CASH COLLATERAL AND DISBURSEMENT AGREEMENT

 

TABLE OF CONTENTS

 

1.	Definitions
	1.1	Defined Terms
	1.2	Additional Defined Terms
	1.3	Rules of Interpretation
2.	Establishment of Accounts
	2.1	Appointment of Disbursement Agent
	2.2	Establishment of Accounts
	2.3	Pledge Agreement
	2.4	Investment of Funds in Accounts
	2.5	Agency
	2.6	Waiver of Set-off Rights
3.	Disbursements from Accounts
	3.1	Conditions to Disbursement
	3.2	Method of Disbursement
	3.3	Disbursement Agent’s Compensation
	3.4	Transfer of Funds to the Trustee
4.	Agreements of the Issuers, the Disbursement Agent and the Trustee
	4.1	Disbursement Requests and Disbursements
	4.2	Insufficient Available Funds
5.	Interest Reserve
	5.1	Interest Disbursements
	5.2	Interest Reserve Account Amounts
6.	Certain Covenants
	6.1	Notice of Opening
	6.2	Issuers’ Officer’s Certificates.
	6.3	Officer’s Certificate as Representation and Warranty
7.	Construction Disbursement Account
	7.1	Conditions to Initial Disbursements
	7.2	Conditions to Subsequent Disbursements
	7.3	Advance Disbursements
	7.4	Disbursements after an Event of Default
	7.5	Final Disbursement of Funds Following Opening
	7.6	First Disbursement Request.
8.	Amendments to Construction Disbursement Budget; Amendments to Contracts; Amendments to Facility Cost Schedule and Cost Overruns.
	8.1	Construction Disbursement Budget Amendment Process
	8.2	Contract Amendment Process

 

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	8.3	Contracts Entered into after the Issue Date
	8.4	Facility Cost Schedule and Cost Overruns
9.	Events of Default
	9.1	Indenture
	9.2	Exception to Prior Disbursement
	9.3	Insufficient Funds
	9.4	Performance of Certain Obligations
	9.5	Failure to Deliver Collateral Agreements
	9.6	Abandonment of Facility
	9.7	Termination or Invalidity of Construction Documents
10.	Disbursed Funds Account
	10.1	Rights of the Issuers to Disbursed Funds Account
	10.2	Right to Substitute Disbursed Funds Account
11.	Indemnity.
	11.1	Limitation of Liability
	11.2	Reliance on Certificates
12.	Indemnity
13.	Termination
14.	Substitution or Resignation
	14.1	Disbursement Agent
15.	Account Statement
16.	Notice
17.	Miscellaneous
	17.1	Waiver
	17.2	Invalidity
	17.3	No Authority
	17.4	Assignment
	17.5	Benefit
	17.6	Time
	17.7	Governing Law; Waiver of Jury Trial
	17.8	Entire Agreement; Amendments
	17.9	Notices
	17.10	Counterparts
	17.11	Captions
	17.12	Right to Consult Counsel
	17.13	Disputes

 

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EXHIBITS

 

Exhibit A		Form of Initial Disbursements Certificate
Exhibit B-1		Form of Issuers’ Closing Certificate
Attachment A to Exhibit B-1		Form of Issuers’ Officer’s Certificate to Issuers’ Closing Certificate
Exhibit B-2		Form of Disbursement Agent’s Closing Certification
Exhibit B-3		Form of Trustee’s Closing Certification
Exhibit C		Form of Interest Disbursement Request
Exhibit D-1		Form of Construction Disbursement Request and Certificate
Attachment A to Exhibit D-1		Form of Issuers’ Officer’s Certificate to Construction Disbursement Request and Certificate
Exhibit D-2		Form of Advance Disbursement Request and Certificate
Attachment A to Exhibit D-2		Form of Issuers’ Officer’s Certificate to Advance Disbursement Request and Certificate
Exhibit D-3		Form of First Disbursement Officer’s Certificate
Exhibit E		Form of Construction Disbursement Budget Amendment Certificate
Exhibit F-1		Form of Contract Amendment Certificate
Exhibit F-2		Form of Additional Contract Certificate
Exhibit G		Form of Consent to Collateral Assignment of Contract
Exhibit H		Form of Pro Forma Title Policy
Exhibit I		Property Legal Description

 

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CASH COLLATERAL AND DISBURSEMENT AGREEMENT

 

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

 

R E C I T A L S

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

1.             Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Affiliate” has the meaning given in the Indenture.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Collateral” has the meaning given in the Indenture.

 

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