EX. 1.1 - PURCHASE AGREEMENT

Note Purchase Agreement

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PENINSULA GAMING CO LLC | DIAMOND JO, LLC | THE OLD EVANGELINE DOWNS CAPITAL CORP | JEFFERIES & COMPANY, INC

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Title: EX. 1.1 - PURCHASE AGREEMENT
Date: 7/30/2004
Law Firm: Mayer, Brown, Rowe & Maw LLP; Skadden, Arps, Slate, Meagher & Flom LLP

Exhibit 1.1

DIAMOND JO, LLC

THE OLD EVANGELINE DOWNS CAPITAL CORP.

$233,000,000 8 3/4 % SENIOR SECURED NOTES DUE 2012

PURCHASE AGREEMENT

March 25, 2004

JEFFERIES & COMPANY, INC.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California 90025

Ladies and Gentlemen:

Each of Diamond Jo, LLC, a Delaware limited liability company (the

"COMPANY"), The Old Evangeline Downs Capital Corp., a Delaware corporation

("CAPITAL" and, together with the Company, the "ISSUERS"), and each of the

entities listed on the signature pages hereto under the heading "Guarantors"

(the "GUARANTORS") hereby agrees with you as follows:

1. ISSUANCE OF SECURITIES. The Issuers propose to issue and sell to

Jefferies & Company, Inc. (the "INITIAL PURCHASER"), and the Initial Purchaser

proposes to purchase, $233,000,000 aggregate principal amount of the Issuers' 8

3/4% Senior Secured Notes due 2012, Series A (together with the Guarantees (as

defined below) endorsed thereon, the "SERIES A NOTES"). The Series A Notes will

be issued pursuant to an indenture (the "INDENTURE"), to be dated as of the

Closing Date (as defined below), by and among the Issuers, the Guarantors and

U.S. Bank National Association, as trustee (the "TRUSTEE"). The Series A Notes

and the Series B Notes (as defined below), each with the Guarantees endorsed

thereon, are collectively referred to herein as the "NOTES."

Pursuant to the Indenture, each of the Guarantors and any future

guarantor which becomes a party to the Indenture, will jointly and severally,

fully and unconditionally guarantee, on a senior secured basis, to each holder

of Notes and the Trustee, the payment and performance of the Issuers'

obligations under the Indenture, the Notes and the Security Documents (as

defined below), including the payment of principal, interest, premium, if any,

and Liquidated Damages (as defined in the Indenture), if any, on the Notes (the

"GUARANTEES").

Pursuant to the terms of the Security Documents, all of the

respective obligations of the Issuers and the Guarantors under the Indenture,

the Notes and the Guarantees will be secured by security interests in, or

pledges of (the "SECURITY INTERESTS") substantially all of the assets (other

than certain excluded assets) of, and all of the shares of capital stock of and

membership interests in (the "COLLATERAL"), the Issuers, the Guarantors and the

Issuers' future domestic restricted subsidiaries who become parties thereto, as

set forth in the Offering Circular (as defined below).

<PAGE>

The Series A Notes will be offered and sold to the Initial Purchaser

pursuant to an exemption from the registration requirements under the Securities

Act of 1933, as amended (the "ACT"). The Issuers have prepared a preliminary

offering circular, dated March 15, 2004 (the "PRELIMINARY OFFERING CIRCULAR"),

and a final offering circular, dated March 31, 2004 (the "OFFERING CIRCULAR"),

relating to the offer and sale of the Series A Notes (the "OFFERING").

Upon original issuance thereof, and until such time as the same is

no longer required under the Indenture or the applicable requirements of the

Act, the Series A Notes shall bear the following legend:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS

SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,

ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE

ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR

NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL

OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS

(OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(k)

UNDER THE SECURITIES ACT AS PERMITTING RESALES OF RESTRICTED SECURITIES BY

NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE

DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE

ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS

SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE

ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED

EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS

ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A

PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS

DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN

ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM

NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A

UNDER THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.

PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES IN ACCORDANCE WITH

REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED

INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF

RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS

OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED

INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR

SALE IN CONNECTION WITH, ANY

<PAGE>

DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER

AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES

ACT, SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH

OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE

DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION

SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A

CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS

COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND IN EACH CASE

IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR ANY

OTHER APPLICABLE JURISDICTION.

2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the

representations, warranties and agreements contained herein, and subject to the

terms and conditions hereof, the Issuers shall issue and sell to the Initial

Purchaser (and, in order to induce the Initial Purchaser to purchase the Series

A Notes, the Guarantors shall enter into the Guarantees and the Issuers and the

Guarantors shall grant the Security Interests), and the Initial Purchaser agrees

to purchase from the Issuers, $233,000,000 aggregate principal amount of Series

A Notes. The purchase price for the Series A Notes shall be 95.346% of the

principal amount thereof.

3. TERMS OF OFFERING. The Initial Purchaser has advised the Issuers

that the Initial Purchaser will make offers to sell (the "EXEMPT RESALES") the

Series A Notes purchased by the Initial Purchaser hereunder on the terms set

forth in the Offering Circular, as amended or supplemented, solely to (a)

persons whom the Initial Purchaser reasonably believes to be "qualified

institutional buyers," as defined in Rule 144A under the Act ("QIBS"), (b)

non-U.S. persons in reliance upon Regulation S under the Act ("REGULATION S

PURCHASERS"), and (c) a limited number of institutional "accredited investors,"

as defined in Rule 501(a)(1), (2), (3) or (7) under the Act that make certain

representations and warranties to the Initial Purchaser and the Issuers

("ACCREDITED INVESTORS" and, collectively with QIBs and Regulation S Purchasers,

"ELIGIBLE PURCHASERS), which representations and warranties are set forth in the

form of Accredited Investor Letter attached as Annex A to the Offering Circular

(the "ACCREDITED INVESTOR LETTER").

Holders of the Series A Notes (including subsequent transferees)

will have the registration rights set forth in the registration rights agreement

(the "REGISTRATION RIGHTS AGREEMENT"), to be executed on and dated as of the

Closing Date. Pursuant to the Registration Rights Agreement, the Issuers and the

Guarantors will agree, among other things, (a) to file with the Securities and

Exchange Commission (the "COMMISSION") under the circumstances set forth therein

(i) a registration statement under the Act (the "EXCHANGE OFFER REGISTRATION

STATEMENT") relating to, among other things, the 8 3/4% Senior Secured Notes due

2012, Series B, of the Issuers (the "SERIES B NOTES"), identical in all material

respects to the Series A Notes, including with respect to the Guarantees thereof

(except that the Series B Notes shall have been registered pursuant to such

registration statement), to be offered in exchange for the Series A Notes (such

offer to exchange being referred to as the

<PAGE>

"REGISTERED EXCHANGE OFFER"), and (ii) under certain circumstances, a shelf

registration statement pursuant to Rule 415 under the Act (the "SHELF

REGISTRATION STATEMENT" and, together with the Exchange Offer Registration

Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain

holders of the Series A Notes, and (b) to cause such Registration Statements to

be declared effective, as applicable, as provided in the Registration Rights

Agreement.

On the Closing Date, the Issuers and the Guarantors will enter into

certain security and pledge agreements, mortgages and certain other collateral

documents (collectively, the "SECURITY DOCUMENTS"), that will provide for the

grant of the Security Interests in the Collateral to U.S. Bank National

Association, as collateral agent for the Trustee and the holders of the Notes

(in such capacity, the "SECURED PARTY"). The Security Interests will secure the

payment and performance when due of all of the respective obligations of the

Issuers and the Guarantors under the Indenture, the Notes and the Guarantees.

REFINANCING PLAN. As described in the Offering Circular, in

connection with the Offering, the Issuers and the Guarantors are conducting the

following transactions:

Repurchase of OED Notes. The Old Evangeline Downs, L.L.C., a

Delaware limited liability company ("OED"), and Capital (together, the

"OED NOTE ISSUERS") are offering to purchase (the "TENDER OFFER") any and

all of their outstanding 13% Senior Secured Notes due 2010 with Contingent

Interest (the "OED NOTES") and are soliciting consents (the "CONSENT

SOLICITATION") from the holders of the OED Notes to (i) the adoption of

proposed amendments to the indenture governing the OED Notes (the "OED

INDENTURE"), which would, inter alia, eliminate substantially all of the

restrictive covenants and events of default under the OED Indenture (the

"PROPOSED AMENDMENTS"), and (ii) the release of the liens on the

collateral securing the OED Notes and the termination of the related

security documents (the "COLLATERAL RELEASE" and, together with the

Proposed Amendments, the "PROPOSALS"; the agreements to effect the

Collateral Release, the "COLLATERAL RELEASE AGREEMENTS"), each as more

fully described in the Offer to Purchase and Consent Solicitation

Statement and the related Consent and Letter of Transmittal, each dated

March 9, 2004, as each may be amended or supplemented from time to time

(together, the "OFFER TO PURCHASE"), and the other documents related to

the Tender Offer and the Consent Solicitation (such other documents,

collectively with the Offer to Purchase, the "TENDER OFFER DOCUMENTS"). On

March 25, 2004, the OED Note Issuers entered into a supplemental indenture

with U.S. Bank National Association, the trustee for the OED Notes, to

effectuate the Proposals (the "SUPPLEMENTAL INDENTURE"). The Tender Offer

is scheduled to expire at 5:00 p.m., New York time, on April 5, 2004,

unless earlier terminated or extended by the OED Note Issuers. A portion

of the net proceeds of the Offering will be used to pay the Tender Offer

Consideration and related Consent Payments (as such terms are defined in

the Offer to Purchase) in the Tender Offer and the Consent Solicitation.

