale or other
      disposition shall be given to the Borrowers at least ten (10) days before
      the time of any intended public sale or of the time after which any
      intended private sale or other disposition of the Collateral is to be
      made, which the Borrowers hereby agree shall be reasonable notice of such
      sale or other disposition.  At any such sale or other
      disposition, Bank may, to the extent permissible under applicable Laws,
      purchase the whole or any part of the Collateral, free from any right of
      redemption on the part of the Borrowers, which right is hereby waived and
      released.  Without limiting the generality of any of the rights
      and remedies conferred upon Bank under this paragraph, Bank may, to the
      full extent permitted by the applicable
Laws:

            

    

    
 

    
      	
              11.1  

            	
              Enter
      upon the premises of any Borrower and take immediate possession of any
      Collateral, either personally or by means of a receiver appointed by a
      court of competent jurisdiction and, for purposes of this Section 11, the
      Borrowers hereby agree not to interfere with Bank’s entry upon its
      premises and taking possession of such
  Collateral;

            

    

     

    
      	
              11.2  

            	
              At
      Bank’s option, use, operate, manage, and control the Collateral in any
      lawful manner;

            

    

     

    
      	
              11.3  

            	
              Collect
      and receive all rents, income, revenue, earnings, issues, and profits
      therefrom; and

            

    

     

    
      
        
          

          
            	
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              11.4  

            	
              Maintain,
      repair, renovate, alter, or remove the Collateral as Bank may determine in
      its discretion.

            

    

     

    
      	
              12.  

            	
              Bank as
      Attorney-in-Fact.  The Borrowers hereby appoint Bank to
      be the Borrowers’ attorney-in-fact (without requiring Bank to act as such)
      for the purpose of carrying out the provisions hereof and taking any
      action and executing any instrument which Bank may deem necessary or
      advisable to accomplish the purposes hereof, at any time after which an
      Event of Default has occurred and is continuing, which appointment as
      attorney-in-fact is irrevocable and coupled with an
    interest.

            

    

     

    
      	
              13.   

            	
              Possession of
      Collateral.  It shall not be necessary that Bank take
      possession of the Collateral, or any part thereof, prior to the time that
      any sale pursuant to this Section is conducted, and it shall not be
      necessary that the Collateral, or any part thereof, be present at the
      location of such sale; provided, that
      Bank shall give notice of such sale to the Borrowers in accordance with
      Section 11.

            

    

     

    
      	
              14.   

            	
              Miscellaneous
      Provisions.

            

    

     

    
      	
              14.1  

            	
              Provisions.  The
      provisions of this Agreement shall be in addition to those of any
      guaranty, pledge or security agreement, note or other evidence of
      liability of the Borrowers now or hereafter held by Bank, all of which
      shall be construed as complementary to each other.  Nothing
      herein contained shall prevent Bank from enforcing any or all other
      guaranty, pledge or security agreements, notes or other evidences of
      liability of the Borrowers in accordance with their respective
      terms.

            

    

     

    
      	
              14.2  

            	
              Further
      Assurance.  From time to time, each party hereto will
      execute and deliver to the other party such additional documents and will
      provide such additional information as such other party may reasonably
      require to carry out the terms of this
  Agreement.

            

    

     

    
      	
              14.3  

            	
              Enforcement and Waiver by
      Bank.  Bank shall have the right at all times to enforce
      the provisions of this Agreement in strict accordance with the terms
      hereof and thereof, notwithstanding any conduct or custom on the part of
      Bank in refraining from so doing at any time or times.  The
      failure of Bank at any time or times to enforce its rights under such
      provisions, strictly in accordance with the same, shall not be construed
      as having created a custom in any way or manner contrary to specific
      provisions of this Agreement or as having in any way or manner modified or
      waived the same.  All rights and remedies of Bank are cumulative
      and concurrent, and the exercise of one right or remedy shall not be
      deemed a waiver or release of any other right or
  remedy.

            

    

     

    
      	
              14.4  

            	
              Expenses of
      Bank.  The Borrowers will, on demand, reimburse Bank for
      all expenses, including the reasonable fees and expenses of legal counsel
      for Bank, incurred by Bank in connection with the preparation,
      administration, amendment, modification, or enforcement of this Agreement
      and the collection or attempted collection of the Note (except in the case
      of fraud, willful misconduct or gross negligence by Bank), and in
      connection with the preparation of documents, filings and other legal
      expenses in relation to the initial making of the
  Loan.

            

    

     

    
      
        
          

          
            	
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              14.5  

            	
              Notices.  Any
      notices or consents required or permitted by this Agreement shall be in
      writing and shall be deemed delivered if delivered in person or if sent by
      certified mail, postage prepaid, return receipt requested, or electronic
      transmission (upon confirmation that the transmission was received), as
      follows, unless such address is changed by written notice
      hereunder.

