Exhibit 10.1

 

 

 

SECOND AMENDED AND RESTATED LOAN AGREEMENT

Dated as of August 31, 2010

Among

HARRAH’S LAS VEGAS PROPCO, LLC, HARRAH’S ATLANTIC CITY PROPCO,

LLC, RIO PROPCO, LLC, FLAMINGO LAS VEGAS PROPCO, LLC, HARRAH’S

LAUGHLIN PROPCO, LLC, AND PARIS LAS VEGAS PROPCO, LLC,

collectively, as Borrower

BANK OF AMERICA, N.A., as Collateral Agent

and

JPMORGAN CHASE BANK, N.A., BANK OF AMERICA, N.A., CITIBANK, N.A.,

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (f/k/a CREDIT SUISSE, CAYMAN

ISLANDS BRANCH), MERRILL LYNCH MORTGAGE LENDING, INC., GOLDMAN

SACHS MORTGAGE COMPANY, MORGAN STANLEY MORTGAGE CAPITAL

HOLDINGS LLC, GERMAN AMERICAN CAPITAL CORPORATION, AND EACH

OTHER LENDER THAT MAY BECOME A PARTY HERETO FROM TIME TO TIME,

collectively, as Lender

 

 

 

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TABLE OF CONTENTS

 

               Page I.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION    2   
Section 1.1.   

Definitions

   2    Section 1.2.   

Principles of Construction

   69 II.    GENERAL TERMS    69    Section 2.1.   

Loan Commitment; Disbursement to Borrower

   69    Section 2.2.   

Interest Rate

   70    Section 2.3.   

Loan Payment

   78    Section 2.4.   

Prepayments

   79    Section 2.5.   

Release of Properties

   82    Section 2.6.   

Cash Management; Working Capital Account; Blocked Account

   99    Section 2.7.   

Extension of the Maturity Date

   106 III.    RESERVED    108 IV.    REPRESENTATIONS AND WARRANTIES    108   
Section 4.1.   

Borrower Representations

   108    Section 4.2.   

Survival of Representations

   122 V.    BORROWER COVENANTS    123    Section 5.1.   

Affirmative Covenants

   123    Section 5.2.   

Negative Covenants

   146    Section 5.3.   

General

   155 VI.    INSURANCE; CASUALTY; CONDEMNATION    155    Section 6.1.   

Insurance

   155    Section 6.2.   

Casualty

   162    Section 6.3.   

Condemnation

   162    Section 6.4.   

Restoration

   163 VII.    RESERVE FUNDS    167    Section 7.1.   

Cap Reserve Fund

   167    Section 7.2.   

Tax and Insurance Escrow Fund

   168    Section 7.3.   

FF&E Reserve Account

   169    Section 7.4.   

Intentionally Omitted

   171

 

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   Section 7.5.   

Intentionally Omitted

   171    Section 7.6.   

Reserve Funds, Generally

   171 VIII.    DEFAULTS    173    Section 8.1.   

Event of Default

   173    Section 8.2.   

Remedies

   176    Section 8.3.   

Administration of Bankruptcy Claims

   178    Section 8.4.   

Costs of Collection

   178 IX.    SPECIAL PROVISIONS    179    Section 9.1.   

Servicer

   179    Section 9.2.   

Exculpation

   181    Section 9.3.   

Assignments

   183    Section 9.4.   

Participation

   184    Section 9.5.   

Borrower’s Facilitation of Transfer

   184    Section 9.6.   

Notice; Registration Requirement

   185    Section 9.7.   

Registry

   185    Section 9.8.   

Cooperation in Syndication

   185    Section 9.9.   

Sale of Notes and Securitization

   186    Section 9.10.   

Securitization Indemnification

   188    Section 9.11.   

Amendments to the Co-Lender Agreement, Intercreditor Agreement, Servicing
Agreement and Participation Agreements

   191    Section 9.12.   

Collateral Agent

   192 X.    MISCELLANEOUS    195    Section 10.1.   

Survival

   195    Section 10.2.   

Lender’s Discretion

   195    Section 10.3.   

Governing Law

   196    Section 10.4.   

Amendments and Waivers

   197    Section 10.5.   

Delay Not a Waiver

   198    Section 10.6.   

Notices

   198    Section 10.7.   

Trial by Jury

   200    Section 10.8.   

Headings

   200    Section 10.9.   

Severability

   200    Section 10.10.   

Preferences

   200

 

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   Section 10.11.   

Waiver of Notice

   200    Section 10.12.   

Remedies of Borrower

   201    Section 10.13.   

Expenses; Indemnity

   201    Section 10.14.   

Schedules Incorporated

   203    Section 10.15.   

Offsets, Counterclaims and Defenses

   203    Section 10.16.   

No Joint Venture or Partnership; Servicer a Third Party Beneficiary; No Other
Third Party Beneficiaries

   203    Section 10.17.   

Conversion to LLC; Tax Elections

   204    Section 10.18.   

Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets

   204    Section 10.19.   

Waiver of Counterclaim

   205    Section 10.20.   

Conflict; Construction of Documents; Reliance

   205    Section 10.21.   

Brokers and Financial Advisors

   205    Section 10.22.   

Prior Agreements

   206    Section 10.23.   

Counterparts

   206    Section 10.24.   

Intentionally Omitted

   206    Section 10.25.   

Gaming Laws

   206    Section 10.26.   

Certain Additional Rights of Lender (VCOC)

   207    Section 10.27.   

Ratification of Acknowledgment and Consent

   207 XI.    JOINT AND SEVERAL LIABILITY; WAIVERS    208    Section 11.1.   

Joint and Several Liability; Primary Obligors

   208    Section 11.2.   

Waivers

   208    Section 11.3.   

Other Actions Taken or Omitted

   211    Section 11.4.   

No Release or Novation

   211    Section 11.5.   

Intentionally Omitted

   212    Section 11.6.   

Intentionally Omitted

   212    Section 11.7.   

Platform; Borrower Materials

   212    Section 11.8.   

Confidentiality

   213    Section 11.9.   

Amendment and Restatement

   214

 

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SCHEDULES       Schedule I    –    List, Addresses and Tax Identification
Numbers of Borrowers Schedule II    –    Properties – Allocated Loan Amounts
Schedule III    –    Tax Identification Numbers of Operating Companies
Schedule IV    –    Collection Account Agreements/Working Capital Account      
Agreement Schedule V    –    Off-Shore Accounts Schedule VI    –    Operating
Leases Schedule VIA    –    Operating Lease Guaranty Schedule VII    –   
Permitted Fund Managers Schedule VIII    –    Organizational Chart Schedule IX
   –    Gaming Licenses Schedule X    –    Rent Roll/Space Leases Schedule XI   
–    Intentionally Omitted Schedule XII    –    Recognition Agreement Schedule
XIII    –    First Mezzanine Borrower Schedule XIV    –    Second Mezzanine
Borrower Schedule XV    –    Third Mezzanine Borrower Schedule XVI    –   
Fourth Mezzanine Borrower Schedule XVII    –    Fifth Mezzanine Borrower
Schedule XVIII    –    Sixth Mezzanine Borrower Schedule XIX    –    Seventh
Mezzanine Borrower Schedule XX    –    Eighth Mezzanine Borrower Schedule XXI   
–    Ninth Mezzanine Borrower Schedule XXII    –    Convention Center Parcel
Schedule XXIII    –    Exception Report Schedule XXIV    –    Litigation
Schedule XXV    –    Description of O’Shea’s Schedule XXVI    –    First
Mezzanine Lenders Schedule XXVII    –    Second Mezzanine Lenders Schedule
XXVIII    –    Third Mezzanine Lenders Schedule XXIX    –    Fourth Mezzanine
Lenders Schedule XXX    –    Fifth Mezzanine Lenders Schedule XXXI    –    Sixth
Mezzanine Lenders Schedule XXXII    –    Seventh Mezzanine Lenders Schedule
XXXIII    –    Description of RDE Parcels Schedule XXXIV    –    Documents
Assigned to Collateral Agent Exhibit A    –    Form of Opinion of Interest Rate
Cap Provider Exhibit B    –    Form of Completion Guaranty Exhibit C    –   
Form of Assignment and Assumption

 

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SECOND AMENDED AND RESTATED LOAN AGREEMENT

THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of August 31, 2010 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this “Agreement”), between HARRAH’S LAS VEGAS PROPCO, LLC, a Delaware
limited liability company (together, with its successors and permitted assigns,
“Harrah’s LV Individual Borrower”), HARRAH’S ATLANTIC CITY PROPCO, LLC, a
Delaware limited liability company (together with its successors and permitted
assigns, “Harrah’s AC Individual Borrower”), RIO PROPCO, LLC, a Delaware limited
liability company (together with its successors and permitted assigns, “Rio
Individual Borrower”), FLAMINGO LAS VEGAS PROPCO, LLC, a Delaware limited
liability company (together with its successors and permitted assigns, “Flamingo
Individual Borrower”), PARIS LAS VEGAS PROPCO, LLC, a Delaware limited liability
company (together with its successors and permitted assigns, “Paris Individual
Borrower”), and HARRAH’S LAUGHLIN PROPCO, LLC, a Delaware limited liability
company (together with its successors and permitted assigns, “Laughlin
Individual Borrower”; Harrah’s LV Individual Borrower, Harrah’s AC Individual
Borrower, Rio Individual Borrower, Flamingo Individual Borrower, Paris
Individual Borrower and Laughlin Individual Borrower, collectively, “Borrower”),
each having its principal place of business at One Caesars Palace Drive, Las
Vegas, Nevada 89109, JPMORGAN CHASE BANK, N.A., a banking association chartered
under the laws of the United States of America (together with its successors and
assigns, “JPM”), BANK OF AMERICA, N.A., a banking association chartered under
the laws of the United States of America (together with its successors and
assigns, “BOA”), CITIBANK, N.A., a banking association chartered under the laws
of the United States of America (together with its successors and assigns,
“Citibank”), MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation
(together with its successors and assigns, “Merrill”), CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH (together with its successors and assigns, “CS”), GERMAN AMERICAN
CAPITAL CORPORATION, a Maryland corporation (together with its successors and
assigns, “DB”), MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited
liability company (together with its successors and assigns, “Morgan”), GOLDMAN
SACHS MORTGAGE COMPANY, a New York limited partnership (together with its
successors and assigns, “Goldman”), each other Lender (as such term is
hereinafter defined) that may become a party hereto from time to time, and Bank
of America, N.A, in its capacity as collateral agent (together with its
successors and assigns, “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, Borrower and JPM are parties to that certain Amended and Restated Loan
Agreement dated as of May 22, 2008 (the “Original Loan Agreement”) in connection
with a loan made by the lenders under such Original Loan Agreement to Borrower
in the amount of Four Billion and no/100 Dollars ($4,000,000,000.00) (the
“Original Loan”);

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WHEREAS, (i) immediately prior to the execution and delivery of this Agreement,
JPM assigned to the Initial Lenders (and the Initial Lenders assumed) all right,
title and interest of JPM in and to the Original Loan Agreement and certain of
the other Loan Documents (as such term is hereinafter defined) pursuant to the
provisions of that certain Omnibus Assignment and Assumption (Initial Lenders)
of even date herewith and (ii) contemporaneously herewith, the Initial Lenders
are assigning to the Collateral Agent (and the Collateral Agent is assuming)
record title to, and certain rights and duties of the Initial Lenders under,
certain of the Loan Documents (as and to the extent set forth in Section 9.12
and in the other Loan Documents) pursuant to that certain Omnibus Assignment and
Assumption (Collateral Agent) of even date herewith and the Initial Lenders are
appointing the Collateral Agent to act, in accordance with Section 9.12, as
their collateral agent hereunder and under such other Loan Documents;

WHEREAS, Borrower and Lender have agreed to amend and restate the Original Loan
Agreement in its entirety pursuant to, and in accordance with, the provisions of
this Agreement.

NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, as well as the covenants, agreements, representations and
warranties set forth in this Agreement, the parties hereto hereby covenant,
agree, represent and warrant as follows:

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:

“Acceptable Counterparty” shall mean any counterparty to the Interest Rate Cap
Agreement that has and shall maintain, until the expiration of the applicable
Interest Rate Cap Agreement, a long-term unsecured debt rating of at least “A+”
by S&P and “Aa3” from Moody’s, which rating shall not include a “t” or otherwise
reflect a termination risk and is otherwise reasonably acceptable to Collateral
Agent (it being understood that each of the Initial Lenders is an Acceptable
Counterparty).

“Additional Cap Amount” shall have the meaning set forth in Section 2.2.7(f)
hereof

“Additional Insolvency Opinion” shall have the meaning set forth in
Section 4.1.30(c) hereof.

“Additional True Lease Opinion” shall have the meaning set forth in
Section 4.1.30(d) hereof.

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.

 

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“Aggregate Material Adverse Effect” shall mean any event or condition that,
either singly or in the aggregate, could reasonably be expected to have or
result in a material adverse effect upon (a) the business, operations, economic
performance, prospects, assets or condition (financial or otherwise) of
(i) Borrower (taken as a whole), (ii) Guarantor, (iii) Operating Company (taken
as a whole), (iv) the Operating Lease or the Operating Lease Guaranty (taken as
a whole), (v) Manager, (vi) the Management Agreement (taken as a whole), or
(vii) the Properties (taken as a whole), the Hotel Components (taken as a whole)
or the Casino Components (taken as a whole); (b) the ability of Borrower (taken
as a whole) or Guarantor to perform, in all material respects, its obligations
under the Loan Documents (taken as a whole) to which it is a party; (c) the
ability of Operating Company (taken as a whole) to perform, in all material
respects, the obligations under the Operating Leases (taken as a whole) or the
ability of Guarantor (Operating Lease) (taken as a whole) to perform, in all
material respects, the obligations under the Operating Lease Guaranty (taken as
a whole); (d) the ability of Manager to perform, in all material respects, its
obligations under the Management Agreement (taken as a whole); (e) the
enforceability or validity of (i) the Operating Lease or the Operating Lease
Guaranty (taken as a whole), (ii) the Management Agreement (taken as a whole),
or (iii) the Loan Documents (taken as a whole) or the perfection or priority of
the Liens created under the Loan Documents (taken as a whole); (f) the value of,
or cash flow from, the Properties or the operations thereof (taken as a whole);
or (g) the material rights, interests and remedies of Lender under the Loan
Documents (taken as a whole).

“Allocated Loan Amount” shall mean, for an Individual Property, the amount set
forth on Schedule II attached hereto, as such amount may be reduced or increased
from time to time pursuant to the provisions hereof.

“ALTA” shall mean American Land Title Association, or any successor thereto.

“Alteration” shall mean, with respect to any Individual Property, any
alteration, improvement, demolition, construction or removal of all or any
portion of the Improvements at such Individual Property.

“Amortization Commencement Date” shall mean the last day of the first full
fiscal quarter of the Consolidated Entities occurring after the Trigger Date.

“Annual Budget” shall mean, individually and collectively as the context
requires, (a) the Borrower Annual Budget and (b) the Operating Company Annual
Budget.

“Applicable Interest Rate” shall mean the rate or rates at which the outstanding
principal amount of the Loan bears interest from time to time in accordance with
the provisions of Section 2.2.3 hereof.

“Approved Guarantor” means (x) Holdings, for so long Holdings meets the Minimum
Value Test, or (y) any other guarantor that meets the Minimum Value Test and is
otherwise reasonably satisfactory to Lender.

“Assignee” shall have the meaning set forth in Section 9.3 hereof.

“Assignment” shall have the meaning set forth in Section 9.3 hereof.

 

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“Assignment and Acceptance” shall have the meaning set forth in Section 9.6
hereof.

“Assignment of Leases” shall mean (a) with respect to each Individual Property
(other than a Swap Property), that certain first priority Assignment of Leases
and Rents, dated as of the Original Closing Date, made by Borrower, as amended
on the date hereof and as each of the same may be further amended, restated,
replaced, supplemented or otherwise modified from time to time, and (b) with
respect to each Swap Property, that certain first priority Assignment of Leases
and Rents, dated as of the Swap Closing Date, made by Borrower, as amended on
the date hereof and as each of the same may be further amended, restated,
replaced, supplemented or otherwise modified from time to time.

“Assisted Securitization” shall mean any Securitization undertaken by one or
more Initial Lenders with the assistance of the Borrowers as described in
Section 9.9; provided that (i) each Initial Lender (together with its
Affiliates) may contribute all or any portion of its Note in up to one
(1) Assisted Securitization (whether such Initial Lender leads or participates
in such Securitization), which may be a separate Assisted Securitization for
each Initial Lender, (ii) Bank of America, N.A., Merrill Lynch Mortgage Lending,
Inc. and their Affiliates will be considered a single Initial Lender for
purposes of this definition and the provisions relating to Assisted
Securitizations hereunder and (iii) in connection with any Assisted
Securitization, an Initial Lender may contribute all or any portion of its Note
and/or its Mezzanine Notes, but there shall be no more than one (1) Assisted
Securitization in the aggregate for each Initial Lender under this Agreement and
the Mezzanine Loan Agreements. For the avoidance of doubt, it is understood and
agreed that the proviso in the foregoing sentence will not restrict any Initial
Lender and/or its Affiliates from acting as an underwriter, initial purchaser,
placement agent, arranger, servicer or in any similar capacity in respect of any
Assisted Securitization hereunder and any Securitization as to which any Initial
Lender shall act solely in such capacity shall not constitute such Initial
Lender’s Assisted Securitization.

“Assisted Syndication” shall mean any Syndication undertaken by one or more
Initial Lenders with the assistance of the Borrowers as described in
Section 9.8; provided that (i) each Initial Lender (together with its
Affiliates) may contribute all or any portion of its Note in up to one
(1) Assisted Syndication (whether such Initial Lender leads or participates in
such Syndication), which may be a separate Assisted Syndication for each Initial
Lender, (ii) Bank of America, N.A., Merrill Lynch Mortgage Lending, Inc. and
their Affiliates will be considered a single Initial Lender for purposes of this
definition and the provisions relating to Assisted Syndications hereunder and
(iii) in connection with any Assisted Syndication, an Initial Lender may
contribute all or any portion of its Note and/or its Mezzanine Notes, but there
shall be no more than one (1) Assisted Syndication in the aggregate for each
Initial Lender under this Agreement and the Mezzanine Loan Agreements. For the
avoidance of doubt, it is understood and agreed that the proviso in the
foregoing sentence will not restrict any Initial Lender and/or its Affiliates
from acting as an initial purchaser, placement agent, arranger, servicer or in
any similar capacity in respect of any Assisted Syndication hereunder and any
Syndication as to which any Initial Lender shall act solely in such capacity
shall not constitute such Initial Lender’s Assisted Syndication.