The Tender Offer, the Consent Solicitation, the Proposals, and the

transactions contemplated by the Tender Offer Documents, the Supplemental

Indenture and the Collateral Release Agreements (including, without

limitation, the payment of the

<PAGE>

Tender Offer Consideration and the related Consent Payments, the

repurchase of tendered OED Notes and the Proposals becoming operative),

together with any and all other actions required to be taken, and

transactions required to be entered into, by the Issuers and the

Guarantors to consummate the Tender Offer and the Consent Solicitation and

make operative the Proposals on the Closing Date, are referred to herein

as the "OED NOTE REPURCHASE TRANSACTIONS."

Repurchase of Company Notes. On or before the Closing Date, the

Company and Peninsula Gaming Corp. (together, the "COMPANY NOTE ISSUERS")

will take all actions necessary under the indenture (the "COMPANY

INDENTURE") governing their 12 1/4% Senior Secured Notes due 2006 (the

"COMPANY NOTES") to, on the Closing Date, covenant defease, pursuant to

Section 8.3 of the Company Indenture, the Company Notes to the redemption

date (the "REDEMPTION DATE") specified in the Redemption Notice (as

defined below), have released the collateral securing the Company Notes

and have terminated the related security documents (the "COMPANY SECURITY

DOCUMENTS") and the Company's obligations thereunder, including, without

limitation, on the Closing Date, (i) calling for redemption all of the

Company Notes by mailing a notice of redemption (the "REDEMPTION NOTICE")

to all holders of the Company Notes in accordance with Article III of the

Company Indenture, (ii) depositing with U.S. Bank National Association, as

trustee for the Company Notes (the "COMPANY TRUSTEE"), a portion of the

net proceeds of the Offering in an amount sufficient, in the opinion of a

nationally recognized firm of independent public accountants, to pay the

principal of, premium, if any, and interest on the outstanding Company

Notes to the Redemption Date, (iii) delivering to the Company Trustee the

other documents required by Article VIII of the Company Indenture and (iv)

redeeming the Company Notes on the Redemption Date (the "COMPANY NOTE

REDEMPTION"). The transactions described in this paragraph, together with

any and all other actions required to be taken, and transactions required

to be entered into, by the Issuers and the Guarantors to effect the

transactions described in this paragraph, are referred to herein as the

"COMPANY NOTE REPURCHASE TRANSACTIONS." The Offering, the OED Note

Repurchase Transactions and the Company Note Repurchase Transactions

collectively are referred to herein as the "REFINANCING PLAN."

Waivers Under Existing Credit Facilities. The Company and OED are

seeking from the lenders under their existing senior secured credit

facilities (the "EXISTING SENIOR SECURED CREDIT FACILITIES"), and OED is

seeking from the lenders under its existing FF&E facility (the "OED FF&E

FACILITY" and, together with the Existing Senior Secured Credit

Facilities, the "EXISTING CREDIT FACILITIES"), consents to the Refinancing

Plan and waivers of any defaults that would be triggered under such

Existing Credit Facilities upon consummation of the Refinancing Plan (the

consents and waivers with respect to the Existing Senior Secured Credit

Facilities, the "EXISTING SENIOR SECURED CREDIT FACILITY WAIVERS," and the

consents and waivers with respect to the OED FF&E Facility, the "FF&E

WAIVER" and, together with the Existing Senior Secured Credit Facility

Waivers, the "EXISTING CREDIT FACILITY WAIVERS"). The Existing Credit

Facility Waivers becoming operative are referred to herein as the "CREDIT

FACILITY TRANSACTIONS."

<PAGE>

Intercreditor Agreements. On the Closing Date, the lenders under

each of the Existing Credit Facilities, the Trustee, the Issuers and the

Guarantors shall enter into an Intercreditor Agreement, in a form

reasonably satisfactory to the Initial Purchaser, which form shall be

attached as an exhibit to the Indenture (the "INTERCREDITOR AGREEMENT"),

setting forth their respective rights and obligations with respect to the

Collateral.

CORPORATE TRANSACTIONS. In addition, as described in the Offering

Circular, the Issuers and the Guarantors are seeking requisite approvals from

applicable Iowa and Louisiana regulatory authorities (the "REQUISITE REGULATORY

APPROVALS") to effect the Reorganization Transactions (as defined in the

Offering Circular). If the Requisite Regulatory Approvals are received, the

Issuers, the Guarantors and the Initial Purchaser shall take the applicable

actions set forth in Section 12 hereof.

This Agreement, the Indenture, the Registration Rights Agreement,

the Notes, the Guarantees, the Security Documents and the Intercreditor

Agreement collectively are referred to herein as the "NOTE DOCUMENTS" and,

collectively with the Supplemental Indenture, the Collateral Release Agreements,

the Tender Offer Documents, the Redemption Notice and the Existing Credit

Facility Waivers, the "OPERATIVE DOCUMENTS."

The transactions contemplated by the Operative Documents (including,

without limitation, (i) the Offering and the application of the net proceeds

therefrom as described in the Offering Circular, as amended or supplemented,

(ii) the issuance and sale of the Notes and the Guarantees in accordance with

this Agreement, (iii) the creation, grant, recording and perfection of the

Security Interests, (iv) the OED Note Repurchase Transactions, (v) the Company

Note Repurchase Transactions and (vi) the Credit Facility Transactions),

collectively are referred to herein as the "TRANSACTIONS."

4. DELIVERY AND PAYMENT. Delivery to the Initial Purchaser of and

payment for the Series A Notes shall be made at a Closing (the "CLOSING") to

begin at 9:00 a.m., New York City time, on April 16, 2004, (such time and date,

the "CLOSING DATE") at the offices of Mayer, Brown, Rowe & Maw, LLP, 1675

Broadway, New York, New York 10019. The Closing Date and the location of

delivery of and the form of payment for the Series A Notes may be varied by

agreement between the Initial Purchaser and the Issuers.

The Issuers shall deliver to the Initial Purchaser one or more

certificates representing the Series A Notes (the "GLOBAL SECURITIES"), each in

definitive form, registered in the name of Cede & Co., as nominee of The

Depository Trust Company ("DTC"), or such other names as the Initial Purchaser

may request upon at least one Business Day's notice to the Issuers, in an amount

corresponding to the aggregate principal amount of the Series A Notes sold

pursuant to Exempt Resales to QIBs, to Regulation S Purchasers and to Accredited

Investors, respectively, in each case against payment by the Initial Purchaser

of the purchase price therefore by immediately available Federal funds bank wire

transfer to such bank account as the Issuers shall designate to the Initial

Purchaser at least two Business Days prior to the Closing. "BUSINESS DAY" means

any day other than a Saturday, a Sunday or a day on which banking institutions

in The City of New York or at a place of payment are authorized by law,

regulation or executive order to remain closed.

<PAGE>

The Global Securities in definitive form shall be made available to

the Initial Purchaser for inspection at the offices of Mayer, Brown, Rowe & Maw,

LLP, 1675 Broadway, New York, New York 10019 (or such other place as shall be

acceptable to the Initial Purchaser) not later than the close of business, New

York City time, one Business Day immediately preceding the Closing Date.