            

    

     

    If
to the Borrowers:    Peninsula Gaming,
LLC

    Diamond
Jo, LLC

    The
Old Evangeline Downs, L.L.C.

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

    Dubuque,
IA  52004

    Attn:  Natalie
Schramm

    Email:  natalie.schramm@diamondjo.com

     

    
       

    

    
      If
to the Bank :           
American Trust & Savings Bank

      895
Main Street

      Post
Office Box 938

      Dubuque,
IA  52004-0938

      Attn:  Victoria
J. Richter, 2nd
Senior Vice President

      Email:  trichter@americantrust.com

    

    

     

    
      	
              14.6  

            	
              Waiver and Release by
      Borrowers.  To the maximum extent permitted by applicable
      Laws:

            

    

     

    
      	
              14.6.1  

            	
              The
      Borrowers waive (i) protest of all commercial paper at any time held by
      Bank on which the Borrowers are in any way liable, (ii) except as the same
      may herein be specifically granted, notice of acceleration and of
      intention to accelerate, (iii) notice and opportunity to be heard, after
      acceleration in the manner provided in this Agreement, before exercise by
      Bank of the remedies of self-help, set-off, or of other summary procedures
      permitted by any applicable Laws or by any agreement with the Borrowers,
      and except where required hereby or by any applicable Laws, notice of any
      other action taken by Bank, and (iv) the right to assert any statute of
      limitations as a bar to the enforcement of the lien of this Agreement, or
      to any action brought to enforce the Obligations secured by this
      Agreement.

            

    

     

    
      	
              14.6.2  

            	
              Notwithstanding
      the existence of any other security interest in the property held by Bank,
      or by any other party, Bank shall have the right to determine the order in
      which any or all of the property shall be subjected to the remedies
      provided herein.  Bank shall have the right to determine the
      order in which any or all portions of the Obligations secured hereunder
      are satisfied from the proceeds realized after the exercise of the
      remedies provided herein.  The Borrowers and any party who
      consents to this Agreement, hereby waive any and all right to require the
      marshaling of assets in connection with the exercise of any other remedies
      permitted by applicable Law, or provided herein;
  and

            

    

     

    
      
        
          

          
            	
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              14.6.3  

            	
              The
      Borrowers release Bank and its officers, attorneys, agents and employees
      from all claims for loss or damage caused by any act or omission on the
      part of any of them except fraud, willful misconduct and gross
      negligence.

            

    

     

    
      	
              14.7  

            	
              Participation.  Notwithstanding
      any other provisions of this Agreement, the Borrowers understand that Bank
      may at any time enter into participation agreements with one or more
      participating banks whereby Bank will allocate certain percentages of its
      commitment to them.  The Borrowers acknowledge that, for the
      convenience of all parties, this Agreement is being entered into with Bank
      only.

            

    

     

    
      	
              14.8  

            	
              Governing Law; Waiver of Jury
      Trial;
      Venue.

            

    

     

    
      	
              14.8.1  

            	
              This
      Agreement is entered into and performable in Dubuque, Dubuque County,
      Iowa, and shall be subject to, and construed and enforced in accordance
      with, the laws of the State of
Iowa.

            

    

     

    
      	
              14.8.2  

            	
              EACH
      OF THE PARTIES HERETO IRREVOCABLY WAIVES AS AGAINST THE OTHER PARTY ANY
      RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION ARISING
      UNDER THIS AGREEMENT.

            

    

     

    
      	
              14.8.3  

            	
              Each
      party hereto (i) expressly submits to the jurisdiction of any state or
      federal court sitting in, or having jurisdiction over, Dubuque County,
      Iowa; and (ii) irrevocably waives any objection which it may now or
      hereafter have to the laying of venue in any suit, action or proceeding
      brought in any such court.

            

    

     

    
      	
              14.9  

            	
              Binding Effect; Assignment; Entire
      Agreement.  This Agreement shall inure to the benefit of,
      and shall be binding upon, the respective successors and permitted assigns
      of the parties hereto.  The Borrowers have no right to assign
      any of their rights or obligations hereunder without the prior written
      consent of Bank.  Except as set forth in Section 14.7, Bank has
      no right to assign any of its rights or obligations hereunder without the
      prior written consent of the Borrowers.  This Agreement,
      including the Exhibits hereto, all of which are hereby incorporated herein
      by reference, and the documents executed and delivered pursuant hereto,
      constitute the entire agreement between the parties, and may be amended
      only by a writing signed on behalf of each party.  All
      agreements, instruments and documents referred to in this Agreement are by
      this reference made a part of this Agreement for all
    purposes.