 

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“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation with respect to all or any part of any Individual
Property.

“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law to have such Person be adjudicated bankrupt or
insolvent; (b) the filing of an involuntary petition against such Person under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or soliciting or causing to be solicited petitioning creditors for any
involuntary petition against such Person; (c) such Person filing an answer
consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or soliciting or causing to be
solicited petitioning creditors for any involuntary petition from any Person;
(d) such Person consenting to or acquiescing in or joining in an application for
the appointment of a custodian, receiver, trustee, liquidator, assignee,
sequestrator, examiner or any similar official of or for such Person or any
portion of its property; or (e) such Person making an assignment for the benefit
of creditors, or admitting, in writing or in any legal proceeding, its
insolvency or inability to pay its debts generally as they become due, or taking
any action in furtherance of the foregoing.

“Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C.
§ 101, et seq., as the same may be amended from time to time, and any successor
statute or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors’ rights or any other Federal or state bankruptcy or insolvency law.

“Basic Carrying Costs” shall mean, for any period, with respect to each
Individual Property, the sum of the following costs associated with such
Individual Property for such period: (a) Taxes and (b) Insurance Premiums.

“Blocked Account” shall have the meaning set forth in Section 2.6.3 hereof.

“Blocked Cash Buildup” shall have occurred if, on the date on which the Rio
Leverage Event shall cease to be in effect, (i) the Rio Leverage Event ceased to
be in effect pursuant to the provisions of clause (a) of the last sentence of
the definition of “Rio Leverage Event”, (ii) there was cash on deposit in the
Blocked Account at such time, and (iii) the Post-Rio Leverage Ratio would have
been greater than the Pre-Rio Leverage Ratio had the cash on deposit in the
Blocked Account not been included in the calculation of the Post-Rio Leverage
Ratio at such time.

“Board of Directors” shall mean, as to any Person, the board of directors or
other governing body of such Person, or if such Person is owned or managed by a
single entity, the board of directors or other governing body of such entity.

“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and permitted assigns. As used herein, the
term “Borrower” shall mean one of the Borrowers individually, or the Borrowers
collectively, as the context shall require.

 

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“Borrower Agent” shall have the meaning set forth in Section 10.6 hereof.

“Borrower Annual Budget” shall mean the operating budget of Borrower, prepared
by Borrower for the applicable Fiscal Year or other period.

“Borrower Deposit Account” shall mean, individually or collectively as the
context indicates, those certain segregated Eligible Accounts established by or
on behalf of each Borrower with a Deposit Account Bank.

“Borrower Entity” shall have the meaning set forth in Section 11.1 hereof.

“Borrower Materials” shall have the meaning set forth in Section 11.7 hereof.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York, New York are not open for business.

“Cap Ex Budget” shall have the meaning set forth in Section 5.1.11(d) hereof.

“Cap Reserve Account” shall have the meaning set forth in Section 7.1(a) hereof.

“Cap Reserve Fund” shall have the meaning set forth in Section 7.1(a) hereof.

“Capital Expenditures” shall mean, for any period, the amount expended for items
capitalized under GAAP (including expenditures for building improvements or
major repairs, leasing commissions, tenant improvements and Fixtures).

“Capitalized Software Expenditures” shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities) by a Person
during such period in respect of licensed or purchased software or internally
developed software and software enhancements that, in accordance with GAAP, are
or are required to be reflected as capitalized costs on the consolidated balance
sheet of such Person.

“Captive Insurance Company” shall have the meaning set forth in Section 6.1(c)
hereof.

“Cash Interest Expense” shall mean, with respect to the Consolidated Entities on
a consolidated basis for any period, Interest Expense for such period, less any
non-cash Interest Expense or payment in kind Interest Expense for such period.

“Cash Management Account” shall have the meaning set forth in Section 2.6.3
hereof.

“Casino Components” shall mean, collectively, those portions of each Individual
Property devoted to the operation of casino gaming operations, including
(without limitation) those areas devoted to the conduct of games of chance,
facilities associated directly with gaming operations including, without
limitation, casino support areas such as surveillance and security areas, cash
cages, counting and accounting areas and gaming back-of-the-house areas in each
case, to the extent the operation thereof requires a Gaming License under
applicable Gaming Laws. The Casino Components are more particularly described
and set forth in each Operating Lease, as applicable.

 

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“Casualty” shall have the meaning set forth in Section 6.2 hereof.

“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii)(A)
hereof.

“Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv)
hereof.

“Central Bank Pledge” shall have the meaning set forth in Section 9.3 hereof.

“Certificate Administrator” shall mean any certificate administrator, trustee,
paying agent or other Person responsible for administering the Securities.

“Change in Control” shall be deemed to occur if:

(a) at any time, a “change of control” (or similar event) shall occur under the
Senior Unsecured Notes Indenture or any Permitted Refinancing Indebtedness in
respect thereof that constitutes Material Indebtedness; or

(b) any combination of Permitted Holders in the aggregate shall fail to have the
power, directly or indirectly, to vote or direct the voting of Equity Interests
representing at least a majority of the ordinary voting power for the election
of directors of Holdings; provided that the occurrence of the foregoing event
shall not be deemed a Change of Control if,

(i) at any time prior to a Qualified IPO, (A) any combination of Permitted
Holders in the aggregate otherwise have the right, directly or indirectly, to
designate a majority of the Board of Directors of Holdings at such time or
(B) any combination of Permitted Holders in the aggregate own, directly or
indirectly, a majority of the ordinary voting Equity Interests of Holdings at
such time; provided that the Sponsors have beneficial ownership of more than 50%
of the total voting power of Holdings, or

(ii) at any time upon or after a Qualified IPO, (A) no person or “group” (within
the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the
Original Closing Date), other than any combination of the Permitted Holders,
shall have acquired beneficial ownership of more than the greater of (x) 35% on
a fully diluted basis of the voting Equity Interests of Holdings and (y) the
percentage owned, directly or indirectly, in the aggregate by the Permitted
Holders on a fully diluted basis of the voting Equity Interests of Holdings and
(B) during each period of twelve (12) consecutive months, a majority of the
seats (other than vacant seats) on the Board of Directors of Holdings shall be
occupied by persons who were either (1) nominated by the Board of Directors of
Holdings or a Permitted Holder, (2) appointed by directors so nominated or
(3) appointed by a Permitted Holder.

“Closing Date” shall mean the date of this Agreement.

 

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“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be
further amended from time to time, and any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

“Co-Lender Agreement” shall mean that certain Agreement Among Mortgage
Noteholders dated as of the date hereof between Lender and Bank of America,
N.A., as Servicer, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time (subject to the provisions of
Section 9.11 regarding any such amendments).

“Collateral” shall have the meaning set forth in the First Mezzanine Loan
Agreement, the Second Mezzanine Loan Agreement, the Third Mezzanine Loan
Agreement, the Fourth Mezzanine Loan Agreement, the Fifth Mezzanine Loan
Agreement, the Sixth Mezzanine Loan Agreement, the Seventh Mezzanine Loan
Agreement, the Eighth Mezzanine Loan Agreement or the Ninth Mezzanine Loan
Agreement, as the context shall require.

“Collateral Agent” shall have the meaning set forth in the introductory
paragraph hereto.

“Collateral Assignment of Interest Rate Cap Agreement” shall mean those certain
Amended and Restated Collateral Assignment of Interest Rate Cap Agreements,
dated as of May 22, 2008, between Borrower and JPM, as assigned by JPM to the
Initial Lenders and by the Initial Lenders to the Collateral Agent, and as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

“Collateral Assignment of Management Agreements and Shared Services Agreement”
shall mean that certain Collateral Assignment of Management Agreements and
Shared Services Agreement dated as of the date hereof, among HOC, Holdings,
Borrower, Mezzanine Borrower, Operating Company, each Manager and Collateral
Agent, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

“Collateral Loan Documents” shall have the meaning set forth in Section 9.12.

“Collection Account” shall mean, individually or collectively as the context
indicates, (a) those certain segregated Eligible Accounts established by each
Operating Company with a Collection Bank into which Operating Company causes
(and shall continue to cause) all credit card receipts and all Revenues to be
deposited pursuant to the terms hereof, and (b) subject to the terms hereof,
such replacement collection account or accounts established by Operating Company
at any successor Collection Bank designated from time to time in accordance with
the terms hereof.

“Collection Account Agreement” shall mean, collectively, (i) each of the
agreements among Borrower, Operating Company, Collateral Agent and each
Collection Bank set forth on Schedule IV attached hereto, and (ii) any agreement
entered into by Borrower, Operating Company, Lender and any replacement
Collection Bank, in each case as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

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“Collection Banks” shall mean (a) any Eligible Institution(s) designated by any
Operating Company or Borrower as a Collection Bank and reasonably approved by
Lender from time to time in accordance with the terms hereof, or (b) any other
financial institution otherwise reasonably approved by Lender and, if a
Securitization has occurred, with respect to which a Rating Agency Confirmation
has been obtained.

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of any Individual
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting such Individual Property or
any part thereof.

“Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b)
hereof.

“Consolidated Debt Service” shall mean, with respect to the Consolidated
Entities on a consolidated basis for any period, Cash Interest Expense of the
Consolidated Entities for such period plus principal payments (whether
scheduled, mandatory, voluntary or otherwise) on account of the Loan and the
Mezzanine Loans and on account of other Permitted Indebtedness or Permitted
Indebtedness (Operating Company) of the Consolidated Entities for such period.

“Consolidated Entities” shall mean the Borrowers, Mezzanine Borrowers, the
Operating Companies and their subsidiaries on a consolidated basis. For the
avoidance of doubt, (i) the parties hereto confirm that the Managers are not
included within the definition of “Consolidated Entities” and (ii) upon the sale
of any Individual Property hereunder other than to a Borrower, Mezzanine
Borrower or Operating Company, the individual Borrower, individual Mezzanine
Borrower and individual Operating Company with respect to such Individual
Property shall no longer be included as “Consolidated Entities” hereunder with
respect to the period of time following such sale.

“Consolidated Net Income” shall mean, with respect to any Person for any period,
the aggregate of the Net Income of such Person for such period, on a
consolidated basis; provided, however, that, without duplication,

(i) any net after-tax extraordinary, nonrecurring or unusual gains or losses or
income or expense or charge (less all fees and expenses relating thereto),
including, without limitation, any severance, relocation or other restructuring
expenses, any expenses related to any reconstruction, decommissioning,
recommissioning or reconfiguration of fixed assets for alternative uses, fees,
expenses or charges relating to new product lines, curtailments or modifications
to pension and post-retirement employee benefit plans, excess pension charges,
acquisition integration costs, facilities opening costs, project start-up costs,
business optimization costs, signing, retention or completion bonuses, shall be
excluded,

(ii) any net after-tax income or loss from disposed, abandoned, transferred,
closed or discontinued operations and any net after-tax gain or loss on disposal
of disposed, abandoned, transferred, closed or discontinued operations shall be
excluded,

 

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(iii) any net after-tax gain or loss (less all fees and expenses or charges
relating thereto) attributable to business dispositions or asset dispositions
other than in the ordinary course of business (as determined in good faith by
the management of the Borrower) shall be excluded,

(iv) Consolidated Net Income for such period shall not include the cumulative
effect of a change in accounting principles during such period,

(v) effects of purchase accounting adjustments (including the effects of such
adjustments pushed down to such Person) in component amounts required or
permitted by GAAP, resulting from the application of purchase accounting in
relation to any consummated acquisition or the amortization or write-off of any
amounts thereof, net of taxes, shall be excluded,

(vi) any impairment charges or asset write-offs, in each case pursuant to GAAP,
and the amortization of intangibles arising pursuant to GAAP, shall be excluded,

(vii) any non-cash compensation charge or expenses realized or resulting from
stock option plans, employee benefit plans or post-employment benefit plans, or
grants or sales of stock, stock appreciation or similar rights, stock options,
restricted stock, preferred stock or other rights shall be excluded,

(viii) accruals and reserves that are established or adjusted within twelve
(12) months after the Original Closing Date and that are so required to be
established or adjusted in accordance with GAAP or as a result of adoption or
modification of accounting policies shall be excluded,

(ix) non-cash gains, losses, income and expenses resulting from fair value
accounting required by the applicable standard under GAAP and related
interpretations shall be excluded,

(x) (i) the non-cash portion of “straight-line” rent expense shall be excluded
and (ii) the cash portion of “straight-line” rent expense which exceeds the
amount expensed in respect of such rent expense shall be included,

(xi) to the extent covered by insurance and actually reimbursed, or, so long as
such Person has made a determination that there exists reasonable evidence that
such amount will in fact be reimbursed by the insurer and only to the extent
that such amount is (i) not denied by the applicable carrier in writing within
180 days and (ii) in fact reimbursed within 365 days of the date of such
evidence (with a deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to liability or casualty
events or business interruption shall be excluded,

(xii) any net after-tax income or loss (less all fees and expenses or charges
relating thereto) attributable to the early extinguishment of Indebtedness shall
be excluded; and

 

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(xiii) non-cash charges for deferred tax asset valuation allowances shall be
excluded.

Consolidated Net Income for any period will be calculated substantially in the
form of Exhibit D hereto.

“Contribution Agreement” shall mean that certain Amended and Restated
Contribution Agreement, dated as of the Swap Closing Date, between Borrower and
JPM (as Lender), as amended by the Omnibus Assignment and Acceptance (Initial
Lenders) and as the same may be further amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities, by contract or otherwise.
“Controlled” and “Controlling” shall have correlative meanings.

“Controlling Party” has the meaning ascribed to such term (i) with respect to
each Collection Account, in the Collection Account Agreement related to such
Collection Account, and (ii) with respect to each Working Capital Account, in
the Working Capital Account Agreement related to such Working Capital Account.

“Convention Center Parcel” shall mean the parcel shown on Schedule XXII and
comprising a part of the Harrah’s Atlantic City Property.

“Convention Center Project” shall mean that certain conference center currently
contemplated to be constructed on the Convention Center Parcel by the Borrower
and/or the Operating Company owning the Harrah’s Atlantic City Property, and
more fully described in the schematic designs for the Convention Center Project
provided by Borrower to Lender. The Convention Center Project will not be funded
with the proceeds of the Loan (but will be funded by Borrower, including with
capital contributions).

“Co-Origination Agreement” shall have the meaning set forth in Section 9.12.

“Counterparty” shall mean, with respect to the Interest Rate Cap Agreement and
any Replacement Interest Rate Cap Agreement, any Acceptable Counterparty.

“Covered Disclosure Information” shall have the meaning set forth in
Section 9.10 hereof.

“Current Assets” shall mean, with respect to the Consolidated Entities on a
consolidated basis at any date of determination, the sum of all assets (other
than cash and Permitted Investments or other cash equivalents, except for “cage
cash”) that would, in accordance with GAAP, be classified on a consolidated
balance sheet of the Consolidated Entities as current assets at such date of
determination, other than amounts related to current or deferred taxes based on
income or profits.

 

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“Current Liabilities” shall mean, with respect to the Consolidated Entities on a
consolidated basis at any date of determination, all liabilities that would, in
accordance with GAAP, be classified on a consolidated balance sheet of the
Consolidated Entities as current liabilities at such date of determination,
other than (a) the current portion of any Indebtedness, (b) accruals of Interest
Expense (excluding Interest Expense that is due and unpaid), (c) accruals for
current or deferred taxes based on income or profits, (d) accruals of any costs
or expenses related to bonuses, pension and other post-retirement benefit
obligations, and (e) accruals for add-backs to EBITDAM included in
clauses (a)(iv), (a)(v) and (a)(vii) of the definition of such term.

“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, this Agreement and the Notes together with all interest accrued and unpaid
thereon (including any interest that would accrue on the outstanding principal
amount of the Loan through and including the end of any applicable Interest
Period, even if such Interest Period extends beyond any applicable Payment Date,
prepayment date or the Maturity Date) and all other sums due to Lender in
respect of the Loan under the Notes, this Agreement, the Mortgages and the other
Loan Documents.

“Debt Gap” shall mean the amount, if any, that the aggregate principal balance
of the Loan and the Mezzanine Loans immediately following any sale of the Rio
Las Vegas would have to be reduced to make the Post-Rio Leverage Ratio at such
time equal to the Pre-Rio Leverage Ratio.

“Debt Service” shall mean, with respect to any particular period of time,
scheduled principal and/or interest payments due under this Agreement and the
Notes.

“Debt Service Coverage Ratio” shall mean a ratio for the applicable period in
which:

(a) the numerator is EBITDAM of the Consolidated Entities for the four
(4) quarter period preceding the date of determination, as set forth in the
financial statements required hereunder; and

(b) the denominator is the sum of (i) the aggregate amount of Debt Service which
was due and payable for such preceding four (4) quarter period calculated, for
these purposes, assuming that (A) the spread is the Spread and (B) LIBOR is
equal to the Strike Price, and (ii) the aggregate amount of Mezzanine Debt
Service which was due and payable for such preceding four (4) quarter period
calculated, for these purposes, assuming that (A) the spread on the Mezzanine
Loans is the “Spread” as defined in each Mezzanine Loan Agreement and (B) LIBOR
is equal to the applicable Strike Price as defined in each Mezzanine Loan
Agreement;

provided, however, that, solely for the purpose of Section 2.5, the Debt Service
Coverage Ratio shall be determined as described in Section 2.5.1(c).

“Default” shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would be an Event of Default.

 

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“Default Rate” shall mean a rate per annum equal to the lesser of (a) the
Maximum Legal Rate and (b) two percent (2%) above the Applicable Interest Rate.

“Delinquency” shall mean, with respect to each Individual Property, the latest
date on which Taxes or Other Charges may be paid (with respect to such
Individual Property) without the payment of a premium, penalty or interest.

“Deposit Account Bank” shall mean, initially, Bank of America, N.A. and, if any
Borrower desires to replace Bank of America, N.A. as a Deposit Account Bank,
then, (a) each Eligible Institution designated by such Borrower as a Deposit
Account Bank and reasonably approved by Lender from time to time in accordance
with the terms hereof, or (b) any other financial institution designated by such
Borrower as Deposit Account Bank and reasonably approved by Lender and, if a
Securitization has occurred, with respect to which a Rating Agency Confirmation
has been obtained.