5. AGREEMENTS OF THE ISSUERS AND THE GUARANTORS. Each of the Issuers

and the Guarantors, jointly and severally, hereby agrees:

(a) Certain Events. To (i) advise the Initial Purchaser

promptly after obtaining knowledge (and, if requested by the Initial

Purchaser, confirm such advice in writing) of (A) the issuance by

any state securities commission of any stop order suspending the

qualification or exemption from qualification of any of the Series A

Notes for offer or sale in any jurisdiction, or the initiation of

any proceeding for such purpose by any state securities commission

or other regulatory authority, and (B) the happening of any event

that makes any statement of a material fact made in the Offering

Circular untrue or that requires the making of any additions to or

changes in the Offering Circular in order to make the statements

therein, in the light of the circumstances under which they are

made, not misleading, (ii) use its reasonable best efforts to

prevent the issuance of any stop order or order suspending the

qualification or exemption from qualification of any of the Notes

under any state securities or Blue Sky laws, and (iii) if at any

time any state securities commission or other regulatory authority

shall issue an order suspending the qualification or exemption from

qualification of any of the Series A Notes under any such laws, use

its reasonable best efforts to obtain the withdrawal or lifting of

such order at the earliest practicable time.

(b) Offering Circular. To (i) furnish the Initial Purchaser

and those persons identified by the Initial Purchaser to the

Issuers, without charge, as many copies of the Preliminary Offering

Circular and the Offering Circular, and any amendments or

supplements thereto, as the Initial Purchaser may reasonably

request, and (ii) promptly prepare, upon the Initial Purchaser's

reasonable request, any amendment or supplement to the Offering

Circular that the Initial Purchaser, upon the advice of legal

counsel, deems may be necessary in connection with Exempt Resales

(and the Issuers and the Guarantors hereby consent to the use of the

Preliminary Offering Circular and the Offering Circular, and any

amendments and supplements thereto, by the Initial Purchaser in

connection with Exempt Resales).

Section 5(d), not to amend or supplement the Offering Circular prior

to the Closing Date, or at any time prior to the completion of the

resale by the Initial Purchaser of all of the Series A Notes, unless

the Initial Purchaser shall previously have been advised thereof and

shall not have objected thereto within two Business Days after being

furnished a copy thereof.

<PAGE>

(d) Preparation of Amendments and Supplements. At any time

prior to the completion of the resale by the Initial Purchaser of

all of the Series A Notes, (i) if any event shall occur as a result

of which, in the reasonable judgment of the Issuers or the Initial

Purchaser or their respective counsel, it becomes necessary or

advisable to amend or supplement the Offering Circular in order to

make the statements therein, in the light of the circumstances under

which they were made and when such Offering Circular is delivered to

an Eligible Purchaser, not misleading, or if it is necessary to

amend or supplement the Offering Circular to comply with Applicable

Law (as defined below), forthwith to prepare an appropriate

amendment or supplement to the Offering Circular (in form and

substance reasonably satisfactory to the Initial Purchaser) so that

as so amended or supplemented, (A) the Offering Circular will not

include an untrue statement of material fact or omit to state a

material fact necessary in order to make the statements therein, in

the light of the circumstances under which they were made and when

such Offering Circular is so delivered, not misleading, and (B) the

Offering Circular will comply with Applicable Law, and (ii) if it

becomes necessary or advisable to amend or supplement the Offering

Circular so that the Offering Circular will contain all of the

information specified in, and meet the requirements of, Rule

144A(d)(4) under the Act, forthwith to prepare an appropriate

amendment or supplement to the Offering Circular (in form and

substance satisfactory to the Initial Purchaser) so that the

Offering Circular, as so amended or supplemented, will contain the

information specified in, and meet the requirements of, such Rule.

(e) Qualification of Securities. To cooperate with the Initial

Purchaser and the Initial Purchaser's counsel in connection with the

qualification of the Notes under the securities or Blue Sky laws of

such jurisdictions as the Initial Purchaser may request and continue

such qualification in effect so long as reasonably required for

Exempt Resales, and to file such consents to service of process or

other documents as may be necessary in order to effect such

qualification; provided, that none of the Issuers or the Guarantors

shall be required in connection therewith (i) to file any general

consent to service of process or take any action that would subject

it to service of process in suits other than those arising out of

the offer and sale of the Notes in any jurisdiction in which it is

not otherwise so subject, (ii) to register or qualify as a foreign

corporation in any jurisdiction where it is not now so qualified or

(iii) to subject itself to general taxation in respect of doing

business in any jurisdiction in which it is not otherwise so

subject.

(f) Costs and Expenses. Whether or not any of the Transactions

are consummated or this Agreement is terminated, to pay (i) all

costs, expenses, fees and taxes incident to and in connection with

the performance of the obligations of the Issuers and the Guarantors

under this Agreement, including: (A) the preparation, printing and

distribution of the Preliminary Offering Circular and the Offering

Circular and all amendments and supplements thereto (including,

without limitation, financial statements and exhibits), and all

preliminary and final Blue Sky memoranda and all other agreements,

memoranda, correspondence and other documents prepared and delivered

in connection herewith (including the

<PAGE>

furnishing of copies of the foregoing to the Initial Purchaser and

such other persons as the Initial Purchaser may designate), (B) the

printing, processing and distribution (including, without

limitation, word processing and duplication costs) and delivery of

each of the Operative Documents and any other agreements or

documents in connection with the Transactions, (C) the preparation,

issuance and delivery of the Notes, including the fees and expenses

of the Trustee and the Secured Party (including fees and expenses of

their respective counsel) and the cost of their respective

personnel, and all costs and expenses related to the delivery of the

Notes to the Initial Purchaser and pursuant to Exempt Resales,

including any transfer or other taxes payable thereon, and (D) the

qualification of the Notes for offer and sale under the securities

or Blue Sky laws of the several states (including, without

limitation, filing fees and fees and disbursements of the Initial

Purchaser's counsel relating to such registration or qualification

and the preparation of memoranda related thereto); (ii) all fees and

expenses of the counsel and accountants of the Issuers and the

Guarantors and their respective direct and indirect parents and

subsidiaries; (iii) all expenses and listing fees in connection with

the application for quotation of the Series A Notes in The

PORTAL(SM) Market ("PORTAL") of the National Association of

Securities Dealers, Inc. ("NASD"); (iv) all fees and expenses

(including fees and expenses of counsel) of the Issuers in

connection with approval of the Notes by DTC for "book-entry"

transfer; (v) all fees charged by rating agencies in connection with

the rating of the Notes; (vi) the costs and charges of any transfer

agent, registrar and/or depositary (including DTC); (vii) all costs

and expenses of the Registered Exchange Offer, the Exchange Offer

Registration Statement and any Shelf Registration Statement, as set

forth in the Registration Rights Agreement; (viii) all costs and

expenses in connection with the creation and perfection of the

Security Interests (including, without limitation, filing and

recording fees, search fees, taxes and costs of title policies);

(ix) all costs and expenses of the Transactions (including, without

limitation, filing and recording fees); and (x) all fees and

expenses (including reasonable fees and expenses of counsel)

incurred by the Initial Purchaser in connection with the

preparation, negotiation and execution, as applicable, of the

Operative Documents and any other agreements or documents in

connection with the Transactions and the consummation of the

Transactions.

(g) Use of Proceeds. To use the proceeds from the sale of the

Series A Notes in the manner described in the Offering Circular

under the caption "Use of Proceeds."

(h) Waiver of Certain Laws. To the extent it may lawfully do

so, not to insist upon, plead, or in any manner whatsoever claim or

take the benefit or advantage of, any stay, extension usury or other

law, wherever enacted, now or at any time hereafter in force, that

would prohibit or forgive the payment of all or any portion of the

principal of or interest on the Notes, or that may affect the

covenants or the performance of the Indenture or any of the Security

Documents (and, to the extent it may lawfully do so, each Issuer and

each Guarantor hereby expressly waives all benefit or advantage of

any such law, and covenants that it shall not, by

<PAGE>

resort to any such law, hinder, delay or impede the execution of any

power granted to the Trustee in the Indenture or to the Secured

Party in the Security Documents but shall suffer and permit the

execution of every such power as though no such law had been

enacted).

(i) Security Interests. (A) To do and perform all things

required to be done and performed under the Security Documents prior

to, on and after the Closing Date, including, without limitation,

all things that are required to be done and performed under the

Security Documents that are necessary or reasonably advisable to

obtain on or prior to the Closing Date (i) all Permits (as defined

below), other than any gaming or racing approvals required to be

obtained by a purchaser in a foreclosure sale, necessary for the

granting, perfection and enforcement of the Security Interests and

for the foreclosure by the Secured Party thereon following an Event

of Default (as defined in the Indenture), (ii) all termination

statements, mortgage releases and other documents necessary to

terminate any Liens (as defined in the Indenture) on the Collateral

(other than Liens created by the Indenture, Liens created by the

Security Documents and Permitted Liens (as defined in the

Indenture)), and (iii) subject to the terms of the Intercreditor

Agreement and any Permitted Liens, a valid and perfected, first

priority Security Interest with respect to each of the assets,

shares of capital stock and membership interests which are to

constitute, as of the Closing Date, the Collateral.

