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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(y)                                  Security Interests .  Upon execution and delivery of the Security Documents by the Issuers and Parent, in each case, to the extent it is a party thereto, and the issuance of the Notes, the Security Documents to which it is a party will create, in favor of the Secured Party for the benefit of the holders of the Notes, a legal, valid and enforceable security interest in (subject to Permitted Liens) all of the right, title and interest of the Issuers and Parent, as the case may be, in the Collateral covered by the Security Documents and the proc