“Determination Date” shall mean, with respect to any Interest Period, the date
that is two (2) London Business Days prior to the fifteenth (15th) day of the
calendar month in which such Interest Period commences.

“Disclosure Document” shall mean a prospectus, prospectus supplement, private
placement memorandum, offering memorandum, offering circular, term sheet, road
show presentation materials or other offering documents or any other marketing
materials or information provided to prospective investors, in each case in
preliminary or final form and including all exhibits, annexes and other
attachments thereto, used in connection with a Securitization or a Syndication
and designated as a “Disclosure Document” by Lender in its sole and absolute
discretion (it being understood and agreed, however, that (i) Borrower and its
Affiliates shall have no liability with respect to a Disclosure Document, other
than in respect of a (a) Disclosure Document that has been reviewed and approved
by Borrower pursuant to the terms of this Agreement, (b) a Disclosure Document
with respect to which Borrower has an indemnity obligation pursuant to
Section 9.10 that has been provided to Borrower for review and approval but
Borrower has failed to timely provide such review and approval, or (c) such
materials or other written information provided by Borrower hereunder that will
be included with Borrower’s knowledge at the time of such provision in a
Disclosure Document and (ii) if Borrower has any liability in respect of the
foregoing clause (i), such liability shall exist, as contemplated pursuant to
the last sentence of Section 9.10(b), whether or not the Borrower has executed
an indemnification agreement pursuant to Section 9.10(b)).

“EBITDAM” shall mean, with respect to the Consolidated Entities for any period,
the Consolidated Net Income of the Consolidated Entities plus the sum of (in
each case without duplication and to the extent the respective amounts described
in subclauses (i) through (vi) below reduced such Consolidated Net Income (and
were not excluded therefrom) for the respective period for which EBITDAM is
being determined):

(i) provision for taxes based on income, profits or capital for such period,
including, without limitation, state, franchise and similar taxes and foreign
withholding taxes (including penalties and interest related to taxes or arising
from tax examinations),

 

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(ii) Interest Expense for such period (net of interest income for such period),

(iii) depreciation and amortization expenses for such period including, but not
exclusively, the amortization of intangible assets, deferred financing fees and
Capitalized Software Expenditures and amortization of unrecognized prior service
costs and actuarial gains and losses related to pensions and other
post-employment benefits,

(iv) any expenses or charges (other than depreciation or amortization expense as
described in the preceding clause (iii)) related to any acquisition,
disposition, recapitalization or the incurrence, modification or repayment of
Indebtedness permitted to be incurred by this Agreement (including a refinancing
thereof) (whether or not successful), including (y) any amendment or other
modification of such Indebtedness, and (z) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any such
Indebtedness,

(v) restructuring charges or reserves (which, for the avoidance of doubt, shall
include, without limitation, the effect of inventory optimization programs,
retention, severance, systems establishment costs, contract termination costs,
future lease commitments and excess pension charges), to the extent that such
expenses, charges or reserves are considered to be extraordinary expenses under
GAAP,

(vi) any costs or expense incurred pursuant to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement
or any stock subscription or shareholder agreement, to the extent that such cost
or expenses are funded with cash proceeds contributed to the capital of the
Consolidated Entities,

(vii) any other non-cash charges; provided, that, for purposes of this
subclause (vii), any non-cash charges or losses shall be treated as cash charges
or losses in any subsequent period during which cash disbursements attributable
thereto are made (but excluding, for the avoidance of doubt, amortization of a
prepaid cash item that was paid in a prior period),

(viii) management fees and expenses (including reimbursable expenses) equal to
the actual management fees and expenses (including reimbursable expenses) paid
under the Management Agreement, without double counting actual amounts incurred
and otherwise reflected in the calculation of EBITDAM, and

(ix) if the Captive Insurance Company shall be utilized to provide terrorism
coverage hereunder, the amount of the premiums expended by Borrower to obtain
such terrorism coverage to the extent such amount exceeds the Terrorism Premium
Limit and such excess is retained by the Captive Insurance Company;

provided that EBITDAM shall be reduced by the sum of (without duplication and to
the extent the amounts described in this proviso increased such Consolidated Net
Income (and were not excluded therefrom) for the respective period for which
EBITDAM is being determined) non-cash items increasing Consolidated Net Income
of the Consolidated Entities for such period (but excluding any such items
(A) in respect of which cash was received in a prior period or will be received
in a future period or (B) which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges that reduced EBITDAM in any prior
period).

 

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EBITDAM for any period will be calculated substantially in the form of Exhibit D
hereto.

“ECF Purchases” has the meaning set forth in the Note Sales Agreement.

“Eighth Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XX hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Eighth Mezzanine Borrower” shall mean one of the Eighth Mezzanine Borrowers
individually, or the Eighth Mezzanine Borrowers collectively, as the context
shall require.

“Eighth Mezzanine Debt Service” shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments due under the
Eighth Mezzanine Notes.

“Eighth Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Eighth Mezzanine Loan Agreement from time to time. The Eighth
Mezzanine Lender as of the date hereof is Goldman Sachs Mortgage Company.

“Eighth Mezzanine Loan” shall mean that certain loan made by the Eighth
Mezzanine Lenders to Eighth Mezzanine Borrower as of the Original Closing Date.
When made, the Eighth Mezzanine Loan was in the original principal amount of Two
Hundred Seventy Five Million and no/100 Dollars ($275,000,000.00). As of the
date hereof, the Eighth Mezzanine Loan is in the outstanding principal amount of
Nine Million One Hundred Fifty Seven Thousand Five Hundred and No/100 Dollars
($9,157,500.00). The Eighth Mezzanine Loan is evidenced and/or secured by the
Eighth Mezzanine Loan Agreement and the Eighth Mezzanine Loan Documents.

“Eighth Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Eighth Mezzanine Loan Agreement, dated as of the date hereof, between
Eighth Mezzanine Lenders and Eighth Mezzanine Borrower, as the same may
hereafter be amended, supplemented, or otherwise modified from time to time.

“Eighth Mezzanine Loan Documents” shall mean the Eighth Mezzanine Loan
Agreement, the Eighth Mezzanine Notes and all other documents and instruments
executed and delivered in connection with the Eighth Mezzanine Loan, as such
documents may be amended, modified and restated in accordance with their
respective terms.

“Eighth Mezzanine Notes” shall mean the “Notes” as defined in the Eighth
Mezzanine Loan Agreement.

“Eligibility Requirements” means, with respect to any Person, that such Person
(a) has total assets (in name or under management) in excess of $4,000,000,000
and (except with respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholder’s equity of $1,000,000,000, (b) is
regularly engaged in the business of owning and operating

 

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commercial real estate properties, (c) is not currently, and its principals are
not currently, subject to a Bankruptcy Action and for the immediately preceding
10 years, neither it nor any material subsidiary has been subject to a
Bankruptcy Action, and (d) has not been, and its principals have not been,
convicted and is not under current indictment for a felony or crime involving
moral turpitude, has not been found by a court of competent jurisdiction to have
violated federal or state securities laws, and is not an organized crime figure.

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. § 9.10(b),
having in either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and state authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.

“Eligible Institution” shall mean a depository institution or trust company, the
short term unsecured debt obligations or commercial paper of which are rated at
least “A-1” by S&P, “P-1” by Moody’s and “F-1” by Fitch in the case of accounts
in which funds are held for thirty (30) days or less (or, in the case of
accounts in which funds are held for more than thirty (30) days, the long term
unsecured debt obligations of which are rated at least “A” by Fitch and S&P and
“A2” by Moody’s).

“Embargoed Person” shall have the meaning set forth in Section 4.1.35 hereof.

“Environmental Indemnity” shall mean, that certain Amended and Restated
Environmental Indemnity Agreement, dated as of the date hereof, executed by
Borrower and Guarantor in connection with the Loan for the benefit of Lenders
and as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

“Equipment” shall mean, with respect to each Individual Property, any equipment
now owned or hereafter acquired by Borrower, Manager or Operating Company, which
is used at or in connection with the Improvements or such Individual Property or
is located thereon or therein, including (without limitation) all Gaming
Equipment, all machinery, equipment, furnishings, and electronic data-processing
and other office equipment now owned or hereafter acquired by or on behalf of
Borrower, Manager or Operating Company and any and all additions, substitutions
and replacements of any of the foregoing), together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.

“Equity Interests” of any Person shall mean any and all shares, interests,
rights to purchase or otherwise acquire, warrants, options, participations or
other equivalents of or interests in (however designated) equity or ownership of
such Person, including any preferred stock, any limited or general partnership
interest and any limited liability company membership interest, and any
securities or other rights or interests convertible into or exchangeable for any
of the foregoing.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

“Excess Cash Flow” shall mean, with respect to the Consolidated Entities on a
consolidated basis for any Excess Cash Flow Period, EBITDAM of the Consolidated
Entities on a consolidated basis for such Excess Cash Flow Period, minus,
without duplication,

(a) Consolidated Debt Service (other than, as to any debt service payable to
Affiliates, prepayments of any such debt) paid during such Excess Cash Flow
Period,

(b) the amount of Optional Note Purchases paid for during such Excess Cash Flow
Period (other than Optional Note Purchases funded with equity contributions to a
Consolidated Entity) in accordance with the Note Sales Agreement,

(c) the greater of (1) capital expenditures by the Consolidated Entities during
such Excess Cash Flow Period that are paid in cash (and not financed) during
such Excess Cash Flow Period and (2) the amount used to fund the FF&E Reserve
Account hereunder during such Excess Cash Flow Period,

(d) Capital Expenditures that (i) a Consolidated Entity shall, during such
Excess Cash Flow Period, become obligated to make in cash (and that shall not be
financed), (ii) are not paid for by a Consolidated Entity during such Excess
Cash Flow Period (to the extent permitted under this Agreement) and (iii) are
anticipated to be paid for by a Consolidated Entity (and not financed) during,
and not after, the immediately following Excess Cash Flow Period; provided, that
any amount so deducted shall not be deducted again in a subsequent Excess Cash
Flow Period,

(e) taxes paid in cash by the Consolidated Entities on a consolidated basis or
Permitted Tax Distributions made by the Consolidated Entities during such Excess
Cash Flow Period or that will be paid or made during (and not after) the
immediately following Excess Cash Flow Period; provided, that with respect to
any such amounts to be paid after the close of such Excess Cash Flow Period,
(i) any amount so deducted shall not be deducted again in a subsequent Excess
Cash Flow Period, and (ii) appropriate reserves shall have been established in
accordance with GAAP,

(f) an amount equal to any increase in Working Capital of the Consolidated
Entities for such Excess Cash Flow Period,

(g) amounts paid in cash during such Excess Cash Flow Period on account of items
that were accounted for as non-cash reductions of Net Income in determining
Consolidated Net Income or as non-cash reductions of Consolidated Net Income in
determining EBITDAM of the Consolidated Entities in a prior Excess Cash Flow
Period,

(h) the amount related to items that were added to or not deducted from Net
Income in calculating Consolidated Net Income or were added to or not deducted
from Consolidated Net Income in calculating EBITDAM to the extent such items
represented a

 

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cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in
a prior Excess Cash Flow Period), or an accrual for a cash payment, by the
Consolidated Entities or did not represent cash received by the Consolidated
Entities, in each case on a consolidated basis during such Excess Cash Flow
Period,

(i) in each case, during such Excess Cash Flow Period, (1) amounts paid under
(and in accordance with the provisions of) the Management Agreement or, prior to
the effectiveness of the Management Agreement, that would be paid under the
Management Agreement if it was in effect (in the aggregate), (2) amounts paid
under (and in accordance with the provisions of) the Shared Services Agreement,
(3) the amount of any Reserve Funds deposited into any Reserve Account (other
than amounts deposited in the Working Capital Account described in clause
(j) below and other than amounts deposited in the FF&E Reserve Account as
described in clause (c) above), and (4) amounts reasonably anticipated by
Borrower to be paid to the Second Option Noteholders (as such term is defined in
the Note Sales Agreement) in respect of such Excess Cash Flow Period in
accordance with the terms of the Note Sales Agreement (which amounts shall be
adjusted, as appropriate, in the calculation of Excess Cash Flow for the final
Excess Cash Flow Period in each fiscal year, when such amounts are capable of
actual determination and, following which, such amounts are paid);

(j) amounts (if any) deposited into the Working Capital Account during such
Excess Cash Flow Period (provided, that, (i) the aggregate amount of cash that
may be deposited into the Working Capital Account during any Excess Cash Flow
Period shall not exceed $20,000,000 (which amount shall be reduced
proportionally, following the sale of any Individual Property other than to a
Borrower or Mezzanine Borrower, based on the Allocated Loan Amount of the
Individual Property sold and the Allocated Loan Amounts of all of the
Properties, in each case as of the date hereof) and (ii) immediately after
giving effect to any such deposit into the Working Capital Account, the balance
in such account shall not exceed $50,000,000 (which amount shall be reduced
proportionally, following the sale of any Individual Property other than to a
Borrower or Mezzanine Borrower, based on the Allocated Loan Amount of the
Individual Property sold and the Allocated Loan Amounts of all of the
Properties, in each case as of the date hereof)),

(k) if the Pre-Funded Deferred Purchase Price (as defined in the Note Sales
Agreement) is paid pursuant to Section 2.3 of the Note Sales Agreement, (i) for
the Excess Cash Flow Period ending December 31, 2010, an amount equal to the
lesser of (1) Excess Cash Flow for such period (calculated without giving effect
to this clause (k)) and (2) the amount of the Pre-Funded Deferred Purchase Price
paid to the Mezzanine Lenders pursuant to the terms of the Note Sales Agreement
during such Excess Cash Flow Period and (ii) for each subsequent Excess Cash
Flow Period after the Excess Cash Flow Period ending December 31, 2010 until
such time as the Remaining Pre-Funded Deferred Purchase Price has been reduced
to zero, an amount equal to the lesser of (1) Excess Cash Flow for such period
(calculated without giving effect to this clause (k)) and (2) the amount of the
Remaining Pre-Funded Deferred Purchase Price outstanding at such time.

plus, without duplication,

 

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(l) an amount equal to any decrease in Working Capital for such Excess Cash Flow
Period,

(m) to the extent any capital expenditures referred to in clause (d) above were
deducted from Excess Cash Flow in the prior Excess Cash Flow Period and not made
in the current Excess Cash Flow Period, the amount of such Capital Expenditures
that were not so made in the current Excess Cash Flow Period, and to the extent
any taxes referred to in clause (e) above were deducted from Excess Cash Flow in
the prior Excess Cash Flow Period and are not paid in the current Excess Cash
Flow Period, the amount of such taxes that were not so paid in the current
Excess Cash Flow Period;

(n) any extraordinary or nonrecurring gain realized in cash during such Excess
Cash Flow Period (except to the extent such gain consists of (1) Net Sales
Proceeds that are applied to repay the Debt or Mezzanine Loans, or (2) Net
Proceeds that are applied in accordance with Section 6.4),

(o) to the extent deducted in the computation of EBITDAM, cash interest income,

(p) the amount related to items that were deducted from or not added to Net
Income in connection with calculating Consolidated Net Income or were deducted
from or not added to Consolidated Net Income in calculating EBITDAM to the
extent either (i) such items represented cash received by a Consolidated Entity
or (ii) such items do not represent cash paid by a Consolidated Entity, in each
case on a consolidated basis during such Excess Cash Flow Period, and

(q) the amount of any withdrawal from the Working Capital Account during such
Excess Cash Flow Period.

Excess Cash Flow for any Excess Cash Flow Period will be calculated
substantially in the form of Exhibit E hereto.

“Excess Cash Flow Period” shall have the meaning set forth in the Note Sales
Agreement.

“Excess Proceeds” shall have the meaning set forth in the definition of “Release
Price”.

“Exchange Act” shall have the meaning set forth in Section 9.10 hereof.

“Exchange Act Filing” shall have the meaning set forth in Section 5.1.11(e)
hereof.

“FF&E” shall mean, with respect to each Individual Property, collectively, all
furniture, fixtures, goods, inventory, Equipment, furnishings, objects of art,
machinery, appliances, appurtenances and signage (as such terms are defined in
the Uniform Commercial Code, as applicable) together with tools and supplies
(including, but not limited to, all spare parts inventories and linen, china,
glassware, tableware, uniforms, other hotel inventory and similar

 

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items) and all other similar property now or hereafter located at each
Individual Property or usable in connection with the present or future operation
and occupancy of each Individual Property. “FF&E” shall include, without
limitation: beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors,
bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades, blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage
racks, stools, sofas, chinaware, linens, pillows, blankets, glassware,
silverware, food carts, cookware, dry cleaning facilities, dining room wagons,
keys or other entry systems, bars, bar fixtures, liquor and other drink
dispensers, icemakers, radios, television sets, intercom and paging equipment,
electric and electronic equipment, dictating equipment, private telephone
systems, medical equipment, potted plants, fittings, plants, heating fixtures,
lighting fixtures, plumbing fixtures, fire prevention extinguishing and all
other apparatuses, stoves, ranges, refrigerators, laundry machines, machinery,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems,
electrical signs, bulbs, bells, ash and fuel, conveyors, cabinets, lockers,
shelving, spotlighting equipment, dishwashers, garbage disposals, washers and
dryers, all gaming and financial equipment, computer equipment, calculators,
adding machines, gaming tables, any other electronic equipment of every nature,
and all other customary hotel and casino resort equipment and other tangible
property owned by Borrower, Manager or Operating Company, or in which Borrower,
Manager or Operating Company has or shall have an interest, now or hereafter
located at such Individual Property and useable in connection with the present
or future operation and occupancy of such Individual Property; provided,
however, that FF&E shall not include items owned by tenants under space Leases
(other than the Operating Lease) or by third party operators (other than
Operating Company or Manager).

“FF&E Reserve Account” shall have the meaning set forth in Section 7.3 hereof.

“FF&E Reserve Fund” shall have the meaning set forth in Section 7.3 hereof.

“Fifth Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XVII hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Fifth Mezzanine Borrower” shall mean one of the Fifth Mezzanine Borrowers
individually, or the Fifth Mezzanine Borrowers collectively, as the context
shall require.