(B) To provide an updated A.L.T.A. survey, certified to all parties

designated by the Initial Purchaser in a manner satisfactory to the

Initial Purchaser, by a land surveyor duly registered and licensed

in the State in which the property described in such survey is

located and reasonably acceptable to the Initial Purchaser, within

thirty (30) days of Closing with respect to (i) the property located

in St. Landry Parish, Louisiana, and (ii) if Issuer fails to satisfy

the condition to Closing set forth in Section 9(a)(xv)(I), the

property located in Dubuque, Iowa. Additional title insurance shall

be provided or additional action shall be taken within thirty (30)

days of Closing to cure defects as may be disclosed on any such

survey as reasonably required by the Initial Purchaser or the

Trustee, provided that such defect be susceptible to cure, and

further provided that failure to so cure or insure over, whether the

defect be susceptible to cure or not, shall constitute an Event of

Default.

(j) Integration. Not to, and to ensure that no affiliate (as

defined in Rule 501(b) under the Act) of any of the Issuers or the

Guarantors will, sell, offer for sale or solicit offers to buy or

otherwise negotiate in respect of any "security" (as defined in the

Act) that would be integrated with the sale of the Series A Notes in

a manner that would require the registration under the Act of the

sale to the Initial Purchaser or of the offers or sales of Series A

Notes pursuant to Exempt Resales.

(k) Rule 144A Information. For so long as any of the Series A

Notes remain outstanding, during any period in which either of the

Issuers is not subject to Section 13 or 15(d) of the Securities

Exchange Act of 1934, as amended

<PAGE>

(the "EXCHANGE ACT"), to make available, upon request, to any holder

of the Notes in connection with any sale thereof and any prospective

Eligible Purchaser of such Notes from such holder, the information

required by Rule 144A(d)(4) under the Act.

(l) DTC. To comply with the representation letter of the

Issuers and the Guarantors to DTC relating to the approval of the

Notes by DTC for "book entry" transfer.

(m) PORTAL. To use its reasonable best efforts to effect the

inclusion of the Series A Notes in PORTAL and to use its reasonable

best efforts to maintain the listing of the Series A Notes on PORTAL

for so long as the Series A Notes are outstanding.

(n) Reporting Requirements. For so long as any of the Notes

remain outstanding, to furnish to the Initial Purchaser copies of

all reports and other communications (financial or otherwise)

furnished to the Trustee or to the holders of the Notes and, as soon

as available, copies of any reports or financial statements

furnished to or filed by the Issuers with the Commission or any

national securities exchange on which any class of securities of the

Issuers may be listed.

(o) No Selling Efforts or General Solicitation. Except in

connection with the Registered Exchange Offer or the filing of the

Shelf Registration Statement, not to, and not to authorize or permit

any person acting on its behalf to, (i) distribute any offering

material in connection with the offer and sale of the Series A Notes

other than the Preliminary Offering Circular and the Offering

Circular and any amendments and supplements to the Offering Circular

prepared in compliance with Section 5(d), or (ii) solicit any offer

to buy or offer to sell the Series A Notes by means of any form of

general solicitation or general advertising (including, without

limitation, as such terms are used in Regulation D under the Act) or

in any manner involving a public offering within the meaning of

Section 4(2) of the Act.

(p) No Similar Offerings. Not to, directly or indirectly,

without the prior consent of the Initial Purchaser, offer, sell,

contract to sell, grant any option to purchase or otherwise dispose

of (or announce any offer or sale of, contract to sell, grant of any

option to purchase or other disposition of) any securities of any of

the Issuers or the Guarantors substantially similar to the Notes or

the Guarantees for a period of six months after the date of the

Offering Circular, except as contemplated by the Registration Rights

Agreement; provided, that the foregoing will not apply to (i) the

Notes or the Guarantees or (ii) borrowings (not constituting the

issuance of securities) from financial institutions to the extent

not prohibited by the Indenture.

(q) ERISA. At any time prior to the completion of the resale

by the Initial Purchaser of the Series A Notes, to notify the

Initial Purchaser promptly in writing if any of the Issuers or the

Guarantors or any of their Affiliates becomes a party in interest or

a disqualified person with respect to any employee benefit plan,

<PAGE>

and to identify such plans. The terms "ERISA," "Affiliates," "party

in interest," "disqualified person" and "employee benefit plan"

shall have the meanings as set forth in Section 6(ll).

(r) Performance of this Agreement. To do and perform in all

material respects all things required or necessary to be done and

performed on its part under this Agreement on or prior to the

Closing Date and to satisfy in all material respects all conditions

precedent to the delivery of the Series A Notes and the granting,

perfection and enforcement of the Security Interests in the

Collateral as of the Closing Date.

(s) Performance of Other Transactions. To do and perform in

all material respects all things required or necessary to be done

and performed on its part (i) to consummate the OED Note Repurchase

Transactions, the Company Note Repurchase Transactions (other than

the consummation of the Company Note Redemption) and the Credit

Facility Transactions, in each case, in all material respects, on or

prior to the Closing Date, and (ii) to permit the Company Note

Redemption to be consummated on the Redemption Date.

6. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS AND THE GUARANTORS.

Each of the Issuers and the Guarantors, jointly and severally, represents and

warrants to the Initial Purchaser that:

(a) Offering Circular. The Preliminary Offering Circular as of

its date did not, and the Offering Circular, as of its date does not

and as of the Closing Date will not, and each supplement or

amendment thereto (if any) as of its date will not, contain any

untrue statement of a material fact or omit to state any material

fact (except with respect to offers and sales of Series A Notes by

the Initial Purchaser to Accredited Investors, as to which the

Issuers and the Guarantors make no representation, and except, in

the case of the Preliminary Offering Circular, for pricing terms and

other financial or similar terms intentionally left blank) necessary

in order to make the statements therein, in the light of the

circumstances under which they were made, not misleading. The

foregoing representation and warranty made in this Section 6(a)

shall not apply to any statements or omissions made in reliance on

and in conformity with information relating to the Initial Purchaser

furnished to the Issuers by the Initial Purchaser specifically for

inclusion in the Preliminary Offering Circular or the Offering

Circular. The parties hereto acknowledge that for purposes of this

Agreement (including this Section 6(a) and Section 8) the only

information furnished to the Issuers by the Initial Purchaser

specifically for inclusion in Preliminary Offering Circular or the

Offering Circular is the information set forth (i) on the cover page

of the Offering Circular with respect to the price of the Notes,

(ii) in the third paragraph on page 133 of the Offering Circular

concerning the offering the Notes for resale by the Initial

Purchaser, (iii) in the fourth paragraph on page 133 of the Offering

Circular concerning market-making by the Initial Purchaser, (iv) in

the sixth paragraph on page 133 of the Offering Circular concerning

settlement of the Notes on the sixteenth business day

<PAGE>

following pricing, (v) in the first full paragraph on page 134 of

the Offering Circular concerning stabilization by the Initial

Purchaser and (vi) in the second full paragraph on page 134 of the

Offering Circular concerning the affiliation of the Initial

Purchaser and its affiliates with the Issuers and their affiliates

(such information described in the immediately preceding clauses (i)

through (vi) of this Section 6(a), the "FURNISHED INFORMATION").

Each of the Preliminary Offering Circular and the Offering Circular,

as of their respective dates contained, and the Offering Circular,

as of the Closing Date and as amended or supplemented, will contain,

all of the information specified in, and meet the requirements of,

Rule 144A(d)(4) under the Act. The Offer to Purchase, as of its date

does not and as of the Closing Date will not, and each supplement or

amendment thereto (if any) as of its date will not, contain any

untrue statement of a material fact or omit to state any material

fact necessary in order to make the statements therein, in the light

of the circumstances under which they were made, not misleading.

(b) 144A Eligibility. Other than the OED Notes and the Company

Notes, there are no securities of the same class (within the meaning

of Rule 144A) as the Notes of either of the Issuers or any of the

Guarantors registered under the Exchange Act or listed on a national

securities exchange registered under Section 6 of the Exchange Act

or quoted in a United States automated inter-dealer quotation

system. The Series A Notes are eligible for resale pursuant to Rule

144A under the Act.

the Guarantors (i) has been duly organized, is validly existing and

is in good standing under the laws of its jurisdiction of

organization, (ii) has all requisite power and authority to conduct

and carry on its business and to own, lease, use and operate its

properties and assets as described in the Offering Circular, and

(iii) is duly qualified or licensed to do business and is in good

standing as a foreign limited liability company or corporation, as

the case may be, authorized to do business in each jurisdiction in

which the nature of its business or the ownership, leasing, use or

operation of its properties and assets requires such qualification

or licensing, except where the failure to be so qualified or

licensed would not, singly or in the aggregate, have a material

adverse effect on (A) the properties, business, prospects,

operations, earnings, assets, liabilities or condition (financial or

otherwise) of the Issuers and the Guarantors, taken as a whole, (B)

the ability of any of the Issuers or the Guarantors to perform its

obligations in all material respects under any of the Operative

Documents or to consummate in all material respects the

Transactions, (C) the enforceability of any of the Security

Documents or the attachment, perfection or priority of any of the

Security Interests intended to be created thereby in any portion of

the Collateral or (D) the validity of any of the Operative Documents

or the consummation of any of the Transactions (each, a "MATERIAL

ADVERSE EFFECT").