            

    

     

    
      	
              14.10  

            	
              Severability.  If
      any provision of this Agreement shall be held invalid under any applicable
      Law, such invalidity shall not affect any other provision of this
      Agreement that can be given effect without the invalid provision, and, to
      this end, the provisions hereof are
severable.

            

    

     

    
      	
              14.11  

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

            

    

     

    
      
        
          

          
            	
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              14.12  

            	
              Interpretation; Headings.  Words
      and phrases herein shall be interpreted and understood according to the
      context in which they are used, and all words and phrases used herein
      shall be construed as in the singular or plural number, and masculine,
      feminine or neuter gender, as the context may require.  The
      headings in this Agreement are intended solely for convenience of
      reference, and shall be given no effect in the construction or
      interpretation of this Agreement.

            

    

     

    
      	
              14.13  

            	
              Incorporation by
      Reference.  All agreements, instruments and documents
      referred to in this Agreement are by this reference made a part of this
      Agreement for all purposes.

            

    

     

    
      	
              14.14  

            	
              Disclaimer.  In
      no event shall either party to this Agreement be liable to the other for
      indirect, special or consequential damages, including loss of anticipated
      profits.

            

    

     

    
      	
              14.15  

            	
              Liability.  The
      Borrowers have selected all parties and items furnishing services or
      materials to the FF&E, and Bank has, and shall have, no responsibility
      for them, or for the quality of their materials or
      workmanship.  Bank’s sole function is that of lender, and the
      only consideration passing from Bank to the Borrowers is the loan proceeds
      in accordance with and subject to the terms of this
      Agreement.  The Borrowers shall have no right to rely on any
      procedures required by Bank, the procedures being for Bank’s protection as
      lender, and no one else.  The Borrowers shall hold Bank harmless
      and indemnify it against claims of any kind, of any persons, including but
      without limiting the generality of the foregoing, the Borrowers’
      employees, any contractor and such contractor’s employees, any tenant of
      the Borrowers, any subtenant or concessionaire of any such tenant, and the
      employees and business invitees of any tenant, subtenant or concessionaire
      arising from or out of the use or possession of the FF&E in accordance
      with the Borrowers’ plans and
specifications.

            

    

     

    *     *     *

     

    
      
        
          

          
            	
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              14.16  

            	
              Priority of
      Documents.  In case of a conflict between a provision of
      this Agreement, and the provisions of any other agreement, document or
      instrument related to the Loan or the Collateral, the provisions of this
      Agreement shall govern.

            

    

     

    

    THIS
AGREEMENT SPECIFICALLY INCLUDES ALL OF THE ADDITIONAL PROVISIONS SET FORTH
ABOVE.  THE BORROWERS ACKNOWLEDGE RECEIPT OF A FULLY COMPLETED COPY OF
THIS AGREEMENT.

    

    IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.

    

    

                 
PENINSULA GAMING, LLC

    

    

    
      	
               
      

            	
                    
      By: s/Natalie
      Schramm

            

    

    
      	
               
      

            	
              Name:  Natalie
      Schramm

            

    

    
      	
               
      

            	
               

            	
              Title:   
      Chief Financial Officer

            

    

    

    

    STATE OF
IOWA, DUBUQUE COUNTY) ss:

    

    On this 2nd
day of May, 2008, before me, the undersigned, a
Notary Public in and for the State of Iowa, personally appeared Natalie
Schramm, to me personally known, who, being by me duly sworn, did say that she
is the Chief Financial Officer of Peninsula Gaming, LLC, executing the within
and foregoing instrument, that said instrument was signed on behalf of the
Limited Liability Company by authority of its Members/Managers; and that Natalie Schramm, as
CFO,
acknowledged the execution of the foregoing instrument to be the voluntary act
and deed of the corporation, by it and by her voluntarily executed.

    

    

    s/Karen M.
Beetem

    Notary Public, State of
Iowa

    

    

    
      
        
          

          
            	
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              DIAMOND
      JO, LLC

            

    

    

    

    

    
      	
               
      

            	
              By:
      s/Natalie
      Schramm

            

    

    
      	
               
      

            	
              Name:  Natalie
      Schramm

            

    

    
      	
               
      

            	
               

            	
              Title:  
      Chief Financial Officer

            

    

    

    

    

    STATE OF
IOWA, DUBUQUE COUNTY) ss:

    

    On this 2nd day of May, 2008, before me, the
undersigned, a Notary Public in and for the State of Iowa, personally appeared
Natalie Schramm, to me personally known, who, being by me duly sworn, did say
that she is the Chief Financial Officer of Diamond Jo, LLC, executing the within
and foregoing instrument, that said instrument was signed on behalf of the
Limited Liability Company by authority of its Members/Managers; and that Natalie Schramm, as
CFO,
acknowledged the execution of the foregoing instrument to be the voluntary act
and deed of the corporation, by it and by her voluntarily executed.