“Fifth Mezzanine Debt Service” shall mean, with respect to any particular period
of time, scheduled principal and/or interest payments due under the Fifth
Mezzanine Notes.

“Fifth Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Fifth Mezzanine Loan Agreement from time to time. The Fifth
Mezzanine Lenders as of the date hereof are listed on Schedule XXX.

“Fifth Mezzanine Loan” shall mean that certain loan made by the Fifth Mezzanine
Lenders to Fifth Mezzanine Borrower as of the Original Closing Date. When made,
the Fifth Mezzanine Loan was in the original principal amount of Two Hundred
Seventy Five Million and no/100 Dollars ($275,000,000.00). As of the date
hereof, the Fifth Mezzanine Loan is in the outstanding principal amount of One
Hundred Thirty Two Million Nine Hundred

 

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Twenty One Thousand Two Hundred Fifty and 01/100 Dollars ($132,921,250.01). The
Fifth Mezzanine Loan is evidenced and/or secured by the Fifth Mezzanine Loan
Agreement and the Fifth Mezzanine Loan Documents.

“Fifth Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Fifth Mezzanine Loan Agreement, dated as of the date hereof, between
Fifth Mezzanine Lenders and Fifth Mezzanine Borrower, as the same may hereafter
be amended, supplemented, or otherwise modified from time to time.

“Fifth Mezzanine Loan Documents” shall mean the Fifth Mezzanine Loan Agreement,
the Fifth Mezzanine Notes and all other documents and instruments executed and
delivered in connection with the Fifth Mezzanine Loan, as such documents may be
amended, modified and restated in accordance with their respective terms.

“Fifth Mezzanine Notes” shall mean the “Notes” as defined in the Fifth Mezzanine
Loan Agreement.

“Filed Documents” shall have the meaning set forth in Section 11.8 hereof.

“First Extended Maturity Date” shall mean February 13, 2014, or such earlier
date on which the final payment of principal of the Loan or the Notes becomes
due and payable as therein or herein provided whether at such stated maturity
date, by declaration of acceleration or otherwise.

“First Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XIII hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“First Mezzanine Borrower” shall mean one of the First Mezzanine Borrowers
individually, or the First Mezzanine Borrowers collectively, as the context
shall require.

“First Mezzanine Debt Service” shall mean, with respect to any particular period
of time, scheduled principal and/or interest payments due under the First
Mezzanine Notes.

“First Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the First Mezzanine Loan Agreement from time to time. The First
Mezzanine Lenders as of the date hereof are listed on Schedule XXVI.

“First Mezzanine Loan” shall mean that certain loan made by the First Mezzanine
Lenders to First Mezzanine Borrower as of the Original Closing Date. When made,
the First Mezzanine Loan was in the original principal amount of Three Hundred
Million and No/100 Dollars ($300,000,000). As of the date hereof, the First
Mezzanine Loan is in the outstanding principal amount of Two Hundred Ninety
Million Ten Thousand and no/100 Dollars ($290,010,000). The First Mezzanine Loan
is evidenced and/or secured by the First Mezzanine Loan Agreement and the First
Mezzanine Loan Documents.

“First Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated First Mezzanine Loan Agreement, dated as of the date hereof, between
First Mezzanine Lenders and First Mezzanine Borrower, as the same may hereafter
be amended, supplemented, or otherwise modified from time to time.

 

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“First Mezzanine Loan Documents” shall mean the First Mezzanine Loan Agreement,
the First Mezzanine Notes and all other documents and instruments executed and
delivered in connection with the First Mezzanine Loan, as such documents may be
amended, modified and restated in accordance with their respective terms.

“First Mezzanine Notes” shall mean the “Notes” as defined in the First Mezzanine
Loan Agreement.

“First Period” shall mean the period from the Closing Date to and including
September 9, 2011 (being the first Payment Date occurring after the twelfth full
month following the Closing Date).

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during each year of the term of the Loan.

“Fitch” shall mean Fitch, Inc.

“Fixtures” shall mean, with respect to each Individual Property, all Equipment
now owned, or the ownership of which is hereafter acquired, by Borrower which is
so related to the Land and the Improvements forming part of the Individual
Property in question that it is deemed fixtures or real property under
applicable Legal Requirements, including, without limitation, all building or
construction materials intended for construction, reconstruction, alteration,
decoration or repair of or installation on the applicable Individual Property,
construction equipment, appliances, machinery, plant equipment, fittings,
apparatuses, fixtures and other items now or hereafter attached to, installed in
or used in connection with (temporarily or permanently) any of the Improvements
or the Land, including, but not limited to, engines, devices for the operation
of pumps, pipes, plumbing, call and sprinkler systems, fire extinguishing
apparatuses and equipment, heating, ventilating, incinerating, electrical, air
conditioning and air cooling equipment and systems, gas and electric machinery,
appurtenances and equipment, pollution control equipment, security systems,
disposals, dishwashers, refrigerators and ranges, recreational equipment and
facilities of all kinds, and water, electrical, storm and sanitary sewer
facilities, utility lines and equipment (whether owned individually or jointly
with others, and, if owned jointly, to the extent of Borrower’s interest
therein) and all other utilities whether or not situated in easements, all water
tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply,
and all other structures, together with all accessions, appurtenances,
additions, replacements, betterments and substitutions or any of the foregoing
and the proceeds thereof.

“Flamingo Individual Borrower” shall have the meaning set forth in the
introductory paragraph hereto.

“Flamingo Las Vegas” shall mean that certain Individual Property identified on
Schedule II as the “Flamingo Las Vegas” and having a street address of 3555 Las
Vegas Boulevard South, Las Vegas, Nevada.

 

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“Flamingo Las Vegas Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Flamingo Las Vegas Operating
Company, LLC, Flamingo Individual Borrower and Flamingo CMBS Manager, LLC,
pursuant to which Flamingo CMBS Manager, LLC is to provide management and other
services with respect to the Flamingo Las Vegas, as such agreement may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Flamingo Las Vegas Manager” shall mean (i) Flamingo CMBS Manager, LLC (so long
as such entity is Controlled by and wholly-owned by Holdings), (ii) any other
Person that (x) timely obtains any Gaming Licenses that may be required to be a
manager of a gaming operation, (y) is Controlled by and wholly-owned by
Holdings, and (z) is experienced in the management and operation of properties
such as the Flamingo Las Vegas or (iii) any other Person that is approved by
Lender to be the manager of the Flamingo Las Vegas.

“Force Majeure” shall mean any delay caused by reason of strike, lock-out or
other labor trouble, casualty, governmental preemption of priorities or other
controls in connection with a national or other public emergency or shortages of
fuel, supplies or labor resulting therefrom or other causes beyond Borrower’s
reasonable control.

“Foreign Taxes” shall have the meaning set forth in Section 2.2.3(e) hereof.

“Fourth Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XVI hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Fourth Mezzanine Borrower” shall mean one of the Fourth Mezzanine Borrowers
individually, or the Fourth Mezzanine Borrowers collectively, as the context
shall require.

“Fourth Mezzanine Debt Service” shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments due under the
Fourth Mezzanine Notes.

“Fourth Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Fourth Mezzanine Loan Agreement from time to time. The Fourth
Mezzanine Lenders as of the date hereof are listed on Schedule XXIX.

“Fourth Mezzanine Loan” shall mean that certain loan made by the Fourth
Mezzanine Lenders to Fourth Mezzanine Borrower as of the Original Closing Date.
When made, the Fourth Mezzanine Loan was in the original principal amount of Two
Hundred Seventy Five Million and No/100 Dollars ($275,000,000). As of the date
hereof, the Fourth Mezzanine Loan is in the outstanding principal amount of Two
Hundred Sixty Five Million Eight Hundred Forty Two Thousand Five Hundred and
no/100 Dollars ($265,842,500). The Fourth Mezzanine Loan is evidenced and/or
secured by the Fourth Mezzanine Loan Agreement and the Fourth Mezzanine Loan
Documents.

“Fourth Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Fourth Mezzanine Loan Agreement, dated as of the date hereof, between
Fourth Mezzanine Lenders and Fourth Mezzanine Borrower, as the same may
hereafter be amended, supplemented, or otherwise modified from time to time.

 

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“Fourth Mezzanine Loan Documents” shall mean the Fourth Mezzanine Loan
Agreement, the Fourth Mezzanine Notes and all other documents and instruments
executed and delivered in connection with the Fourth Mezzanine Loan, as such
documents may be amended, modified and restated in accordance with their
respective terms.

“Fourth Mezzanine Notes” shall mean the “Notes” as defined in the Fourth
Mezzanine Loan Agreement.

“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.

“Gaming Authorities” shall mean, in any jurisdiction in which Borrower,
Operating Company, Manager or any of their respective subsidiaries manages or
conducts any casino, gaming business or activities, the applicable gaming board,
commission, or other governmental gaming regulatory authority, body or agency
which (a) has, or may at any time after the Original Closing Date have,
jurisdiction over the gaming activities at any of the Properties or any
successor to such authority or (b) is, or may at any time after the Original
Closing Date be, responsible for interpreting, administering and enforcing the
Gaming Laws.

“Gaming Equipment” shall mean any and all gaming devices, gaming device parts
inventory and other related gaming equipment and supplies used in connection
with the operation of a casino, including (without limitation), slot machines,
gaming tables, cards, dice, chips, tokens, player tracking systems, cashless
wagering systems, electronic betting systems, mobile gaming systems and
associated equipment which are located at the Casino Components, owned or leased
by Operating Company or Borrower and used or useable exclusively in the present
or future operation of slot machines and live games at the Casino Component,
together with all improvements and/or additions thereto.

“Gaming Equipment Facility Agreements” means, collectively, the Loan Agreements,
Notes and Security Agreements entered into as of (a) with respect to each
Individual Property (other than the Individual Property located in the State of
New Jersey and each Swap Property), the Original Closing Date, (b) with respect
to the Individual Property located in the State of New Jersey, February 20,
2008, and (c) with respect to each Swap Property, as of the Swap Closing Date,
in each case by and between each Borrower and its corresponding Operating
Company, in each case relative to Gaming Equipment, as amended on the date
hereof and as the same may hereafter be amended, supplemented, or otherwise
modified from time to time.

“Gaming Laws” or “Gaming Regulations” shall mean all applicable constitutions,
treaties, laws, statutes and municipal ordinances pursuant to which any Gaming
Authority possesses regulatory, licensing or permitting authority over gaming,
gambling or casino or casino-related activities and all rules, rulings, orders,
ordinances and regulations of any Gaming Authority applicable to the gambling,
casino, gaming businesses or casino or casino-related activities of Borrower,
Manager, Operating Company or any of their respective subsidiaries in any
jurisdiction, as in effect from time to time, including the policies,
interpretations and administration thereof by the Gaming Authorities.

 

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“Gaming License” shall mean, in any jurisdiction in which Borrower, Manager,
Operating Company or any of their respective subsidiaries conducts any casino
and gaming business or activities, any license, qualification, franchise,
accreditation, approval, registration, permit, finding of suitability or other
authorization relating to gaming, the gaming business or the operation of a
casino under the Gaming Laws or required by the Gaming Authorities or otherwise
necessary for the operation of gaming, the gaming business or a resort casino.

“Gaming Liquidity Requirement” shall mean the minimum bankroll requirements for
cash and cash equivalents required to be maintained by each Operating Company
pursuant to Gaming Laws in an amount no greater than is mandated by applicable
law, which requirements may be subject to (a) adjustment in an amount equal to
any incremental increase or decrease in the amount of the Gaming Liquidity
Requirement that is required to be maintained by Operating Company under
applicable Gaming Laws as a result of any increase or decrease in gaming
business at the applicable Casino Component, or (b) subject to increase or
decrease due to any change in the applicable requirements under Gaming Laws
generally.

“Gaming Operating Reserve” shall mean, with respect to the Casino Component,
such cash funds and reserves that are held and maintained on-site at each
Individual Property by Operating Company, in its capacity as the duly licensed
operator of the Casino Component, including (without limitation) casino chips,
tokens, checks and markers; provided, however, that all such Gaming Operating
Reserves (a) are established and maintained in compliance with all applicable
Gaming Liquidity Requirements, (b) are solely for use in the day-to-day
operation and management of each Casino Component in the ordinary course of
business, and (c) in the case of each Individual Property, are in amounts
customary and generally comparable for casinos comparable to the Individual
Property in question.

“Governmental Authority” shall mean any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence, including, without limitation, all Gaming Authorities having
jurisdiction over the Properties (and any operations conducted thereat),
Borrower, Manager and Operating Company. For the avoidance of doubt, the term
“Governmental Authority” shall include, and be deemed to include, all Gaming
Authorities.

“Guarantor” shall mean, collectively, Guarantor (FF&E), Guarantor (Recourse
Carveouts), Guarantor (Operating Lease) and any guarantor under any completion
guaranty provided under Section 5.1.21.

“Guarantor (FF&E)” shall mean any Approved Guarantor. Initially, Guarantor
(FF&E) shall mean Holdings, and its successors. If Holdings (or any replacement
Guarantor (FF&E)) fails to meet the Minimum Value Test, then Borrower shall
replace Holdings (or such replacement Guarantor (FF&E)), as the guarantor under
the Guaranty (FF&E), with an Approved Guarantor.

“Guarantor (Operating Lease)” shall mean Holdings, and its successors.

“Guarantor (Recourse Carveouts)” shall mean Holdings, and its successors.

 

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“Guaranty” shall mean, collectively, the Guaranty (FF&E), the Guaranty (Recourse
Carveouts), the Operating Lease Guaranty, and any completion guaranty provided
under Section 5.1.21.

“Guaranty (FF&E)” shall mean that certain Amended and Restated Guaranty (FF&E),
dated as of the date hereof, from Guarantor (FF&E) to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Guaranty (Recourse Carveouts)” shall mean that certain Amended and Restated
Guaranty (Recourse Carveouts), dated as of the date hereof, from Guarantor
(Recourse Carveouts) to Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Harrah’s AC Individual Borrower” shall have the meaning set forth in the
introductory paragraph hereto.

“Harrah’s Atlantic City Property” shall mean that certain Individual Property
identified on Schedule II as “Harrah’s Atlantic City” and having a street
address of 777 Harrah’s Boulevard, Atlantic City, New Jersey.

“Harrah’s Atlantic City Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Harrah’s Atlantic City Operating
Company, LLC, Harrah’s AC Individual Borrower and HAC CMBS Manager, LLC,
pursuant to which HAC CMBS Manager, LLC is to provide management and other
services with respect to the Harrah’s Atlantic City Property, as such agreement
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“Harrah’s Atlantic City Manager” shall mean (i) HAC CMBS Manager, LLC (so long
as such entity is Controlled by and wholly-owned by Holdings), (ii) any other
Person that (x) timely obtains any Gaming Licenses that may be required to be a
manager of a gaming operation, (y) is Controlled by and wholly-owned by
Holdings, and (z) is experienced in the management and operation of properties
such as the Harrah’s Atlantic City Property or (iii) any other Person that is
approved by Lender to be the manager of the Harrah’s Atlantic City Property.

“Harrah’s LV Individual Borrower” shall have the meaning set forth in the
introductory paragraph hereto.

“Harrah’s Las Vegas” shall mean that certain Individual Property identified on
Schedule II as “Harrah’s Las Vegas” and having a street address of 3475 Las
Vegas Boulevard South, Las Vegas, Nevada.

“Harrah’s Las Vegas Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Harrah’s Las Vegas, Inc., Harrah’s
LV Individual Borrower and HLV CMBS Manager, LLC, pursuant to which HLV CMBS
Manager, LLC is to provide management and other services with respect to the
Harrah’s Las Vegas, as such agreement may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

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“Harrah’s Las Vegas Manager” shall mean (i) HLV CMBS Manager, LLC (so long as
such entity is Controlled by and wholly-owned by Holdings), (ii) any other
Person that (x) timely obtains any Gaming Licenses that may be required to be a
manager of a gaming operation, (y) is Controlled by and wholly-owned by
Holdings, and (z) is experienced in the management and operation of properties
such as the Harrah’s Las Vegas or (iii) any other Person that is approved by
Lender to be the manager of the Harrah’s Las Vegas.

“Harrah’s Laughlin” shall mean that certain Individual Property identified on
Schedule II as “Harrah’s Laughlin” and having a street address of 2900 South
Casino Drive, Laughlin, Nevada.

“Harrah’s Laughlin Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Harrah’s Laughlin, Inc., Laughlin
Individual Borrower and Laughlin CMBS Manager, LLC, pursuant to which Laughlin
CMBS Manager, LLC is to provide management and other services with respect to
the Harrah’s Laughlin, as such agreement may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Harrah’s Laughlin Manager” shall mean (i) Laughlin CMBS Manager, LLC (so long
as such entity is Controlled by and wholly-owned by Holdings), (ii) any other
Person that (x) timely obtains any Gaming Licenses that may be required to be a
manager of a gaming operation, (y) is Controlled by and wholly-owned by
Holdings, and (z) is experienced in the management and operation of properties
such as the Harrah’s Laughlin or (iii) any other Person that is approved by
Lender to be the manager of the Harrah’s Laughlin.

“HOC” shall mean Harrah’s Operating Company, Inc., a Delaware corporation, and
its successors.

“HOC Credit Agreement” means that certain Credit Agreement dated as of the
Original Closing Date among HOC, Bank of America, N.A., as administrative agent
and collateral agent, and the other parties thereto, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

“Holdings” shall mean Harrah’s Entertainment, Inc., and its successors.

“Hotel Components” shall mean, collectively, those portions of each Individual
Property devoted to the operation of a hotel and related facilities, excluding
the Casino Component, but including (without limitation) (a) all guest rooms and
suites, hotel amenities, restaurants, conference centers, meeting, banquet and
other public rooms, spa, parking spaces and other facilities of the hotel
portion of such Individual Property, and (b) any theaters or performing arts
spaces in the Individual Property in question. The Hotel Components are more
particularly described and set forth in each Operating Lease, as applicable.

“Improvements” shall have the meaning set forth in the granting clause of the
related Mortgage with respect to each Individual Property.