(d) Subsidiaries. Immediately following the Closing, (i) the

corporate structure of the Issuers and the Guarantors shall be as

set forth on Schedule 6(d) hereto, (ii) Capital will have no

subsidiaries, (iii) the only direct or

<PAGE>

indirect subsidiaries of the Company (other than Capital) will be

the Guarantors, (iv) the Company will directly own 100% of the

outstanding shares of capital stock or membership interests of

Capital and of each Guarantor, free and clear of all Liens, except

for Liens created by the Indenture, Liens created by the Security

Documents and Permitted Liens, and (v) Peninsula Gaming Partners,

LLP, a Delaware limited liability partnership, will directly own

100% of the outstanding membership interests in the Company (except

for the Seller Preferred (as defined in the Indenture)), free and

clear of all Liens, except for Liens created by the Indenture and

the Security Documents. Except as disclosed in the Offering

Circular, there are no outstanding (i) securities convertible into

or exchangeable for any capital stock of or any membership interests

in, as the case may be, any of the Issuers or the Guarantors, (ii)

options, warrants or other rights to purchase or subscribe for any

capital stock of or any membership interests in, or any securities

convertible into or exchangeable for any capital stock of or any

membership interests in, as the case may be, any of the Issuers or

the Guarantors or (iii) contracts, commitments, agreements,

understandings, arrangements, undertakings, rights, calls or claims

of any kind relating to the issuance of any capital stock of or any

membership interests in, as the case may be, any of the Issuers or

the Guarantors, any such convertible or exchangeable securities or

any such options, warrants or rights. Except as set forth above,

immediately following the Closing, none of the Issuers or the

Guarantors will directly or indirectly own any capital stock of or

other equity interest in any person.

(e) Capitalization. All of the outstanding shares of capital

stock of or membership interests in, as the case may be, each of the

Issuers and the Guarantors have been duly authorized, are validly

issued, fully paid and nonassessable, and were not issued in

violation of, and are not subject to, any preemptive or similar

rights. The table under the caption "Capitalization" in the Offering

Circular (including the footnotes thereto) sets forth, as of

December 31, 2003, (i) the actual capitalization of the Company and

its subsidiaries, on a consolidated basis, and (ii) the as adjusted

capitalization of the Company and its subsidiaries, on a

consolidated basis, after giving effect to the Offering and the

application of the net proceeds therefrom and the consummation of

the other Transactions (as such term is defined in the Offering

Circular). Immediately following the Closing, except as set forth in

such table or as described in the footnotes thereto, none of the

Issuers or the Guarantors will have any liabilities, absolute,

accrued, contingent or otherwise other than: (i) liabilities that

are reflected in the Company Financial Statements (as defined below)

or (ii) liabilities incurred subsequent to December 31, 2003, in the

ordinary course of business, that would not, singly or in the

aggregate, have a Material Adverse Effect.

(f) No Other Registration Rights. Except for this Agreement

and the Registration Rights Agreement, there are no contracts,

commitments, agreements, arrangements, understandings or

undertakings of any kind to which any of the Issuers or Guarantors

is a party, or by which either of them is bound, granting to any

person the right (i) to require any of the Issuers or the Guarantors

to file a registration statement under the Act with respect to any

securities of any of the

<PAGE>

Issuers or the Guarantors or requiring any of the Issuers or the

Guarantors to include such securities with the Notes registered

pursuant to any registration statement, or (ii) to purchase or offer

to purchase any securities of any of the Issuers or the Guarantors

or any of their respective affiliates.

(g) Power and Authority. Each of the Issuers and the

Guarantors has all requisite power and authority to execute and

deliver, and to perform its obligations under, the Operative

Documents to which it is a party and to consummate the Transactions

to which it is a party.

(h) Authorization of this Agreement. This Agreement and the

Transactions contemplated hereby (including, without limitation, the

Offering and the issuance and sale of the Notes in accordance with

this Agreement) have been duly authorized by each of the Issuers and

the Guarantors, and this Agreement has been validly executed and

delivered by, and is the legal, valid and binding obligation of,

each of the Issuers and the Guarantors, enforceable against each of

the Issuers and the Guarantors in accordance with its terms, except

that such enforceability may be limited by (i) applicable

bankruptcy, insolvency or similar laws affecting creditors' rights

generally, (ii) any rights of acceleration and the availability of

equitable remedies and general principles of equity (whether

considered in a proceeding in equity or at law) and (iii) with

respect to rights to indemnity or contribution thereunder, by

Federal and state securities laws and public policy considerations.

(i) Authorization of Indenture. The Indenture and the

Transactions contemplated thereby have been duly authorized by each

of the Issuers and the Guarantors and, on the Closing Date, the

Indenture will have been validly executed and delivered by, and will

be the legal, valid and binding obligation of, each of the Issuers

and the Guarantors, enforceable against each of the Issuers and the

Guarantors in accordance with its terms, except that (i) such

enforceability may be limited by applicable bankruptcy, insolvency

or similar laws affecting creditors' rights generally and (ii) any

rights of acceleration and the availability of equitable remedies

may be subject to general principles of equity (whether considered

in a proceeding in equity or at law). On the Closing Date, the

Indenture will conform to the requirements of the Trust Indenture

Act of 1939, as amended (the "TIA"), applicable to an indenture that

is required to be qualified under the TIA.

(j) Authorization of Registration Rights Agreement. The

Registration Rights Agreement and the Transactions contemplated

thereby have been duly authorized by each of the Issuers and the

Guarantors and, on the Closing Date, the Registration Rights

Agreement will have been validly executed and delivered by, and will

be the legal, valid and binding obligation of, each of the Issuers

and the Guarantors, enforceable against each of the Issuers and the

Guarantors in accordance with its terms, except that such

enforceability may be limited by (i) applicable bankruptcy,

insolvency or similar laws, (ii) any rights of acceleration and the

availability of equitable remedies and general principles of

<PAGE>

equity (whether considered in a proceeding in equity or at law) and

(iii) with respect to rights to indemnity or contribution

thereunder, by Federal and state securities laws and public policy

considerations.

(k) Authorization of Series A Notes. The Series A Notes have

been duly authorized by each of the Issuers for issuance and sale to

the Initial Purchaser pursuant to this Agreement and, on the Closing

Date, will have been validly executed, authenticated, issued and

delivered by the Issuers in accordance with the terms of this

Agreement and the Indenture. When the Series A Notes have been

issued and executed by the Issuers and authenticated by the Trustee

in accordance with the terms of the Indenture and delivered to and

paid for by the Initial Purchaser in accordance with the terms of

this Agreement, the Series A Notes will be legal, valid and binding

obligations of each of the Issuers, entitled to the benefits of the

Indenture and enforceable against each of the Issuers in accordance

with their terms, except to the extent that (i) such enforceability

may be limited by applicable bankruptcy, insolvency or similar laws

affecting creditors' rights generally and (ii) any rights of

acceleration and the availability of equitable remedies may be

subject to general principles of equity (whether considered in a

proceeding in equity or at law). Upon and following delivery to the

Initial Purchaser, the Notes will rank on a parity with all senior

Indebtedness (as defined in the Indenture) of each of the Issuers

that is outstanding on the date hereof or that may be incurred

hereafter and senior to all other Indebtedness of each of the

Issuers that is outstanding on the date hereof or that may be

incurred hereafter; provided, that pursuant to the Intercreditor

Agreement, the Lien on the Collateral securing the Existing Credit

Facilities will be senior to the Lien on the Collateral securing the

Notes and the Guarantees.

(l) Authorization of Series B Notes. The Series B Notes have

been duly authorized by each of the Issuers and, when issued in the

Registered Exchange Offer, (A) will have been validly executed,

authenticated, issued and delivered in accordance with the terms of

the Indenture, the Registration Rights Agreement and the Registered

Exchange Offer and (B) will be legal, valid and binding obligations

of each of the Issuers, entitled to the benefits of the Indenture

and enforceable against each of the Issuers in accordance with their

terms, except to the extent that (i) such enforceability may be

limited by applicable bankruptcy, insolvency or similar laws

affecting creditors' rights generally and (ii) any rights of

acceleration and the availability of equitable remedies may be

subject to general principles of equity (whether considered in a

proceeding in equity or at law).