    

    

    s/Karen M.
Beetem

    Notary Public, State of
Iowa

    

    

    
      
        
          

          
            	
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              THE
      OLD EVANGELINE DOWNS, L.L.C.

            

    

    

    
      	
            	
              By:
      s/Natalie
      Schramm

            

      
        	
                 
      

              	
                Name:  Natalie
      Schramm

              

      

      
        	
                 
      

              	
                 

              	
                Title:  
      Chief Financial Officer

              

    

    

            

    

    STATE OF
IOWA, DUBUQUE COUNTY) ss:

    

    On this 2nd day of May, 2008, before me, the
undersigned, a Notary Public in and for the State of Iowa, personally appeared
Natalie Schramm, to me personally known, who, being by me duly sworn, did say
that she is the Chief Financial Officer of The Old Evangeline Downs, L.L.C.,
executing the within and foregoing instrument, that said instrument was signed
on behalf of the Limited Liability Company by authority of its Members/Managers;
and that Natalie
Schramm, as CFO, acknowledged the
execution of the foregoing instrument to be the voluntary act and deed of the
corporation, by it and by her voluntarily executed.

    

    

    s/Karen M.
Beetem

    Notary Public, State of
Iowa

    

    
      
        
          

          
            	
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    AMERICAN
TRUST & SAVINGS BANK

    

    

    
      	
               By:
      s/Victoria J.
      Richter

            	
               

            

    

    
      	
               Name: 
      Victoria J. Richter

            	
               

            

    

    Title:     2nd Senior
Vice President

    

    

    

    

    
      
        
          

          
            	
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    SCHEDULE
A

    

    BORROWERS’
ADDRESS

    

    

    

    Each
Borrower’s principal place of business is located at the following
address:

    

    
      	
              1.  

            	
              Peninsula
      Gaming, LLC:

            

    

    

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

    Dubuque,
IA  52004

    

    

    
      	
              2.  

            	
              Diamond
      Jo, LLC:

            

    

    

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

    Dubuque,
IA  52004

    

    

    
      	
              3.  

            	
              The
      Old Evangeline Downs, L.L.C.:

            

    

    

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

    Dubuque,
IA  52004

    

    

    
      
        
          

          
            	
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    SCHEDULE
B

    

    EXISTING
INDEBTEDNESS

     

    

     

    
      	
              1.  

            	
              Indebtedness
      incurred by DJL and OED under the Loan and Security Agreement, dated as of
      June 16, 2004, among DJL, OED, the Lenders (as defined in said Loan and
      Security Agreement) and Wells Fargo Foothill, Inc., a California
      corporation, as the arranger and agent for the Lenders, as such Loan and
      Security Agreement was subsequently amended as of November 10, 2004; July
      12, 2005; December 6, 2006; and December 22,
  2006;

            

    

     

    
      	
              2.  

            	
              Indebtedness
      incurred by DJL and PGL and guaranteed by OED under the Indenture, dated
      as of April 16, 2004, among PGL, Peninsula Gaming Corp., the guarantors
      named therein and U.S. Bank National Association, as trustee, as such
      Indenture was subsequently amended as of June 16, 2004 and June 30,
      2005;

            

    

     

    
      	
              3.  

            	
              Indebtedness
      incurred by OED under the Indenture, dated as of February 25, 2003, among
      OED, Peninsula Gaming Corp. and U.S. Bank National Association, as
      trustee, as such Indenture was subsequently amended as of March 25,
      2004;

            

    

     

    
      	
              4.  

            	
              Indebtedness
      incurred by OED under a Note delivered pursuant to a Purchase Agreement
      between Bart C. Warner and OED;

            

    

     

    
      	
              5.  

            	
              Indebtedness
      of OED as lessee of personal property under the Value Lease Agreement,
      dated September 28, 2006, between OED and Copy & Camera, Inc.;
      and

            

    

     

    
      	
              6.  

            	
              Indebtedness
      of DJL as lessee of personal property under the Financed Equipment Sales
      Agreement, dated October 30, 2006, between Diamond Jo, LLC and Shuffle
      Master, Inc. and the Addendum to Financed Equipment Sales Agreement, dated
      January 4, 2007, between DJL and Shuffle Master,
  Inc.

            

    

     

    

    

    
      
        
          

          
            	
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