 

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“Indebtedness” of a Person, at a particular date, means the sum (without
duplication) at such date of (a) all indebtedness of such Person (including,
without limitation, amounts for borrowed money and indebtedness in the form of
mezzanine debt and preferred equity); (b) obligations evidenced by bonds,
debentures, notes, or other similar instruments; (c) obligations for the
deferred purchase price of property or services (including trade obligations);
(d) obligations under letters of credit; (e) obligations under acceptance
facilities; (f) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds, to invest in any Person
or entity, or otherwise to assure a creditor against loss; and (g) obligations
secured by any Liens, whether or not the obligations have been assumed.

“Indemnified Liabilities” shall have the meaning set forth in Section 10.13
hereof.

“Indemnified Persons” shall have the meaning set forth in Section 9.10 hereof.

“Independent Director” or “Independent Manager” of any corporation or limited
liability company shall mean an individual who has prior experience as an
independent director, independent manager or independent member with at least
three (3) years of employment experience and who is provided by CT Corporation,
Corporation Service Company, National Registered Agents, Inc., Wilmington Trust
Company, Stewart Management Company, Lord Securities Corporation or, if none of
those companies is then providing professional Independent Directors or
Independent Managers, another nationally-recognized company reasonably approved
by Lender, in each case that is not an Affiliate of Borrower and that provides
professional Independent Directors or Independent Managers and other corporate
services in the ordinary course of its business, and which individual is duly
appointed as a member of the board of directors or board of managers of such
corporation or limited liability company and is not, and has never been, and
will not while serving as Independent Director or Independent Manager be, any of
the following:

(i) a member, partner, equityholder, manager, director, officer or employee of
any Borrower or any of their respective Affiliates (other than as an Independent
Director or Independent Manager of Borrower or an Affiliate of Borrower that
(x) is a Special Purpose Entity, (y) is not in the direct chain of ownership of
Borrower and (z) is required by a creditor to be a single purpose bankruptcy
remote entity, provided that such Independent Director or Independent Manager is
employed by a company that routinely provides professional Independent
Directors, Independent Managers or managers in the ordinary course of business);

(ii) a creditor, supplier or service provider (including provider of
professional services) to any Borrower or any of their respective equityholders
or Affiliates (other than a nationally-recognized company that routinely
provides professional Independent Directors or Independent Managers and other
corporate services in the ordinary course of its business);

(iii) a family member of any such member, partner, equityholder, manager,
director, officer, employee, creditor, supplier or service provider;

 

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(iv) an independent manager, independent director or similar officer of any
entity that is in the direct chain of ownership of the Borrower; provided,
however, and notwithstanding anything to the contrary in clause (i) of this
definition, that one Independent Director of each Borrower (but not both
Independent Directors simultaneously) may serve as an independent director of
(x) any entity that owns a direct or indirect interest in any Borrower and is
required by a creditor to be a single purpose bankruptcy remote entity and
(y) any entity that is a wholly owned direct or indirect subsidiary of the
Borrower and is required by a creditor to be a single purpose bankruptcy remote
entity; or

(v) a Person that controls (whether directly, indirectly or otherwise) any of
(i), (ii) or (iii) above.

A natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the Independent Director or Independent
Manager of a Special Purpose Entity affiliated with Borrower shall not be
disqualified from serving as an Independent Director or Independent Manager of
the Borrower, provided that the fees that such individual earns from serving as
Independent Director or Independent Manager of affiliates of the Borrower in any
given year constitute in the aggregate less than five percent (5%) of such
individual’s annual income for that year.

“Individual Material Adverse Effect” shall mean any event or condition that,
either singly or in the aggregate, could reasonably be expected to have or
result in a material adverse effect upon (a) the business, operations, economic
performance, prospects, assets or condition (financial or otherwise) of (i) any
Borrower, (ii) Guarantor, (iii) any Operating Company, (iv) any Operating Lease
or Operating Lease Guaranty, (v) any Manager or any Management Agreement or
(vi) any Individual Property or any Hotel Component or Casino Component thereon;
(b) the ability of any Borrower or Guarantor to perform, in all material
respects, its obligations under each of the Loan Documents to which it is a
party; (c) the ability of any Operating Company to perform, in all material
respects, its obligations under its Lease; (d) the ability of any Manager to
perform, in all material respects, its obligations under the Management
Agreement or any one of the Management Agreements; (e) the enforceability or
validity of (i) any Operating Lease or Operating Lease Guaranty, or (ii) any
Loan Document or the perfection or priority of any Lien created under any Loan
Document; (f) the value of, or cash flow from, any Individual Property or the
operations thereof; or (g) the material rights, interests and remedies of any
Lender under any of the Loan Documents.

“Individual Property” shall mean, individually, any one of the properties
identified on Schedule II and encumbered by the Mortgage in respect of such
property (and, with respect to each such property, the Improvements, all
Fixtures, all Equipment, all FF&E and all personal property owned by Borrower
and encumbered by a Mortgage, together with all rights pertaining to such
property and Improvements, as more particularly described in the Granting
Clauses of each Mortgage and referred to therein as the “Property”).

“Information Recipient” shall have the meaning set forth in Section 11.7 hereof.

 

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“Initial Lender” shall mean JPMorgan Chase Bank, N.A., Bank of America, N.A.,
Citibank, N.A., Merrill Lynch Mortgage Lending, Inc., Credit Suisse AG, Cayman
Islands Branch, German American Capital Corporation, Morgan Stanley Mortgage
Capital Holdings LLC, Goldman Sachs Mortgage Company and each Affiliate of each
such Lender that has become or becomes an Assignee hereunder pursuant to the
provisions of Sections 9.3 and 9.6.

“Initial Maturity Date” shall mean February 13, 2013, or such earlier date on
which the final payment of principal of the Loan or the Notes becomes due and
payable as therein or herein provided whether at such stated maturity date, by
declaration of acceleration or otherwise.

“Insolvency Opinion” shall mean that certain non-consolidation opinion letter
dated the Swap Closing Date delivered by Cleary Gottlieb Steen & Hamilton LLP in
connection with the Loan, as confirmed and updated by Richards, Layton and
Finger LLP on the date hereof.

“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.

“Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.

“Insured Personal Property” shall include, collectively, (i) “Personal Property”
as defined in the granting clauses of the Mortgage with respect to each
Individual Property, (ii) “Equipment” as defined in the granting clauses of the
Mortgage with respect to each Individual Property, (iii) FF&E, and
(iv) Equipment.

“Intellectual Property” or “IP” shall mean any or all of the following and all
worldwide rights in, arising out of, or associated therewith: (i) trademarks,
service marks, certification marks, collective marks, corporate names, domain
names, logos, trade dress, and all other indicia of origin or quality, all
applications and registrations for the foregoing, and all goodwill associated
therewith and symbolized thereby, including all renewals of same (collectively,
“Trademarks”); (ii) published and unpublished works of authorship, whether
copyrightable or not (including databases, lists and other compilations of
information, computer software, source code, object code, user interface, and
user manuals and other training documentation related thereto), and all
derivative works and applications, registrations, and renewals thereof
(collectively, “Copyrights”); (iii) inventions and discoveries, whether
patentable or not, and all invention disclosures, patents and applications
therefor, including divisionals, continuations, and renewals thereof
(collectively, “Patents”); and (iv) confidential information, trade secrets, and
nonpublic know-how, including business methods and plans, customer and supplier
information and lists (collectively, “Trade Secrets”).

“Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated
as of the date hereof among Lender and the Mezzanine Lenders, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time (subject to the provisions of Section 9.11 regarding any such amendments).

“Interest Expense” shall mean, with respect to any Person for any period, the
sum of (a) gross interest expense of such Person for such period on a
consolidated basis, including (i) the amortization of debt discounts, (ii) the
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connection with the incurrence of Indebtedness to the extent included in
interest expense and (iii) the portion of any payments or accruals with respect
to equipment financing and equipment leases allocable to interest expense,
(b) capitalized interest of such Person, and (c) commissions, discounts, yield
and other fees and charges incurred in connection with any indebtedness which
are payable to any Person other than Borrower. For purposes of the foregoing,
interest on equipment financing or equipment leases shall be deemed to accrue at
an interest rate reasonably determined by the Borrower to be the rate of
interest implicit in such equipment financing or equipment lease in accordance
with GAAP.

“Interest Period” shall mean (a) for the first interest period hereunder, the
period commencing on the date hereof and ending on (and including) September 14,
2010, and (b) for each interest period thereafter (commencing with the interest
period beginning on September 15, 2010), the period commencing on the fifteenth
(15th) day of each calendar month and ending on (and including) the fourteenth
(14th) day of the following calendar month. Each Interest Period above shall be
a full month and shall not be shortened by reason of any payment of the Loan
prior to the expiration of such Interest Period.

“Interest Rate Cap Agreement” shall mean, as applicable, the Interest Rate Cap
Agreement (together with the confirmation and schedules relating thereto) dated
as of January 28, 2008 or May 22, 2008 (as applicable) between Borrower and an
Acceptable Counterparty (as may be modified pursuant to the terms thereof and
hereof after the date hereof) or a Replacement Interest Rate Cap Agreement.

“IP License” shall mean, collectively or individually, as the context shall
require, each IP License (Borrower to IP Licensor) (collectively or
individually, as the context shall require), each IP License (Borrower to
Manager and Operating Company) (collectively or individually, as the context
shall require), and each IP License (IP Licensor to Manager, Operating Company
and Borrower) (collectively or individually, as the context shall require).

“IP License (Borrower to IP Licensor)” shall mean, collectively or individually,
as the context shall require, those certain amended and restated license
agreements dated as of the date hereof by and between each Borrower and IP
Licensor, pursuant to which each Borrower shall license all Property-Specific
Trademarks to IP Licensor, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“IP License (Borrower to Manager and Operating Company)” shall mean,
collectively or individually, as the context shall require, those certain
agreements dated as of the date hereof by and between each Borrower, each
Manager, and each Operating Company, pursuant to which each Borrower shall
license all Property-Specific Trademarks to each Manager and each Operating
Company, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

“IP License (IP Licensor to Manager, Operating Company and Borrower)” shall
mean, collectively or individually, as the context shall require, those certain
agreements dated as of the Original Closing Date (or, with respect to each Swap
Property, as of the Swap Closing Date), by and between IP Licensor and each
Operating Company, as amended on the date hereof to, inter alia, add each
Manager and each Borrower as parties, and as the same may be further amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

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“IP Licensor” shall mean Harrah’s License Company, LLC, a Nevada limited
liability company.

“JPM” shall mean JPMorgan Chase Bank, N.A. and its successors in interest.

“Laughlin Individual Borrower” shall have the meaning set forth in the
introductory paragraph hereto.

“Lease” shall mean any lease (including the Operating Lease), sublease or
subsublease, letting, license, concession or other agreement (whether written or
oral and whether now or hereafter in effect) pursuant to which any Person is
granted a possessory interest in, or right to use or occupy all or any portion
of any space in any Individual Property (other than short term arrangements with
transient hotel guests entered into in the usual course of business), and
(a) every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such
lease, sublease, subsublease, or other agreement and (b) every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto (including the Operating Lease
Guaranty).

“Legal Requirements” shall mean, with respect to each Individual Property, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting such Individual Property or any part thereof
(including, without limitation, all Gaming Laws), or affecting the construction,
use, alteration or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto (including, without limitation, all Gaming Licenses
and Operating Permits), and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, Manager or Operating Company, at any time in force affecting such
Individual Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to such
Individual Property or any part thereof, or (b) in any way limit the use and
enjoyment thereof. Legal Requirements shall include any (x) judicial,
administrative or other governmental or quasi governmental order, injunction,
writ, judgment, decree, ruling, interpretation, finding or other directive,
whether domestic or foreign; (y) arbitrator’s, mediator’s or referee’s decision,
finding, award or recommendation; or (z) charter, rule, regulation or other
organizational or governance document of any self-regulatory or governing body
or organization. For the avoidance of doubt, the term “Legal Requirements” shall
include, and be deemed to include, all applicable Gaming Laws and Gaming
Regulations.

“Lender” shall mean, as the context may require, each Initial Lender as well as
any Person that becomes an Assignee hereunder pursuant to the provisions of
Sections 9.3 and 9.6, individually, or all Initial Lenders as well as any
Persons that become Assignees hereunder pursuant to the provisions of Sections
9.3 and 9.6, collectively. The Lender (collectively) is also referred to herein,
from time to time, as the “Noteholders”; and a Lender (individually) is also
referred to herein, from time to time, as a “Noteholder.”

 

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“Lenders’ Percentage” shall mean, with respect to any Lender at any time, the
ratio (expressed as a percentage) of the outstanding principal balance due to
such Lender (under such Lender’s Note) at such time to the aggregate principal
balance of the Loan at such time.

“Lender’s Share” shall mean a fraction, the numerator of which is the
outstanding principal amount of the Loan and the denominator of which is the sum
of the outstanding principal amounts of the Loan and the Mezzanine Loans (in
each case, as of the date of determination).

“Leverage Ratio” shall mean, on any date, the ratio of (a) Net Debt as of such
date to (b) EBITDAM for the Consolidated Entities for the period of twelve
(12) consecutive fiscal months of the Consolidated Entities then most recently
ended (taken as one accounting period) for which financial statements have been
(or were required to have been) delivered hereunder.

“Liabilities” shall have the meaning set forth in Section 9.10 hereof.

“LIBOR” shall mean, with respect to each Interest Period, the rate (expressed as
a percentage per annum and rounded to the next nearest 1/100 of 1%) for deposits
in U.S. dollars, for a one-month period, that appears on Reuters Screen LIBOR01
Page (or the successor thereto) as of 11:00 a.m., London time, on the related
Determination Date. If such rate does not appear on Reuters Screen LIBOR01 Page
as of 11:00 a.m., London time, on such Determination Date, LIBOR shall be the
arithmetic mean of the offered rates (expressed as a percentage per annum) for
deposits in U.S. dollars for a one-month period that appear on the Reuters
Screen Libor Page as of 11:00 a.m., London time, on such Determination Date, if
at least two such offered rates so appear. If fewer than two such offered rates
appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, Lender (or Servicer, on Lender’s behalf) shall request the
principal London office of any four major reference banks in the London
interbank market selected by Lender to provide such bank’s offered quotation
(expressed as a percentage per annum) to prime banks in the London interbank
market for deposits in U.S. dollars for a one-month period as of 11:00 a.m.,
London time, on such Determination Date for the amounts of not less than U.S.
$1,000,000. If at least two such offered quotations are so provided, LIBOR shall
be the arithmetic mean of such quotations. If fewer than two such quotations are
so provided, Lender (or Servicer, on Lender’s behalf) shall request any three
major banks in New York City selected by Lender to provide such bank’s rate
(expressed as a percentage per annum) for loans in U.S. dollars to leading
European banks for a one-month period as of approximately 11:00 a.m., New York
City time on the applicable Determination Date for amounts of not less than U.S.
$1,000,000. If at least two such rates are so provided, LIBOR shall be the
arithmetic mean of such rates. LIBOR shall be determined conclusively by Lender
or its agent.

“LIBOR Loan” shall mean the Loan at such time as interest thereon accrues at a
rate of interest based upon LIBOR.

 

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“Lien” shall mean, with respect to each Individual Property and the Collateral,
any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or restriction on transfer of, on or
affecting Borrower, any Individual Property or any portion thereof or any
interest therein, including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic’s, materialmen’s and other similar liens and encumbrances, in each
case whether arising by contract, operation of law, or otherwise.

“Loan” shall mean the Original Loan, as amended by the modifications set forth
in this Agreement and the other Loan Documents.

“Loan Amount” shall mean, as determined from time to time, the outstanding
principal balance of the Loan (as of the date of determination).

“Loan Documents” shall mean, collectively, this Agreement, the Notes, the
Mortgages, the Assignments of Leases, the Environmental Indemnity, the O&M
Agreement, the Guaranty, the Pledge of Gaming Equipment Facility Agreements, the
Collateral Assignment of Interest Rate Cap Agreement, the Collateral Assignment
of Management Agreements and Shared Services Agreement, the Contribution
Agreement, the Trademark Security Agreement, the Omnibus Assignment and
Assumption (Initial Lenders), the Omnibus Amendment (Gaming Facility), the
Omnibus Amendment (Mortgage Loan), the Omnibus Amendment (Windstorm
Intercreditor), the Note Sales Agreement, the Working Capital Account Agreement,
the Operating Lease Subordination and all other documents executed and/or
delivered in connection with the Original Loan and the Loan, as any of the same
may have been (or may be) amended, restated, replaced, supplemented or otherwise
modified from time to time.

“Loan Party” shall mean, collectively, Borrower, Principal and Guarantor.

“London Business Day” shall mean any day other than a Saturday, Sunday or any
other day on which commercial banks in London, England are not open for
business.

“Major Lease” shall mean any of the following: (a) with respect to any
Individual Property, any Lease (i) covering in excess of forty thousand
(40,000) net rentable square feet at such Individual Property or (ii) made with
a tenant that is a tenant under another Lease at such Individual Property (or
with a tenant that is an Affiliate of a tenant under another Lease at such
Individual Property) if any such Leases, together, cover in excess of forty
thousand (40,000) net rentable square feet or more at such Individual Property,
(b) any Lease of space at any Individual Property with an Affiliate of Borrower,
or (c) any Lease that is not the result of arm’s length negotiations; provided,
however, that the Operating Lease shall not constitute a Major Lease for
purposes of this Agreement.

“Management Agreement” shall mean, individually or collectively as the context
requires, the Flamingo Las Vegas Management Agreement, the Harrah’s Atlantic
City Management Agreement, the Harrah’s Laughlin Management Agreement, the Paris
Las Vegas Management Agreement, the Rio Las Vegas Management Agreement and the
Harrah’s Las Vegas Management Agreement, as all or any of the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

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“Management Group” means the group consisting of the directors, executive
officers and other management personnel of Holdings, HOC and their subsidiaries,
as the case may be, on the Original Closing Date together with (x) any new
directors whose election by such boards of directors or whose nomination for
election by the shareholders of HOC or Holdings, as the case may be, was
approved by a vote of a majority of the directors of HOC or Holdings, as the
case may be, then still in office who were either directors on the Original
Closing Date or whose election or nomination was previously so approved and
(y) executive officers and other management personnel of HOC, Holdings and their
subsidiaries, as the case may be, hired at a time when the directors on the
Original Closing Date together with the directors so approved constituted a
majority of the directors of HOC or Holdings, as the case may be.