(m) Authorization of Guarantees of Series A Notes and Series B

Notes. The Guarantee to be endorsed on the Series A Notes by each

Guarantor has been duly authorized by each such Guarantor and, on

the Closing Date, will have been validly executed and delivered by

each such Guarantor in accordance with the terms of the Indenture.

When the Series A Notes have been issued, executed and authenticated

in accordance with the terms of the Indenture and delivered to and

paid for by the Initial Purchaser in accordance with the terms of

this Agreement, the

<PAGE>

Guarantee of each Guarantor endorsed on the Series A Notes will be

the legal, valid and binding obligation of each such Guarantor,

enforceable against each such Guarantor in accordance with its

terms, except to the extent that (i) such enforceability may be

limited by applicable bankruptcy, insolvency or similar laws

affecting creditors' rights generally and (ii) any rights of

acceleration and the availability of equitable remedies may be

subject to general principles of equity (whether considered in a

proceeding in equity or at law). The Guarantee to be endorsed on the

Series B Notes by each Guarantor has been duly authorized by each

such Guarantor and, when the Series B Notes are issued, will have

been validly executed and delivered by each such Guarantor in

accordance with the terms of the Indenture, the Registration Rights

Agreement and the Registered Exchange Offer. When the Series B Notes

have been issued, executed and authenticated in accordance with the

terms of the Registered Exchange Offer and the Indenture, the

Guarantee of each Guarantor endorsed on the Series B Notes will be

the legal, valid and binding obligation of each such Guarantor,

enforceable against each such Guarantor in accordance with its

terms, except to the extent that (i) such enforceability may be

limited by applicable bankruptcy, insolvency or similar laws

affecting creditors' rights generally and (ii) any rights of

acceleration and the availability of equitable remedies may be

subject to general principles of equity (whether considered in a

proceeding in equity or at law). The Guarantees to be endorsed on

the Notes rank and will rank on a parity with all senior

Indebtedness of the Guarantors that is outstanding on the date

hereof or that may be incurred hereafter and senior to all

subordinated Indebtedness of the Guarantors that is outstanding on

the date hereof or that may be incurred hereafter; provided, that

pursuant to the Intercreditor Agreement, the Lien on the Collateral

securing the Existing Credit Facilities will be senior to the Lien

on the Collateral securing the Notes and the Guarantees.

(n) Authorization of Security Documents. Each of the Security

Documents and the Transactions contemplated thereby (including,

without limitation, the creation, grant, recording and perfection of

the Security Interests, the execution and filing of financing

statements and the payment of any fees and taxes in connection

therewith) have been duly authorized by each of the Issuers and each

of the Guarantors which is a party thereto and, on the Closing Date,

each of the Security Documents will have been validly executed and

delivered by, and will be the legal, valid and binding obligation

of, each of the Issuers and each of the Guarantors which is a party

thereto, enforceable against each of the Issuers and each of the

Guarantors which is a party thereto in accordance with its terms,

except that (i) such enforceability may be limited by applicable

bankruptcy, insolvency or similar laws affecting creditors' rights

generally and (ii) any rights of acceleration and the availability

of equitable remedies may be subject to general principles of equity

(whether considered in a proceeding in equity or at law).

(o) Authorization of Other Operative Documents and Other

Transactions.

<PAGE>

(i) OED Note Repurchase Transactions. The Supplemental

Indenture has been duly authorized, and as of the second

Business Day after the date hereof, executed and delivered by

the OED Note Issuers, each of the Collateral Release

Agreements has been duly authorized, and as of Closing,

executed and delivered by the OED Note Issuers, and the

Proposals and the other OED Note Repurchase Transactions

(including the use of net proceeds from the Offering in

connection therewith) have been duly authorized by the Issuers

and the Guarantors, as applicable, and assuming the due

authorization, execution and delivery of the Supplemental

Indenture and each of the Collateral Release Agreements by

parties thereto other than the OED Note Issuers, the

Supplemental Indenture and each of the Collateral Release

Agreements constitutes the legal, valid and binding obligation

of, the OED Note Issuers, enforceable against the OED Note

Issuers in accordance with its terms, except that (i) such

enforceability may be limited by applicable bankruptcy,

insolvency or similar laws affecting creditors' rights

generally and (ii) any rights of acceleration and the

availability of equitable remedies may be subject to general

principles of equity (whether considered in a proceeding in

equity or at law).

(ii) Company Note Repurchase Transactions. Each of the

Company Note Repurchase Transactions (including the use of net

proceeds from the Offering in connection therewith) has been

duly authorized by the Issuers and the Guarantors, as

applicable.

(iii) Credit Facility Documents. Each of the

Intercreditor Agreement and the transactions contemplated by

the Intercreditor Agreement and the Credit Facility Waivers

have been duly authorized by the Issuers and each Guarantor

which is a party thereto, and, on the Closing Date, each of

the Intercreditor Agreement will have been validly executed

and delivered by the Issuers and each Guarantor which is a

party thereto, and assuming the due authorization, execution

and delivery of the Intercreditor Agreement by parties thereto

other than the Issuers and each of the Guarantors which is a

party thereto, the Intercreditor Agreement will be the legal,

valid and binding obligation of, the Issuers and each

Guarantor which is a party thereto, enforceable against the

Issuers and each Guarantor which is a party thereto in

accordance with its terms, except that (i) such enforceability

may be limited by applicable bankruptcy, insolvency or similar

laws affecting creditors' rights generally and (ii) any rights

of acceleration and the availability of equitable remedies may

be subject to general principles of equity (whether considered

in a proceeding in equity or at law).

(p) Actions in Connection with the Transactions. Each of the Note

Documents, as executed and delivered, and each of the Transactions

described in the Offering Circular, conforms in all material respects to

the description thereof in the Offering Circular. The Supplemental

Indenture and each of the Collateral

<PAGE>

Release Agreements, as executed and delivered, and each of the OED Note

Repurchase Transactions, conforms in all material respects to the

description thereof in the Offer to Purchase.

(q) No Violation. The Company is not in violation of its certificate

of formation or operating agreement (the "COMPANY CHARTER DOCUMENTS"),

Capital is not in violation of its charter or bylaws (the "CAPITAL CHARTER

DOCUMENTS"), and none of the Guarantors is in violation of its certificate

of formation, operating agreement, charter or bylaws, as applicable (the

"GUARANTOR CHARTER DOCUMENTS" and, collectively with the Company Charter

Documents and the Capital Charter Documents, the "CHARTER DOCUMENTS").

None of the Issuers or the Guarantors is (i) in violation of any Federal,

state, municipal, county, parish, local or foreign statute, law, ordinance

or standard applicable to it, or any judgment, decree, rule, regulation or

order applicable to it (including, without limitation, common law and

Chapter 99F of the Code of Iowa (1999), the Iowa Racing and Gaming

Commission, the Louisiana Pari-Mutuel Live Racing Facility Economic

Redevelopment and Gaming Control Act, the Louisiana Gaming Control Law and

the Video Draw Poker Device Control Law) in each case including the rules

and regulations promulgated thereunder (collectively, "APPLICABLE LAW"),

of any government, governmental or regulatory agency or body (including,

without limitation, the Iowa Racing and Gaming Commission, the Louisiana

Gaming Control Board, the Louisiana State Racing Commission or other

applicable gaming or racing authority) (each, a "GAMING AUTHORITY"),

court, arbitrator or self-regulatory organization, domestic or foreign

(each, a "GOVERNMENTAL AUTHORITY") or (ii) in breach of or default under

any bond, debenture, note or other evidence of indebtedness, indenture,

mortgage, deed of trust, lease or any other agreement or instrument to

which any such person is a party or by which any of them or any of their

respective property is bound (collectively, "APPLICABLE AGREEMENTS"),

other than, in the case of each of the immediately preceding clauses (i)

and (ii), violations, breaches or defaults that would not, singly or in

the aggregate, have a Material Adverse Effect. There exists no condition

that, with the passage of time or otherwise, would reasonably be expected

to (x) constitute a violation of (A) the Charter Documents or (B)

Applicable Laws or (y) constitute a breach of or default under any

Applicable Agreement or (z) result in the imposition of any penalty or the

acceleration of any indebtedness, other than, in the case of the

immediately preceding clauses (x)(B),(y) and (z), such violations,

breaches, penalties or defaults that would not, singly or in the

aggregate, have a Material Adverse Effect. All Applicable Agreements are

in full force and effect with respect to the Issuers and the Guarantors,

and are legal, valid and binding obligations of the Issuers and the

Guarantors.