“Manager” shall mean, collectively, or individually as the context shall
require, the Flamingo Las Vegas Manager, the Harrah’s Atlantic City Manager, the
Harrah’s Laughlin Manager, the Paris Las Vegas Manager, the Rio Las Vegas
Manager and the Harrah’s Las Vegas Manager.

“Material Alteration” shall mean any Alteration with respect to all or a portion
of any Individual Property that (i) when aggregated with all other Alterations
at such Individual Property then being conducted involve an estimated total cost
in excess of an amount equal to ten percent (10%) of the sum of the Allocated
Loan Amount for such Individual Property as of the date hereof and the
“Allocated Loan Amounts” under (and as defined in each of) the Mezzanine Loan
Agreements for such Individual Property as of the date hereof or (ii) when
aggregated with all other Alterations at the Properties, including such
Individual Property, then being conducted, involve an estimated total cost in
excess of an amount equal to five percent (5%) of the sum of the Loan Amount and
the Mezzanine Loan Amount as of the close of business on (and taking into
account any Mezzanine Note repurchases closing on) the date hereof (and, as used
herein, “Threshold Amount” shall mean whichever of said five percent (5%) or ten
percent (10%) amount shall have been exceeded, provided that if both shall have
been exceeded, then the lower of such two amounts shall be the “Threshold
Amount”); provided, that, in determining whether one or more Alterations
comprise a Material Alteration, there shall not be included (a) merely
decorative work such as painting, wall papering, carpeting and replacement of
FF&E to the extent the same are of a routine and recurring nature and performed
in the ordinary course of business; (b) tenant improvement work performed by a
tenant pursuant to the terms of any Lease (other than the Operating Lease)
entered into in accordance with the terms hereof, so long as such work does not
adversely affect any structural component of any Improvements, any utility or
HVAC system contained in any Improvements or the exterior of any building
constituting a part of any Improvements, (c) any Alterations which are performed
in connection with the Restoration of any portion of any Individual Property
after the occurrence of a Casualty or Condemnation in accordance with the terms
and provisions of this Agreement, or (d) the Convention Center Project.

“Material Indebtedness” shall mean Indebtedness in an aggregate principal amount
exceeding $150 million.

 

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“Maturity Date” shall mean (i) the Initial Maturity Date, (ii) the First
Extended Maturity Date if the conditions to extending the term of the Loan
beyond the Initial Maturity Date (as set forth in Section 2.7) are satisfied and
the term of the Loan is so extended, (iii) the Second Extended Maturity Date if
the conditions to extending the term of the Loan beyond the First Extended
Maturity Date (as set forth in Section 2.7) are satisfied and the term of the
Loan is so extended, or (iv) such other date on which the final payment of
principal of the Notes becomes due and payable as therein or herein provided,
whether at maturity, by declaration of acceleration, or otherwise.

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

“Mezzanine Borrowers” shall mean, collectively, First Mezzanine Borrower, Second
Mezzanine Borrower, Third Mezzanine Borrower, Fourth Mezzanine Borrower, Fifth
Mezzanine Borrower, Sixth Mezzanine Borrower, Seventh Mezzanine Borrower, Eighth
Mezzanine Borrower and Ninth Mezzanine Borrower.

“Mezzanine Debt Service” shall mean, with respect to any particular period of
time, the sum of (a) the First Mezzanine Debt Service, (b) the Second Mezzanine
Debt Service, (c) the Third Mezzanine Debt Service, (d) the Fourth Mezzanine
Debt Service, (e) the Fifth Mezzanine Debt Service, (f) the Sixth Mezzanine Debt
Service, (g) the Seventh Mezzanine Debt Service, (h) the Eighth Mezzanine Debt
Service and (i) the Ninth Mezzanine Debt Service.

“Mezzanine Lenders” shall mean, collectively, the First Mezzanine Lenders, the
Second Mezzanine Lenders, the Third Mezzanine Lenders, the Fourth Mezzanine
Lenders, the Fifth Mezzanine Lenders, the Sixth Mezzanine Lenders, the Seventh
Mezzanine Lenders, the Eighth Mezzanine Lenders and the Ninth Mezzanine Lenders;
and “Mezzanine Lender” shall mean any or all of the Mezzanine Lenders, as the
context shall require.

“Mezzanine Loan Agreements” shall mean collectively, the First Mezzanine Loan
Agreement, the Second Mezzanine Loan Agreement, the Third Mezzanine Loan
Agreement, the Fourth Mezzanine Loan Agreement, the Fifth Mezzanine Loan
Agreement, the Sixth Mezzanine Loan Agreement, the Seventh Mezzanine Loan
Agreement, the Eighth Mezzanine Loan Agreement and the Ninth Mezzanine Loan
Agreement.

“Mezzanine Loan Amount” shall mean, as determined from time to time, the
outstanding principal balance of the Mezzanine Loans in the aggregate (as of the
date of determination).

“Mezzanine Loan Documents” shall mean, collectively, the First Mezzanine Loan
Documents, the Second Mezzanine Loan Documents, the Third Mezzanine Loan
Documents, the Fourth Mezzanine Loan Documents, the Fifth Mezzanine Loan
Documents, the Sixth Mezzanine Loan Documents, the Seventh Mezzanine Loan
Documents, the Eighth Mezzanine Loan Documents and the Ninth Mezzanine Loan
Documents.

 

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“Mezzanine Loan Reallocation Amount” shall have the meaning set forth in
Section 2.5.1.

“Mezzanine Loans” shall mean, collectively, the First Mezzanine Loan, the Second
Mezzanine Loan, the Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth
Mezzanine Loan, the Sixth Mezzanine Loan, the Seventh Mezzanine Loan, the Eighth
Mezzanine Loan and the Ninth Mezzanine Loan.

“Mezzanine Notes” shall mean, collectively, the First Mezzanine Notes, the
Second Mezzanine Notes, the Third Mezzanine Notes, the Fourth Mezzanine Notes,
the Fifth Mezzanine Notes, the Sixth Mezzanine Notes, the Seventh Mezzanine
Notes, the Eighth Mezzanine Notes and the Ninth Mezzanine Notes.

“Minimum Value Test” shall mean, with respect to any Person, that the greater of
the book value or the fair market value of the assets of such Person (excluding,
for purposes of making such determination, the value of the Properties) exceeds
Five Billion and no/100 Dollars ($5,000,000,000.00) in the aggregate, as
certified to Lender in an Officer’s Certificate prepared in good faith based on
the most recent financial statements of such Person.

“Monthly Disbursements” shall have the meaning set forth in Section 2.6.2.

“Monthly FF&E Reserve Amount” means the monthly deposit for FF&E required
pursuant to Section 7.3 of this Agreement.

“Monthly Tax and Insurance Amount” means the monthly deposit for Taxes and
Insurance required pursuant to Section 7.2 of this Agreement.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall mean (a) with respect to each Individual Property (other than a
Swap Property), that certain first priority Mortgage (or Deed of Trust or Deed
to Secure Debt) and Security Agreement, dated as of the Original Closing Date,
executed and delivered by Borrower as security for the Loan and encumbering such
Individual Property in favor of Collateral Agent (for the benefit of Lender), as
amended on the date hereof and as each of the same may be further amended,
restated, replaced, supplemented or otherwise modified from time to time, and
(b) with respect to each Swap Property, that certain first priority Mortgage (or
Deed of Trust or Deed to Secure Debt) and Security Agreement, dated as of the
Swap Closing Date, executed and delivered by Borrower as security for the Loan
and encumbering such Swap Property in favor of Collateral Agent (for the benefit
of Lender), as amended on the date hereof and as each of the same may be further
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Mortgage Loan Reallocation Amount” shall have the meaning set forth in
Section 2.5.1.

“Net Debt” shall mean, at any time, (a) the aggregate principal amount of the
Loan, the Mezzanine Loans and any other Permitted Indebtedness (Operating
Company) outstanding at such time, minus (b) the sum of (i) all Unrestricted
Cash then held by or on behalf

 

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of Borrower, Mezzanine Borrower and Operating Company and (ii) all amounts then
on deposit in the Collection Accounts, the Cash Management Account, the Working
Capital Account, the Blocked Account, the other Reserve Accounts and any other
account or reserve established by Lender or any Mezzanine Lender with respect to
the Loan or the Mezzanine Loan. For the avoidance of doubt, Net Debt shall not
include any cash or cash equivalents that are contributed to Borrower, directly
or indirectly, by Holdings and then returned to Holdings (as a dividend or
otherwise) for purposes of manipulating any calculation of Net Debt.

“Net Income” shall mean, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.

“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.

“Net Proceeds Deficiency” shall have the meaning set forth in
Section 6.4(b)(vi) hereof.

“Net Sales Proceeds” shall mean one hundred percent (100%) of the gross cash
proceeds actually received by a Borrower from the sale of an Individual
Property, net of (a) customary, reasonable, documented and out-of-pocket
attorneys’ fees and expenses, accountants’ fees and expenses, investment banking
fees, recording charges, transfer taxes, brokerage fees, consultants’ fees and
other customary, reasonable, documented and out-of-pocket fees and expenses, in
each case to the extent actually incurred by a Borrower in connection with the
sale of an Individual Property and provided that (and only if) such fees and
expenses are paid to unaffiliated third parties, and (b) an amount not to exceed
ten percent (10%) of the sales price of the Individual Property on account of
potential adjustments to the purchase price under (or continuing obligations of
the Borrower under) the contract of sale for such Individual Property provided
that (x) such amount on account of such potential adjustments or continuing
obligations under the contract of sale is deposited (at the closing of the sale
of such Individual Property) in an escrow account maintained under such contract
or in a reserve account maintained by Servicer as collateral for the Loan,
(y) any amounts that are disbursed from such escrow or reserve account to (or as
directed by) the purchaser under such contract of sale on account of items other
than customary, normal course post-closing adjustments (such as under any
indemnities for breach of contract or relating to breaches of representations in
respect of pension or environmental liabilities) shall be reimbursed by Borrower
and paid over by Borrower to or as directed by Lender on or prior to the release
date referred to below, to be applied as Net Sales Proceeds pursuant to this
Agreement (or, if applicable, to prepay the Mezzanine Loans as and to the extent
described in, and subject to the provisions and offer and payment mechanisms
described in, the Note Sales Agreement) and (z) the amount held in such escrow
or reserve account (as may be adjusted following the closing of the sale of the
Individual Property to reflect payments made to or as directed by the purchaser
under the contract of sale) shall be released from the escrow or reserve account
to Lender or as directed by Lender to be applied as Net Sales Proceeds pursuant
to this Agreement (or, if applicable, to be applied to prepay Mezzanine Loans,
as and to the extent described in, and subject to the provisions and offer and
payment mechanisms described in, the Note Sales Agreement) within no more than
nine (9) months following the date of closing under such contract of sale (such
amount released to or as directed by Lender pursuant to this subclause (z), the
“Post-Closing Reserve Amount”). For the

 

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avoidance of doubt, the parties confirm and agree that (1) Net Sales Proceeds
shall include and there shall be paid to Lender or as directed by Lender (A) any
proceeds and non-cash consideration received by a Borrower from the sale of an
Individual Property that are paid over from time to time (in the case of an
installment sales agreement or otherwise), (B) an amount equal to all amounts
disbursed to or as directed by the purchaser under the contract of sale on
account of items other than customary, normal course post-closing adjustments,
and (C) the amounts released to or as directed by Lender from the escrow or
reserve account pursuant to subclause (z) of the immediately preceding sentence,
(2) Borrower or its affiliates shall bear the cost of, and pay over to Lender as
Net Sales Proceeds (or as directed by Lender), any post-closing purchase price
adjustments that are other than customary, normal course post-closing
adjustments in accordance with subclause (y) of the immediately preceding
sentence, and (3) Borrower or its Affiliates shall bear the cost of, and there
shall not be deducted from Net Sales Proceeds, any income or gains taxes (or any
taxes other than transfer taxes) payable in connection with or as a result of
the sale of an Individual Property.

“New Syndication Arrangement” shall have the meaning set forth in
Section 9.11(a) hereof.

“Ninth Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XXI hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Ninth Mezzanine Borrower” shall mean one of the Ninth Mezzanine Borrowers
individually, or the Ninth Mezzanine Borrowers collectively, as the context
shall require.

“Ninth Mezzanine Debt Service” shall mean, with respect to any particular period
of time, scheduled principal and/or interest payments due under the Ninth
Mezzanine Notes.

“Ninth Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Ninth Mezzanine Loan Agreement from time to time. The Ninth
Mezzanine Lender as of the date hereof is Goldman Sachs Mortgage Company.

“Ninth Mezzanine Loan” shall mean that certain loan made by the Ninth Mezzanine
Lenders to Ninth Mezzanine Borrower as of the Original Closing Date. When made,
the Ninth Mezzanine Loan was in the original principal amount of Two Hundred
Seventy Five Million and no/100 Dollars ($275,000,000.00). As of the date
hereof, the Ninth Mezzanine Loan is in the outstanding principal amount of Nine
Million One Hundred Fifty Seven Thousand Five Hundred and No/100 Dollars
($9,157,500.00). The Ninth Mezzanine Loan is evidenced and/or secured by the
Ninth Mezzanine Loan Agreement and the Ninth Mezzanine Loan Documents.

“Ninth Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Ninth Mezzanine Loan Agreement, dated as of the date hereof, between
Ninth Mezzanine Lenders and Ninth Mezzanine Borrower, as the same may hereafter
be amended, supplemented, or otherwise modified from time to time.

“Ninth Mezzanine Loan Documents” shall mean the Ninth Mezzanine Loan Agreement,
the Ninth Mezzanine Notes and all other documents and instruments executed and
delivered in connection with the Ninth Mezzanine Loan, as such documents may be
amended, modified and restated in accordance with their respective terms.

 

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“Ninth Mezzanine Notes” shall mean the “Notes” as defined in the Ninth Mezzanine
Loan Agreement.

“Note” or “Notes” shall mean, individually or collectively as the context may
require, Note A-1, Note A-2, Note A-3, Note A-4, Note A-5, Note A-6, Note A-7,
Note A-8 and Note A-9.

“Note A-1” shall mean that certain Second Amended and Restated Promissory Note
A-1, dated as of the date hereof, executed by Borrower and JPMorgan Chase Bank,
N.A. and payable to the order of JPMorgan Chase Bank, N.A. in the amount of Six
Hundred Million Sixty Six Thousand Six Hundred Sixty Six and 67/100 Dollars
($600,066,666.67), as the same may hereafter be amended, supplemented, severed,
consolidated or otherwise modified from time to time.

“Note A-2” shall mean that certain Second Amended and Restated Promissory Note
A-2, dated as of the date hereof, executed by Borrower and Bank of America, N.A.
and payable to the order of Bank of America, N.A. in the amount of Six Hundred
Million Sixty Six Thousand Six Hundred Sixty Six and 67/100 Dollars
($600,066,666.67), as the same may hereafter be amended, supplemented, severed,
consolidated or otherwise modified from time to time.

“Note A-3” shall mean that certain Second Amended and Restated Promissory Note
A-3, dated as of the date hereof, executed by Borrower and Citibank, N.A. and
payable to the order of Citibank, N.A. in the amount of Six Hundred Million
Sixty Six Thousand Six Hundred Sixty Six and 67/100 Dollars ($600,066,666.67),
as the same may hereafter be amended, supplemented, severed, consolidated or
otherwise modified from time to time.

“Note A-4” shall mean that certain Second Amended and Restated Promissory Note
A-4, dated as of the date hereof, executed by Borrower and Credit Suisse, Cayman
Islands Branch and payable to the order of Credit Suisse AG, Cayman Islands
Branch in the amount of Six Hundred Million Sixty Six Thousand Six Hundred Sixty
Six and 67/100 Dollars ($600,066,666.67), as the same may hereafter be amended,
supplemented, severed, consolidated or otherwise modified from time to time.

“Note A-5” shall mean that certain Second Amended and Restated Promissory Note
A-5, dated as of the date hereof, executed by Borrower and German American
Capital Corporation and payable to the order of German American Capital
Corporation in the amount of Six Hundred Million Sixty Six Thousand Six Hundred
Sixty Six and 66/100 Dollars ($600,066,666.66), as the same may hereafter be
amended, supplemented, severed, consolidated or otherwise modified from time to
time.

“Note A-6” shall mean that certain Second Amended and Restated Promissory Note
A-6, dated as of the date hereof, executed by Borrower and Merrill Lynch
Mortgage Lending, Inc. and payable to the order of Merrill Lynch Mortgage
Lending, Inc. in the amount of Six Hundred Million Sixty Six Thousand Six
Hundred Sixty Six and 66/100 Dollars ($600,066,667.66), as the same may
hereafter be amended, supplemented, severed, consolidated or otherwise modified
from time to time.

 

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“Note A-7” shall mean that certain Second Amended and Restated Promissory Note
A-7, dated as of the date hereof, executed by Borrower and JPMorgan Chase Bank,
N.A. and payable to the order of JPMorgan Chase Bank, N.A. in the amount of One
Hundred Thirty Three Million Two Hundred Thousand and No/100 Dollars
($133,200,000.00), as the same may hereafter be amended, supplemented, severed,
consolidated or otherwise modified from time to time.

“Note A-8” shall mean that certain Second Amended and Restated Promissory Note
A-8, dated as of the date hereof, executed by Borrower and Goldman Sachs
Mortgage Company and payable to the order of Goldman Sachs Mortgage Company in
the amount of One Hundred Thirty Three Million Two Hundred Thousand and No/100
Dollars ($133,200,000.00), as the same may hereafter be amended, supplemented,
severed, consolidated or otherwise modified from time to time.

“Note A-9” shall mean that certain Second Amended and Restated Promissory Note
A-9, dated as of the date hereof, executed by Borrower and Morgan Stanley
Mortgage Capital Holdings LLC and payable to the order of Morgan Stanley
Mortgage Capital Holdings LLC in the amount of One Hundred Thirty Three Million
Two Hundred Thousand and No/100 Dollars ($133,200,000.00), as the same may
hereafter be amended, supplemented, severed, consolidated or otherwise modified
from time to time.

“Noteholder”, as used herein from time to time, shall refer to a Lender
(individually); and “Noteholders”, as used herein from time to time, shall refer
to the Lender (collectively).

“Note Sales Agreement” shall mean that certain Note Sales Agreement among
Borrower, each Mezzanine Borrower, each Lender, each Mezzanine Lender, each
Operating Company and Holdings, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“O&M Agreement” shall mean, with respect to each Individual Property (to the
extent required by the environmental reports referenced in Section 3.1.3(e)
hereof), that certain Amended and Restated Operations and Maintenance Agreement,
dated as of the Swap Closing Date, between Borrower and JPM (as Lender), as
amended pursuant to the Omnibus Assignment and Acceptance (Initial Lenders) and
the Omnibus Amendment (Mortgage Loan) and as the same may be further amended,
restated, replaced, supplemented or otherwise modified from time to time.

“OC Accounts” shall have the meaning set forth in Section 2.6.1(c).

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized senior officer of Borrower or the general
partner or managing member of Borrower, as applicable.

 

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“Off-Shore Accounts” shall mean the accounts more particularly described on
Schedule V.

“Omnibus Amendment (Gaming Facility)” shall mean that certain Omnibus
Reaffirmation and Ratification of Guaranty Agreements (Gaming Facility) dated as
of the date hereof, among Harrah’s Entertainment, Inc. and Lender, as the same
may be amended, supplemented, or otherwise modified from time to time.

“Omnibus Amendment (Mortgage Loan)” shall mean that certain Omnibus Amendment to
and Assignment of Loan Documents (Mortgage Loan) dated as of the date hereof,
among Borrower, Lender and Collateral Agent, as the same may be amended,
supplemented, or otherwise modified from time to time.

“Omnibus Amendment (Windstorm Intercreditor)” shall mean that certain Omnibus
Amendment to Loan Documents (Windstorm Intercreditor) dated as of the date
hereof, among Borrower, Lender, the Mezzanine Lenders, each of the “Other
Owners” named therein and made a party thereto, Holdings, Bank of America, N.A.,
and the “Other Secured Parties” named therein and made a party thereto, as the
same may be amended, supplemented, or otherwise modified from time to time.

“Omnibus Assignment and Acceptance (Initial Lenders)” shall mean that certain
Omnibus Assignment and Acceptance (Initial Lenders) dated as of the date hereof
among JPMorgan Chase Bank, N.A., as assignor, and the Initial Lenders, as
assignee.

“Operating Company” shall mean, collectively, the tenants under the Operating
Leases, and their successors and permitted assigns.

“Operating Company Annual Budget” shall mean, individually and collectively as
the context requires, with respect to each Operating Company, the operating
budget of such Operating Company, including all planned Capital Expenditures,
prepared by such Operating Company (and submitted to the Board of Directors for
such Operating Company) for the applicable Fiscal Year or other period.

“Operating Lease” shall mean, individually and collectively, as the context may
require, those certain Amended and Restated Lease Agreements listed on Schedule
VI, having a term of fifteen (15) years commencing on the Original Closing Date
(or, with respect to those Operating Leases relating to a Swap Property, as of
the Swap Closing Date), as the same may be amended, supplemented, replaced or
otherwise modified from time to time in accordance with the provisions hereof.
Each Operating Lease originally dated as of the Original Closing Date only shall
be referred to herein as an “Original Operating Lease”.

“Operating Lease Guaranty” shall mean, individually and collectively, as the
context may require, those certain Amended and Restated Lease Guaranty
Agreements listed on Schedule VIA, executed and delivered by Guarantor
(Operating Lease), dated as of the date hereof, unconditionally guaranteeing the
payment and performance by the Operating Company of all of its obligations under
the Operating Lease, and as such Lease Guaranty Agreements may be amended,
supplemented, replaced or otherwise modified from time to time in accordance
with the provisions hereof.

 

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“Operating Lease Subordination” shall mean, individually and collectively, as
the context may require, each Subordination of Operating Lease executed and
delivered by Borrower dated as of the date hereof and as the same may be
amended, supplemented, replaced or otherwise modified from time to time in
accordance with the provisions hereof.

“Operating Permits” shall have the meaning set forth in Section 4.1.22 hereof.

“Optional Note Purchases” shall have the meaning set forth in the Note Sales
Agreement.

“Ordinary Course Dispositions” shall have the meaning set forth in
Section 5.2.10.

“Original Closing Date” shall mean January 28, 2008.

“Original Loan” shall have the meaning set forth in the recitals hereto.

“Original Loan Agreement” shall have the meaning set forth in the recitals
hereto.

“Other Borrower Collateral” shall have the meaning set forth in Section 11.2.1
hereof.

“Other Borrowers” shall have the meaning set forth in Section 11.1 hereof.

“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes, and any other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining any Individual Property, now or hereafter levied or assessed or
imposed against such Individual Property or any part thereof.

“Paris Individual Borrower” shall have the meaning set forth in the introductory
paragraph hereto.

“Paris Las Vegas” shall mean that certain property identified in Schedule II as
Paris-Las Vegas, having a street address of 3655 South Las Vegas Boulevard, Las
Vegas, Nevada.

“Paris Las Vegas Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Paris Las Vegas Operating Company,
LLC, Paris Individual Borrower and Paris CMBS Manager, LLC, pursuant to which
Paris CMBS Manager, LLC is to provide management and other services with respect
to the Paris Las Vegas, as such agreement may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Paris Las Vegas Manager” shall mean (i) Paris CMBS Manager, LLC (so long as
such entity is Controlled by and wholly-owned by Holdings), (ii) any other
Person that (x) timely obtains any Gaming Licenses that may be required to be a
manager of a gaming operation, (y) is Controlled by and wholly-owned by
Holdings, and (z) is experienced in the management and operation of properties
such as the Paris Las Vegas or (iii) any other Person that is approved by Lender
to be the manager of the Paris Las Vegas.

 

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“Participant” shall have the meaning set forth in Section 9.4 hereof.

“Participant Register” shall have the meaning set forth in Section 9.4 hereof.

“Payment Date” shall mean the ninth (9th) calendar day of each calendar month
during the term of the Loan, and if such day is not a Business Day, then the
Business Day immediately preceding such day, commencing on September 9, 2010 and
continuing to and including the Maturity Date. Notwithstanding the foregoing,
the Payment Date in the final Interest Period shall be the Maturity Date (i.e.,
the second to last Business Day in such Interest Period rather than the ninth
calendar day of such month).

“Performance Threshold” shall have the meaning set forth in Section 5.1.22
hereof.

“Permitted Encumbrances” shall mean, with respect to an Individual Property,
collectively (a) the Liens and security interests created by the Loan Documents;
(b) all Liens, encumbrances and other matters disclosed in the Title Insurance
Policies relating to such Individual Property or any part thereof; (c) Liens, if
any, for Taxes and Other Charges imposed by any Governmental Authority not yet
due or delinquent; (d) the Operating Lease; (e) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender’s
reasonable discretion; (f) any Lien being contested by Borrower in good faith by
appropriate proceedings, provided that (i) no Default or Event of Default has
occurred and remains uncured, (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any applicable material
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances, (iii) no Individual Property nor any
part thereof or interest therein will be in imminent danger of being sold,
forfeited, terminated, cancelled or lost, (iv) such proceeding shall suspend the
enforcement of the contested Lien against Borrower and any Individual Property,
and (v) Borrower shall furnish such security as may be required by GAAP or as
may be reasonably requested by Lender; (g) statutory Liens for amounts not yet
due and payable, provided that no Individual Property nor any part thereof or
interest therein will be in imminent danger of being sold, forfeited,
terminated, cancelled or lost; (h) Liens incurred in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other types of social security; (i) any Lien securing the financing of FF&E
(including equipment leases) entered into by Borrower or Operating Company in
the ordinary course of business, subject to the limitations specified in the
definitions of “Permitted Indebtedness” and “Permitted Indebtedness (Operating
Company)”, as applicable; (j) rights of tenants under Leases, as tenants only;
(k) rights of hotel guests at the Hotel Components of the Properties; (l) zoning
restrictions, easements, rights-of-way, restrictions on use of real property and
other similar encumbrances incurred or entered into in the ordinary course of
business which do not, in each case, have an Individual Material Adverse Effect,
and (m) liens securing equipment financing leases and/or equipment acquisition
financings permitted hereunder as “Permitted Indebtedness (Operating Company),”
subject to the final sentence of said definition, or as “Permitted
Indebtedness”.

 

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“Permitted Fund Manager” means any Person that on the date of determination
(a) is one of the entities listed on Schedule VII or any other
nationally-recognized manager of investment funds investing in debt or equity
interests relating to commercial real estate, (b) is investing through a fund
with committed capital of at least $1,000,000,000, (c) is not subject to a
Bankruptcy Action, (d) has not been, and none of its material subsidiaries has
been, subject to a Bankruptcy Action for the preceding 5 years, (e) has not been
convicted and is not under current indictment for a felony or crime involving
moral turpitude, (f) has not been found by a court of competent jurisdiction to
have violated federal or state securities laws, and (g) is not an organized
crime figure (as determined by Lender in its reasonable discretion).

“Permitted Holder” shall mean each of (i) the Sponsors, (ii) the Management
Group, (iii) any Person that has no material assets other than the capital stock
of Holdings and that, directly or indirectly, holds or acquires beneficial
ownership of 100% on a fully diluted basis of the voting Equity Interests of
Holdings, and of which no other Person or “group” (within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act as in effect on the Original Closing
Date), other than any of the other Permitted Holders specified in clauses
(i) and (ii), beneficially owns more than 50% (or, following a Qualified IPO,
the greater of 35% and the percentage beneficially owned by the Permitted
Holders specified in clauses (i) and (ii)) on a fully diluted basis of the
voting Equity Interests thereof, and (iv) any “group” (within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Original
Closing Date) the members of which include any of the other Permitted Holders
specified in clauses (i) and (ii) and that, directly or indirectly, hold or
acquire beneficial ownership of the voting Equity Interests of Holdings (a
“Permitted Holder Group”), so long as (1) each member of the Permitted Holder
Group has voting rights proportional to the percentage of ownership interests
held or acquired by such member and (2) no Person or other “group” (other than
the other Permitted Holders specified in clauses (i) and (ii)) beneficially owns
more than 50% (or, following a Qualified IPO, the greater of 35% and the
percentage beneficially owned by the Permitted Holders specified in clauses
(i) and (ii)) on a fully diluted basis of the voting Equity Interests held by
the Permitted Holder Group.

“Permitted Indebtedness” shall mean the Debt and ordinary administrative costs
of Borrower.

“Permitted Indebtedness (Operating Company)” shall mean, collectively, (a) trade
and operational debt (including equipment financing leases, such as leases with
providers of Gaming Equipment) relating to the operation of the Properties and
the routine administration of Operating Company incurred in the ordinary course
of business with trade creditors and in amounts as are normal and reasonable
under the circumstances, are not evidenced by a note, are required to be paid
within ninety (90) days after same are incurred (except in the case of equipment
leases) and are paid when due, (b) accrued and unpaid payroll, benefits and
payroll taxes with respect to employees of Operating Company or its Affiliates
engaged with respect to the Properties incurred in the ordinary course of
business and paid when due, (c) debt owed to affiliates, provided such debt is
made subject to an intercreditor and standstill agreement in favor of Lender in
form and substance reasonably satisfactory to Lender, and (d) such other
Indebtedness specifically permitted pursuant to the Operating Lease. In no event
shall the Permitted Indebtedness (Operating Company) of each Operating Company,
determined on an aggregate basis, excluding for purposes of this sentence the
Indebtedness

 

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described in subclause (b) of the preceding sentence, exceed five percent
(5%) of the sum of the Loan Amount and the Mezzanine Loan Amount in the
aggregate as of the close of business on (and taking into account any Mezzanine
Note repurchases closing on) the date hereof.

“Permitted Investments” shall mean any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, including
those issued by Servicer or any Certificate Administrator under any
Securitization or any of their respective Affiliates, payable on demand or
having a maturity date not later than the Business Day immediately prior to the
first Payment Date following the date of acquiring such investment and meeting
one of the appropriate standards set forth below:

(i) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause (i) must
(A) have a predetermined fixed dollar amount of principal due at maturity that
cannot vary or change, (B) if rated by S&P, not have an “r” highlighter affixed
to their rating, (C) if such investments have a variable rate of interest, have
an interest rate tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (D) not be subject to
liquidation prior to their maturity;

(ii) Federal Housing Administration debentures;

(iii) obligations of the following United States government sponsored agencies:
Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this clause
(iii) must (A) have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change, (B) if rated by S&P, not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

(iv) federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
all Rating Agencies, rated by

 

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at least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to the certificates); provided, however, that the investments described
in this clause (iv) must (A) have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change, (B) if rated by S&P, not
have an “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, have an interest rate tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) not be subject to liquidation prior to their maturity;

(v) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers’ acceptances issued by, any bank
or trust company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in the highest short term rating
category by each Rating Agency (or, if not rated by all Rating Agencies, rated
by at least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to the certificates); provided, however, that the investments described
in this clause (v) must (A) have a predetermined fixed dollar of principal due
at maturity that cannot vary or change, (B) if rated by S&P, not have a “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

(vi) debt obligations with maturities of not more than 365 days and at all times
rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investments would not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial or, if higher,
then current ratings assigned to the certificates) in its highest long-term
unsecured debt rating category; provided, however, that the investments
described in this clause (vi) must (A) have a predetermined fixed dollar amount
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
not have an “r” highlighter affixed to their rating, (C) if such investments
have a variable rate of interest, have an interest rate tied to a single
interest rate index plus a fixed spread (if any) and must move proportionately
with that index, and (D) not be subject to liquidation prior to their maturity;

(vii) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 365 days and that at all times is rated by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to the certificates) in its highest short-term unsecured debt rating;

 

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provided, however, that the investments described in this clause (vii) must
(A) have a predetermined fixed dollar amount of principal due at maturity that
cannot vary or change, (B) if rated by S&P, not have a “r” highlighter affixed
to their rating, (C) if such investments have a variable rate of interest, have
an interest rate tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (D) not be subject to
liquidation prior to their maturity;

(viii) units of taxable money market funds or mutual funds, which funds are
regulated investment companies, seek to maintain a constant net asset value per
share and have the highest rating from each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial or, if higher, then current ratings assigned to the
certificates) for money market funds or mutual funds; and

(ix) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (a) Lender and (b) following a
Securitization, each Rating Agency, as evidenced by a written confirmation that
the designation of such security, obligation or investment as a Permitted
Investment will not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial or, if higher, then current ratings assigned to the
certificates by such Rating Agency;

provided, however, that such instrument continues to qualify as a “cash flow
investment” pursuant to Code Section 860G(a)(6) earning a passive return in the
nature of interest and no obligation or security shall be a Permitted Investment
if (A) such obligation or security evidences a right to receive only interest
payments or (B) the right to receive principal and interest payments on such
obligation or security are derived from an underlying investment that provides a
yield to maturity in excess of 120% of the yield to maturity at par of such
underlying investment.

“Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in
exchange for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund the Senior Unsecured Notes (or previous refinancings
thereof constituting Permitted Refinancing Indebtedness) that constitutes
“Permitted Refinancing Indebtedness” under the HOC Credit Agreement in effect as
of the Original Closing Date.

“Permitted Tax Distributions” shall mean distributions by the Consolidated
Entities to pay U.S. federal, state, local and foreign income taxes actually
payable by the Consolidated Entities’ direct and indirect equity owners (or, in
the case of any such owner that owns any assets other than direct or indirect
equity of the Consolidated Entities, at any applicable time after the date
hereof, the U.S. federal, state and local income taxes that would have been
actually payable had such holder owned no other assets after the date hereof) by
virtue of the fact that the Consolidated Entities are pass-through entities for
U.S. federal, state or local income tax purposes (as applicable), for any such
taxable year (or portion thereof) ending after the date hereof, including any
amounts of such income taxes resulting from audit adjustments after the date
hereof for any such taxable year (or portion thereof).

 

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“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

“Physical Conditions Report” shall mean, with respect to each Individual
Property, a report prepared by a company satisfactory to Lender regarding the
physical condition of such Individual Property, satisfactory in form and
substance to Lender in its sole discretion.

“Platform” shall have the meaning set forth in Section 11.7 hereof.

“Pledge Agreement” shall have the meaning set forth in the First Mezzanine Loan
Agreement, the Second Mezzanine Loan Agreement, the Third Mezzanine Loan
Agreement, the Fourth Mezzanine Loan Agreement, the Fifth Mezzanine Loan
Agreement, the Sixth Mezzanine Loan Agreement, the Seventh Mezzanine Loan
Agreement, the Eighth Mezzanine Loan Agreement or the Ninth Mezzanine Loan
Agreement, as the context shall require, as each such Pledge Agreement shall be
ratified simultaneously herewith and as the same may be further amended,
modified or supplemented from time to time.

“Pledge of Gaming Equipment Facility Agreements” means each of the Security
Agreements, entered into as of (a) with respect to each Individual Property
(other than the Individual Property located in the State of New Jersey and each
Swap Property), the Original Closing Date, (b) with respect to the Individual
Property located in the State of New Jersey, February 20, 2008, and (c) with
respect to each Swap Property, as of the Swap Closing Date, by each Borrower in
favor of JPM (as Lender), in each case as amended by the Omnibus Amendment
(Gaming Facility) and as the same may hereafter be further amended,
supplemented, or otherwise modified from time to time.

“Policies” shall have the meaning specified in Section 6.1(b) hereof.

“Post-Closing Reserve Amount” shall have the meaning set forth in the definition
of “Net Sales Proceeds”.

“Post-Rio Leverage Ratio” shall mean, as of any date of determination, after the
sale of the Rio Las Vegas in accordance with the provisions of this Agreement,
the Leverage Ratio at such time, as adjusted to give pro forma effect to any
reduction in the principal balance of the Loan and/or the Mezzanine Loans
(whether from the sale of the Rio Las Vegas or otherwise).

“Pre-Rio Leverage Ratio” shall mean the Leverage Ratio immediately prior to any
sale of the Rio Las Vegas pursuant to and in accordance with the provisions of
this Agreement. The Pre-Rio Leverage Ratio shall be determined immediately prior
to the closing of the sale of the Rio Las Vegas.

“Prepayment Date” shall have the meaning specified in Section 2.4.1 hereof.

 

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“Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), as amended,
(b) Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001, and relating to Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the
International Emergency Economic Power Act, 50 U.S.C. § 1701 et. seq. and
(d) all other Legal Requirements relating to money laundering or terrorism.