(r) No Conflict. None of the execution, delivery or performance of

any of the Operative Documents, nor the compliance with the terms and

provisions thereof, nor the consummation of any of the Transactions, shall

conflict with, violate, constitute a breach of or a default (with the

passage of time or otherwise) under, result in the imposition of a Lien on

any assets of or any capital

<PAGE>

stock of or membership interests in any of the Issuers or the Guarantors

(except for Liens created by the Indenture, Liens created by the Security

Documents and Permitted Liens), or result in an acceleration of

indebtedness under or pursuant to, (i) the Charter Documents, (ii) any

Applicable Agreement, or (iii) (assuming the accuracy of the

representations and warranties of the Initial Purchaser in Section 7 of

this Agreement and, if any Exempt Resales are made to Accredited

Investors, the accuracy of the representations and warranties of such

Accredited Investors contained in the Accredited Investor Letters executed

by such Accredited Investors) any Applicable Law, other than, in the case

of the immediately preceding clauses (ii) and (iii), such violations,

breaches or defaults that would not, singly or in the aggregate, have a

Material Adverse Effect. After giving effect to the Transactions, no

Default or Event of Default (each, as defined in the Indenture) will

exist.

(s) Permits. Except as disclosed in the Offering Circular and

assuming the accuracy of the representations and warranties of the Initial

Purchaser in Section 7 of this Agreement and, if any Exempt Resales are

made to Accredited Investors, the accuracy of the representations and

warranties of such Accredited Investors contained in the Accredited

Investor Letters executed by such Accredited Investors, no permit,

certificate, authorization, approval, consent, license or order of, or

filing, registration, declaration or qualification with, any Governmental

Authority or any other person (collectively, "PERMITS") is required to

own, lease, use and operate the properties and assets and to conduct and

carry on the businesses described in the Offering Circular, or in

connection with, or as a condition to, the execution, delivery or

performance of any of the Operative Documents, the compliance with the

terms and provisions thereof or the consummation of any of the

Transactions, other than (i) such Permits as have been made or obtained on

or prior to the Closing Date, which Permits are in full force and effect

on the Closing Date, (ii) as may be required for Exempt Resales under the

securities or blue sky laws of the various jurisdictions in which the

Notes are being offered by the Initial Purchaser, (iii) an order declaring

effective a registration statement filed by the Issuers with the

Commission pursuant to the Act pursuant to the Registration Rights

Agreement, and (iv) such Permits, the failure of which to make or obtain

would not, singly or in the aggregate, have a Material Adverse Effect.

(t) No Proceedings. Except as disclosed in the Offering Circular and

other than ongoing general licensing investigations conducted in the

ordinary course of business, there is no action, claim, suit, demand,

hearing, notice of violation or deficiency, or proceeding (including,

without limitation, any investigation or partial proceeding, such as a

deposition), domestic or foreign (collectively, "PROCEEDINGS"), pending

or, to the knowledge of the Issuers and the Guarantors, threatened, either

(i) in connection with, or that seeks to restrain, enjoin or prevent the

consummation of, or that otherwise objects to, any of the Operative

Documents or any of the Transactions, or (ii) that could, singly or in the

aggregate, have a Material Adverse Effect. None of the Issuers or the

Guarantors is subject to any judgment, order, decree, rule or regulation

of any Governmental Authority that could, singly or in the aggregate, have

a Material Adverse Effect. No injunction or

<PAGE>

order has been issued and no Proceeding is pending or, to the knowledge of

the Issuers and the Guarantors, threatened that (i) asserts that the

offer, sale and delivery of the Series A Notes to the Initial Purchaser

pursuant to this Agreement or the initial resale of the Series A Notes by

the Initial Purchaser in the manner contemplated by this Agreement is

subject to the registration requirements of the Act, or (ii) would prevent

or suspend the issuance or sale of the Notes, including the Exempt

Resales, or the use of the Preliminary Offering Circular, the Offering

Circular, or any amendment or supplement thereto, in any jurisdiction.

(u) Regulated Persons. Except as set froth on Schedule 6(u) hereto,

each of the Issuers' and the Guarantors', respective directors, officers,

key personnel, partners, members and persons holding a five percent or

greater equity or economic interest in the Issuers (each of such persons,

a "REGULATED PERSON" and, collectively, the "REGULATED PERSONS") has all

Permits (including, without limitation, Permits with respect to engaging

in gaming or racing operations) necessary or advisable to own, lease, use

and operate the properties and assets and to conduct and carry on the

businesses described in the Offering Circular, other than such Permits the

failure of which to have would not, singly or in the aggregate, have a

Material Adverse Effect (a "MATERIAL PERMIT"). All Material Permits are

valid and in full force and effect. Each of the Regulated Persons is in

compliance with the terms and conditions of all Permits (including,

without limitation, Permits with respect to engaging in gaming or racing

operations) necessary or advisable to own, lease, use and operate the

properties and assets and to conduct and carry on the businesses described

in the Offering Circular, other than where such failure to be in

compliance would not, singly or in the aggregate, have a Material Adverse

Effect. None of the execution, delivery or performance of any of the

Operative Documents, nor the compliance with the terms and provisions

thereof, nor the consummation of any of the Transactions, will allow or

result in, and no event has occurred which allows or results in, or after

notice or lapse of time would allow or result in, the imposition of any

material penalty under, or the revocation or termination of, any Material

Permit or any material impairment of the rights of the holder of any

Material Permit. None of the Issuers or the Guarantors has received any

notice from any issuer, and the Issuers and the Guarantors have no actual

knowledge, that any issuer is considering limiting, conditioning,

suspending, modifying, revoking or not renewing any Material Permit.

(v) No Investigations of Regulated Persons. To the knowledge of the

Issuers and the Guarantors, except as disclosed in the Offering Circular,

no Gaming Authority is investigating any Regulated Person, other than

ongoing general licensing investigations conducted in the ordinary course

of business.

(w) Title to Assets. Immediately following the Closing, each of the

Issuers and the Guarantors (i) will have good and marketable title, free

and clear of all Liens (other than Liens created by the Indenture, Liens

created by the Security Documents and Permitted Liens), to all property

and assets described in the Offering Circular as being or to be owned by

it and (ii) will hold a valid leasehold interest

<PAGE>

with respect to each such lease and will remain in possession of the real

property leased pursuant to those leases until the date the lease expires

in accordance with its terms. Capital has no assets, other than assets

received in payment for its capital stock.

(x) Sufficiency and Condition of Assets. The assets of each of the

Issuers and the Guarantors include all of the assets and properties

necessary or required in, or otherwise material to, the conduct of the

businesses of each of them as currently conducted and as proposed to be

conducted (as described in the Offering Circular), and such assets are in

working condition, except where the failure of such assets to be in

working condition would not, singly or in the aggregate, have a Material

Adverse Effect. Without limiting the foregoing, each of the properties of

the Issuers and the Guarantors (including, without limitation, all

buildings, structures, improvements and fixtures located thereon,

thereunder, thereover or therein, and all appurtenances thereto and other

aspects thereof) is otherwise suitable, sufficient, adequate and

appropriate in all respects (including physical, structural, operational,

legal, practical and otherwise) for its current and proposed use,

operation and occupancy, except, in each such case, for such failures to

meet such standards as would not, singly or in the aggregate, have a

Material Adverse Effect.

(y) Insurance. Each of the Issuers and the Guarantors maintains

reasonably adequate insurance covering its properties, operations,

personnel and businesses against losses and risks in accordance with

customary industry practice. All such insurance is outstanding and duly in

force.

(z) Real Property. No condemnation, eminent domain, or similar

proceeding exists, is pending or, to the knowledge of the Issuers and the

Guarantors, is threatened, with respect to or that could affect any real

properties owned by any of the Issuers or the Guarantors, except for such

proceedings as would not, singly or in the aggregate, have a Material

Adverse Effect. No real property owned by any of the Issuers or the

Guarantors is subject to any sales contract, option, right of first

refusal or similar agreement or arrangement with any third party. There is

no real property currently under contract or subject to an option in favor

of any of the Issuers or the Guarantors, except for real property which

the failure of the Issuers or the Guarantors to acquire, would not, singly

or in the aggregate, have a Material Adverse Effect.

(aa) Related Party Transactions. Except as disclosed in the Offering

Circular, there are no related party transactions that would be required

to be disclosed in the Offering Circular if the Offering Circular were a

prospectus included in a registration statement on Form S-1 filed under

the Act.

(bb) Security Interests. Upon execution and delivery of the Security

Documents and the issuance of the Notes, the Security Documents will

create, in favor of the Secured Party for the benefit of the holders of

the Notes, a

<PAGE>

legal, valid and enforceable security interest in (subject to Permitted

Liens) all of the right, title and interest of the Issuers and the

Guarantors in the Collateral covered by the Security Documents and the

proceeds thereof. Upon: (i) the filing or recording of applicable Security

Documents or appropriate Uniform Commercial Code financing statements with

the appropriate filing, records, registry, and/or other public office

(with respect to filings to be made in the U.S. Patent and Trademark

Office, within three (3) months of the date of the applicable Security

Document, and with respect to filings in the U.S. Copyright Office within

one (1) month of the date of the applicable Security Document), together

with the payment of the requisite filing or recordation fees related

thereto, (ii) in the case of each Securities Account and the Investment

Related Property therein (as each such term is defined in the Security

Agreement) with respect to which a control agreement, in the form of

Exhibit B to the Security Agreement, has been executed and delivered, and

(iii) in the case of each Deposit Account (as defined in the Security

Agreement) and the cash and other funds on deposit therein with respect to

which a control agreement, in the form of Exhibit C to the Security

Agreement, has been executed and delivered, the Security Interests will

constitute first priority security interests in (subject to Permitted

Liens), such Collateral (other than insurance policies). As of the Closing

Date, the Collateral will be subject to no Liens other than Permitted

Liens.

(cc) Taxes. All material tax returns required to be filed by any of

the Issuers or the Guarantors in any jurisdiction (including foreign

jurisdictions) have been filed and, when filed, all such returns were

accurate in all material respects, and all taxes, assessments, fees and

other charges (including, without limitation, withholding taxes, penalties

and interest) due or claimed to be due from any of the Issuers or the

Guarantors have been paid, other than those being contested in good faith

by appropriate proceedings, or those that are currently payable without

penalty or interest and, in each case, for which an adequate reserve or

accrual has been established on the books and records of the Issuers or

the Guarantors, as applicable, in accordance with generally accepted

accounting principles of the United States, consistently applied ("GAAP").

There are no actual or proposed additional tax assessments for any tax

period against any of the Issuers or the Guarantors that would, singly or

in the aggregate, reasonably be expected to have a Material Adverse

Effect. The charges, accruals and reserves on the books and records of the

Issuers or the Guarantors, as applicable, in respect of any tax liability

for any tax periods not finally determined are adequate to meet any

assessments of tax or re-assessments of additional tax for any such

period.

(dd) Intellectual Property. The Issuers and the Guarantors own,

possess or are licensed under, and have the right to use, all trademarks,

service marks, trade names and other intellectual property (collectively,

"INTELLECTUAL PROPERTY") currently used in and material to the conduct of

their business, free and clear of all Liens, other than Permitted Liens.

To the knowledge of the Issuers and the Guarantors, no claims have been

asserted by any person challenging the use of any such Intellectual

Property by any of the Issuers and there is no valid basis for

<PAGE>

any such claim, and the use of such Intellectual Property by the Issuers

or the Guarantors will not infringe on the Intellectual Property rights of

any other person.

(ee) Accounting Controls. Each of the Issuers and the Guarantors

maintains a system of internal accounting controls sufficient to provide

reasonable assurance that (i) material transactions are executed in

accordance with management's general or specific authorization, (ii)

material transactions are recorded as necessary to permit preparation of

financial statements in conformity with GAAP, and to maintain asset

accountability, (iii) access to assets is permitted only in accordance

with management's general or specific authorization, and (iv) the recorded

accountability for assets is compared with the existing assets at

reasonable intervals and appropriate action is taken with respect to any

material differences.

(ff) Financial Statements. The audited historical consolidated

financial statements and related notes of Company and its subsidiaries

contained in the Offering Circular (the "COMPANY FINANCIAL STATEMENTS")

present fairly the consolidated financial position, results of operations

and cash flows of Company and its subsidiaries as of the respective dates

and for the respective periods to which they apply, and have been prepared

in accordance with GAAP consistently applied throughout the periods

involved and the requirements of Regulation S-X that would be applicable

if the Offering Circular were a prospectus included in a registration

statement on Form S-1 filed under the Act (the "S-X REQUIREMENTS"). The

selected historical consolidated financial data included in the Offering

Circular for Company and its subsidiaries has been prepared on a basis

consistent with that of the Company Financial Statements and present

fairly the consolidated financial position and results of operations of

Company and its subsidiaries, as of the respective dates and for the

respective periods indicated. Deloitte & Touche, LLP are independent

public accountants with respect to Company and its subsidiaries.

(gg) No Material Adverse Change. Subsequent to the respective dates

as of which information is given in the Offering Circular, except as

disclosed in the Offering Circular, (i) none of the Issuers or the

Guarantors has incurred any liabilities, direct or contingent, that are

material, singly or in the aggregate, to any of them, or has entered into

any material transactions not in the ordinary course of business, (ii)

there has not been any material decrease in the capital stock or

membership interests, as the case may be, or any material increase in

long-term indebtedness or any material increase in short-term indebtedness

of any of the Issuers or the Guarantors, or any payment of or declaration

to pay any dividends or any other distribution with respect to any of the

Issuers or the Guarantors, and (iii) there has not been any material

adverse change in the properties, business, prospects, operations,

earnings, assets, liabilities or condition (financial or otherwise) of the

Issuers and the Guarantors taken as a whole (each of clauses (i) and

(iii), a "MATERIAL ADVERSE CHANGE"). To the actual knowledge of the

Issuers after reasonable inquiry, there is no event that is reasonably

likely to occur, which if it were to occur, could, singly or in the

aggregate, reasonably be expected to have a

<PAGE>

Material Adverse Effect, except such events that have been disclosed in

the Offering Circular.

(hh) Ratings. No "nationally recognized statistical rating

organization" as such term is defined for purposes of Rule 436(g)(2) under

the Act (i) has imposed (or has informed any of the Issuers or the

Guarantors that it is considering imposing) any condition (financial or

otherwise) on the Issuers' or the Guarantors' retaining any rating

assigned to any securities of any of the Issuers or the Guarantors, or

(ii) has indicated to any of the Issuers or the Guarantors that it is

considering (A) the downgrading, suspension, or withdrawal of, or any

review for a possible change that does not indicate the direction of the

possible change in, any rating so assigned, or (B) any change in the

outlook for any rating of any securities of any of the Issuers or the

Guarantors.

(ii) Solvency. Each of the Issuers and the Guarantors is incurring

its respective indebtedness under the Series A Notes for proper purposes

and in good faith. Immediately before and after giving effect to the

issuance of the Series A Notes, for the Issuer (on a consolidated basis

with the Guarantors) and for each of the Guarantors, in all cases

considered as going concerns, (i) its assets at a fair valuation, exceeds

the sum of its debts; (ii) the present fair salable value of its assets is

not less than the amount that will be required to pay its probably

liability on its existing debts as they become absolute and matured, (iii)

it has and will have adequate capital with which to conduct the business

it is presently conducting and presently anticipates conducting; and (iv)

it does not intend to incur, and does not believe and reasonably should

not believe that it will incur, debts beyond its ability to pay as those

debts become due. Neither the Issuers or any Guarantor is aware of any

reason why it would be inappropriate to consider the Issuer or the

Guarantors as a going concern. For purposes of this paragraph, "debts"

includes contingent and unliquidated debts, at a fair valuation.

(jj) No Solicitation. None of the Issuers or the Guarantors nor any

of their affiliates nor anyone acting on their behalf has (i) taken,

directly or indirectly, any action designed to cause or to result in, or

that has constituted or which might reasonably be expected to constitute,

the stabilization or manipulation of the price of the Notes or to

facilitate the sale or resale of any of the Notes, (ii) sold, bid for,

purchased, or paid anyone any compensation for soliciting purchases of,

any of the Notes, or (iii) paid or agreed to pay to any person any

compensation for soliciting another to purchase any other securities of

either of the Issuers.

(kk) No Registration. Without limiting Sections 6(r) and 6(s), no

registration under the Act, and no qualification of the Indenture under

the TIA is required for the sale of the Series A Notes to the Initial

Purchaser as contemplated hereby or for the Exempt Resales, assuming (i)

that the purchasers in the Exempt Resales are Eligible Purchasers, (ii)

the accuracy of the Initial Purchaser's representations contained in

Section 7 of this Agreement and (iii) if any Exempt Resales are made to

Accredited Investors, the accuracy of the representations and

<PAGE>

warranties of such Accredited Investors contained in the Accredited

Investor Letters executed by such Accredited Investors. No form of general

solicitation or general advertising (including, without limitation, as

such terms are defined in Regulation D under the Act) was used by either

of the Issuers, any

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