“Prime Rate” shall mean the annual rate of interest publicly announced by
Citibank, N.A. in New York, New York, as its base rate, as such rate shall
change from time to time. If Citibank, N.A. ceases to announce a base rate,
Prime Rate shall mean the rate of interest published in The Wall Street Journal
Eastern Edition from time to time as the “Prime Rate.” If more than one “Prime
Rate” is published in The Wall Street Journal Eastern Edition for a day, the
average of such “Prime Rates” shall be used, and such average shall be rounded
up to the nearest one-eighth of one percent (0.125%). If The Wall Street Journal
Eastern Edition ceases to publish the “Prime Rate,” Lender shall select an
equivalent publication that publishes such “Prime Rate,” and if such “Prime
Rates” are no longer generally published or are limited, regulated or
administered by a governmental or quasi-governmental body, then Lender shall
select a comparable interest rate index.

“Prime Rate Loan” shall mean the Loan at such time as interest thereon accrues
at a rate of interest based upon the Prime Rate.

“Prime Rate Spread” shall mean the difference (expressed as the number of basis
points) between (a) LIBOR plus the Spread on the date LIBOR was last applicable
to the Loan and (b) the Prime Rate on the date that LIBOR was last applicable to
the Loan; provided, however, in no event shall such difference be a negative
number.

“Principal” shall mean First Mezzanine Borrower.

“Projections” shall have the meaning set forth in Section 9.8 hereof.

“Properties” shall mean, collectively, each and every Individual Property which
is subject to the terms of this Agreement and the Mortgage.

“Property-Specific Trademarks” shall mean, collectively, all Trademarks listed
in the Trademark Assignment and the IP License (Borrower to IP Licensor).

“Provided Information” shall mean any and all financial and other information
provided at any time by, or on behalf of, Borrower with respect to the Loan,
Properties, Borrower, any Affiliates of Borrower, including Holdings, Guarantor
and/or Operating Company.

“Public Lender” shall have the meaning set forth in Section 11.7 hereof.

“Qualified IPO” shall mean an underwritten public offering of the Equity
Interests of Holdings or any direct or indirect parent of Holdings which
generates cash proceeds of at least $1,000.0 million.

 

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“Qualified Transferee” means (a) any Lender and any holder of any of the
Mezzanine Notes, (b) Apollo Management, L.P., TPG Capital, L.P. f/k/a Texas
Pacific Group, their respective Affiliates and senior or executive principals of
Apollo Management, L.P. or TPG Capital, L.P. who are the holders from time to
time of voting interests in Holdings, and investment funds Controlled by either
of them (but excluding for purposes of this clause (b) “portfolio companies” of
the foregoing), or (c) one or more of the following:

(i) a real estate investment trust, bank, saving and loan association,
investment bank, insurance company, trust company, commercial credit
corporation, pension plan, pension fund or pension advisory firm, mutual fund,
government entity or plan, provided that any such Person referred to in this
clause (i) satisfies the Eligibility Requirements;

(ii) an investment company, money management firm or “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933, as
amended, or an institutional “accredited investor” within the meaning of
Regulation D under the Securities Act of 1933, as amended, provided that any
such Person referred to in this clause (ii) satisfies the Eligibility
Requirements;

(iii) an institution substantially similar to any of the foregoing entities
described in clauses (c)(i) or (c)(ii) that satisfies the Eligibility
Requirements;

(iv) any entity Controlled by any of the entities described in clause (a),
(b) or clauses (c)(i) or (c)(iii) above, or Holdings or any entity Controlled by
Holdings (provided in each case there shall have occurred no Change in Control);

(v) a Qualified Trustee in connection with a securitization of, the creation of
collateralized debt obligations (“CDO”) secured by or financing through an
“owner trust” of, any Mezzanine Loan (collectively, “Securitization Vehicles”),
so long as (A) the special servicer or manager of such Securitization Vehicle
has the Required Special Servicer Rating and (B) the entire “controlling class”
of such Securitization Vehicle, other than with respect to a CDO Securitization
Vehicle, is held by one or more entities that are otherwise Qualified
Transferees under clauses (c)(i), (ii), (iii) or (iv) of this definition;
provided that the operative documents of the related Securitization Vehicle
require that (1) in the case of a CDO Securitization Vehicle, the “equity
interest” in such Securitization Vehicle is owned by one or more entities that
are Qualified Transferees under clauses (c)(i), (ii), (iii) or (iv) of this
definition and (2) if any of the relevant trustee, special servicer, manager
fails to meet the requirements of this clause (v), such Person must be replaced
by a Person meeting the requirements of this clause (v) within thirty (30) days;
or

(vi) an investment fund, limited liability company, limited partnership or
general partnership where a Permitted Fund Manager or an entity that is
otherwise a Qualified Transferee under clauses (c)(i), (ii), (iii) or (iv) of
this definition acts as the general partner, managing member or fund manager and
at least 50% of the equity interests in such investment vehicle are owned,
directly or indirectly, by one or more entities that are otherwise Qualified
Transferees under clauses (c)(i), (ii), (iii) or (iv) of this definition;

 

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provided, however, that no Transferee shall be a Qualified Transferee if (and
for so long as) such Transferee is, or is Controlled by, an Embargoed Person or
a Person that has been found “unsuitable,” for any reason, by a Gaming
Authority.

“Qualified Trustee” means (a) a corporation, national bank, national banking
association or a trust company, organized and doing business under the laws of
any state or the United States of America, authorized under such laws to
exercise corporate trust powers and to accept the trust conferred, having a
combined capital and surplus of at least $100,000,000 and subject to supervision
or examination by federal or state authority, (b) an institution insured by the
Federal Deposit Insurance Corporation or (c) an institution whose long-term
senior unsecured debt is rated either of the then in effect top two rating
categories of each of the Rating Agencies.

“Rating Agencies” shall mean, prior to a Securitization of the Loan (or any
component thereof), each of S&P, Moody’s and Fitch and, following a
Securitization of the Loan (or any component thereof), any nationally recognized
statistical rating organization that has been engaged by or on behalf of Lender
or its designee to rate the Loan or such component thereof or any Securities
issued in such Securitization.

“Rating Agency Confirmation” means, collectively, a written affirmation from
each of the Rating Agencies that the credit rating of the Securities given by
such Rating Agency of such Securities immediately prior to the occurrence of the
event with respect to which such Rating Agency Confirmation is sought will not
be qualified, downgraded or withdrawn as a result of the occurrence of such
event, which affirmation may be granted or withheld in such Rating Agency’s sole
and absolute discretion. In the event that, at any given time, no such
Securities shall have been issued and are then outstanding or if any Rating
Agency elects not to consider whether to grant or withhold such an affirmation,
then the term Rating Agency Confirmation shall be deemed instead to require the
written approval of Lender based on its good faith determination of whether the
Rating Agencies would issue a Rating Agency Confirmation if any such Securities
were outstanding.

“RDE Parcels” shall mean the parcels represented by the shaded areas shown on
Schedule XXXIII and comprising a part of the Flamingo Las Vegas and/or Harrah’s
Las Vegas, as applicable.

“RDE Project” shall mean the retail, dining and entertainment project
anticipated to be built upon the property including the RDE Parcels and/or
O’Shea’s.

“RDE Project Easement” shall have the meaning set forth in Section 2.5.4(A).

“RDE Project Financing” shall mean third party financing incurred by Affiliates
of the Borrower for purposes of financing (or refunding the cost of) the
construction, development or improvement of the RDE Project and which is secured
by the RDE Project.

 

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“RDE Project Lease” shall have the meaning set forth in Section 2.5.4(A).

“RDE Project Rights Holder” shall mean the Person (who shall not be a Borrower,
Operating Company or a Mezzanine Borrower) who holds a beneficial interest in a
RDE Project Easement or is the Lessee under a RDE Project Lease.

“REA” shall mean any reciprocal easement agreement or substantially similar
agreement affecting an Individual Property.

“Register” shall have the meaning set forth in Section 9.7 hereof.

“Regulation AB” shall have the meaning set forth in Section 5.1.11(e) hereof.

“Regulation S-K” shall mean Regulation S-K under the Securities Act of 1933 and
the Securities Exchange Act of 1934, as amended.

“Regulation S-X” shall mean Regulation S-X under the Securities Act of 1933 and
the Securities Exchange Act of 1934, as amended.

“Related Loan” shall have the meaning set forth in Section 5.1.11(e) hereof.

“Related Property” shall have the meaning set forth in Section 5.1.11(e) hereof.

“Release Price” shall mean, at any time, in connection with a release of an
Individual Property from the Lien of a Mortgage as provided in Section 2.5, an
amount equal to (i) in the case of any Individual Property other than the Paris
Las Vegas or the Rio Las Vegas, one hundred ten percent (110%) of the applicable
Allocated Loan Amount at such time with respect to such Individual Property,
(ii) in the case of the Paris Las Vegas, one hundred twenty percent (120%) of
the applicable Allocated Loan Amount at such time for the Paris Las Vegas and
(iii) in the case of the Rio Las Vegas, the Net Sales Proceeds at the closing of
the sale of the Rio Las Vegas (subject in all respects to the provisions of
Section 2.5.1 (including, for the avoidance of doubt, the requirements set forth
in Section 2.5.1 that (1) the sales price from the sale of the Rio Las Vegas
must equal or exceed Three Hundred Million and no/100 Dollars ($300,000,000.00)
in order for a sale of such Property to be permitted hereunder and (2) the
Post-Closing Reserve Amount, when available, be applied to the repayment of the
Loan or the Mezzanine Loans, as applicable)). It is understood and agreed that,
if the amount of Net Sales Proceeds (including any Post-Closing Reserve Amount)
from the sale of any Individual Property (other than the Rio Las Vegas) is
greater than the sum of the Release Price (determined above) and the “Release
Price” under and as defined in each Mezzanine Loan Agreement, then such excess
amount of Net Sales Proceeds (including any Post-Closing Reserve Amount) (such
amount, the “Excess Proceeds”) shall be applied to the repayment of the Loan
pursuant to Section 2.5.1(e) (in addition to the applicable Release Price).

“Remaining Pre-Funded Deferred Purchase Price” shall mean, for any Excess Cash
Flow Period, an amount equal to the Pre-Funded Deferred Purchase Price (as
defined in the Note Sales Agreement), less the aggregate amount subtracted from
the calculation of Excess Cash Flow pursuant to clause (k) of the definition of
“Excess Cash Flow” in each Excess Cash Flow Period prior to such Excess Cash
Flow Period.

 

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“REMIC Trust” shall mean a “real estate mortgage investment conduit” (within the
meaning of Section 860D of the Code) that holds the Note.

“Rents” shall mean, with respect to each Individual Property, and without
duplication, all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil
and gas-or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or the Operating Company (or employees of
Borrower or the Operating Company) from any and all sources arising from or
attributable to such Individual Property, and proceeds, if any, from business
interruption or other loss of income or insurance, including, without
limitation, all hotel receipts, revenues and credit card receipts collected from
guest rooms, restaurants, bars, meeting rooms, banquet rooms and recreational
facilities, all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of property or rendering of services by Borrower
or any operator or manager of the Hotel Components or the commercial spaces
located in the Improvements or acquired from others (including, without
limitation, from the rental of any office space, retail space, guest rooms or
other space, halls, stores and offices, and deposits securing reservations of
such space), license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail sales, service
charges, vending machine sales and proceeds, if any, from business interruption
or other loss of income insurance.

“Replacement Interest Rate Cap Agreement” means an interest rate cap agreement
from an Acceptable Counterparty with terms substantially the same as the
Interest Rate Cap Agreement (as such terms may be modified after the date
hereof) and except that the same shall be effective in connection with
replacement of the Interest Rate Cap Agreement following the termination of the
Interest Rate Cap Agreement, including as a result of a downgrade, withdrawal or
qualification of the long-term unsecured debt rating of the Counterparty;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a “Replacement Interest Rate Cap Agreement” shall be
such interest rate cap agreement reasonably approved in writing by Lender.

“Required Special Servicer Rating” shall mean (i) at least “CSS2-” by Fitch,
(ii) on the S&P Select Servicer List as a U.S. Commercial Mortgage Special
Servicer, and (iii) if such special servicer is acting as special servicer in a
commercial mortgage loan securitization that was rated by Moody’s within the
twelve (12) month period prior to the date of determination, a special servicer
with respect to which Moody’s has not downgraded or withdrawn the then-current
rating on any class of commercial mortgage securities or placed any class of
commercial mortgage securities on watch citing the continuation of such special
servicer as special servicer of such commercial mortgage securities.

“Requisite Lenders” shall have the meaning set forth in Section 10.4 hereof.

 

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“Reserve Account” shall mean any one of the Cash Management Account, the Blocked
Account, the Working Capital Account, the Tax and Insurance Escrow Account, the
FF&E Reserve Account and any other escrow fund or reserve account established
pursuant to the Loan Documents.

“Reserve Funds” shall mean, collectively, the Tax and Insurance Escrow Fund, the
FF&E Reserve Fund, any funds in any of the Reserve Accounts and in any other
escrow fund or account established pursuant to the Loan Documents.

“Restoration” shall mean the repair and restoration of an Individual Property
after a Casualty or Condemnation as nearly as possible to the condition the
Individual Property was in immediately prior to such Casualty or Condemnation,
with such alterations as may be reasonably approved by Lender.

“Revenue” shall mean all Rents and items of income or revenue (of any kind)
collected by Borrower or Operating Company.

“Rio Contract of Sale” shall have the meaning set forth in Section 2.5.1.

“Rio Individual Borrower” shall have the meaning set forth in the introductory
paragraph hereto.

“Rio Las Vegas” shall mean that certain Individual Property identified on
Schedule II as “Rio Las Vegas” and having a street address of 3700 W. Flamingo
Road, Las Vegas, Nevada.

“Rio Las Vegas Management Agreement” shall mean that certain Management
Agreement dated as of the date hereof among Rio Properties, Inc., Rio Individual
Borrower and Rio CMBS Manager, LLC, pursuant to which Rio CMBS Manager, LLC is
to provide management and other services with respect to the Rio Las Vegas, as
such agreement may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

“Rio Leverage Event” shall occur hereunder if, immediately after the sale of the
Rio Las Vegas made in accordance with the provisions of this Agreement, the
Post-Rio Leverage Ratio is greater than the Pre-Rio Leverage Ratio. If the Rio
Leverage Event occurs upon the sale of the Rio Las Vegas pursuant to the
preceding sentence, the Rio Leverage Event will remain in effect until the Rio
Leverage Event ceases to be in effect pursuant to the following sentence. The
Rio Leverage Event shall cease to be in effect from and after the earlier to
occur of (a) the last day of any month after the sale of the Rio Las Vegas on
which the Post-Rio Leverage Ratio as of the end of such month is equal to or
less than the Pre-Rio Leverage Ratio and (b) the first date following any sale
of the Rio Las Vegas on which the aggregate outstanding principal balance of the
Loan and the Mezzanine Loans, as determined on the date on which the Rio Las
Vegas is sold, is reduced (from such aggregate principal balance as of such
date) by an amount equal to the Debt Gap; provided that, if an Individual
Property (other than the Rio Las Vegas) is sold, the Debt Gap shall be
calculated without giving effect to reductions in the principal amounts of the
Loan or the Mezzanine Loans in connection with the sale of such Individual
Properties (other than the Rio Las Vegas).

 

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“Rio Leverage Event Cash Collateral” shall have the meaning set forth in
Section 2.6.3(c) hereof.

“Rio Manager” shall mean (i) Rio CMBS Manager, LLC (so long as such entity is
Controlled by and wholly-owned by Holdings), (ii) any other Person that
(x) timely obtains any Gaming Licenses that may be required to be a manager of a
gaming operation, (y) is Controlled by and wholly-owned by Holdings, and (z) is
experienced in the management and operation of properties such as the Rio Las
Vegas or (iii) any other Person that is approved by Lender to be the manager of
the Rio Las Vegas.

“Routine Capital Improvements” shall mean (i) all routine and ordinary course
maintenance, repairs, alterations and replacements of or to the Properties
(including to the existing structures or exterior façades, and the mechanical,
electrical, plumbing, HVAC, vertical transport and similar components of, any of
the Properties), such as exterior and interior painting, resurfacing of walls
and floors, resurfacing parking areas and replacing folding walls, and
(ii) replacements of FF&E and supplies, all to the extent that the same are
capitalized under GAAP. For the avoidance of doubt, “Routine Capital
Improvements” shall not include expansion or “growth” projects.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.

“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance,
assignment, transfer, encumbrance or pledge of a legal or beneficial interest.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Second Extended Maturity Date” shall mean February 13, 2015, or such earlier
date on which the final payment of principal of the Loan or the Notes becomes
due and payable as therein or herein provided whether at such stated maturity
date, by declaration of acceleration or otherwise.

“Second Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XIV hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Second Mezzanine Borrower” shall mean one of the Second Mezzanine Borrowers
individually, or the Second Mezzanine Borrowers collectively, as the context
shall require.

“Second Mezzanine Debt Service” shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments due under the
Second Mezzanine Notes.

“Second Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Second Mezzanine Loan Agreement from time to time. The Second
Mezzanine Lenders as of the date hereof are listed on Schedule XXVII.

 

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“Second Mezzanine Loan” shall mean that certain loan made by the Second
Mezzanine Lenders to Second Mezzanine Borrower as of the Original Closing Date.
When made, the Second Mezzanine Loan was in the original principal amount of Two
Hundred Seventy Five Million and No/100 Dollars ($275,000,000). As of the date
hereof, the Second Mezzanine Loan is in the outstanding principal amount of Two
Hundred Sixty Five Million Eight Hundred Forty Two Thousand Five Hundred and
no/100 Dollars ($265,842,500). The Second Mezzanine Loan is evidenced and/or
secured by the Second Mezzanine Loan Agreement and the Second Mezzanine Loan
Documents.

“Second Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Second Mezzanine Loan Agreement, dated as of the date hereof, between
Second Mezzanine Lenders and Second Mezzanine Borrower, as the same may
hereafter be amended, supplemented, or otherwise modified from time to time.

“Second Mezzanine Loan Documents” shall mean the Second Mezzanine Loan
Agreement, the Second Mezzanine Notes and all other documents and instruments
executed and delivered in connection with the Second Mezzanine Loan, as such
documents may be amended, modified and restated in accordance with their
respective terms.

“Second Mezzanine Notes” shall mean the “Notes” as defined in the Second
Mezzanine Loan Agreement.

“Securities” shall have the meaning set forth in Section 9.9 hereof.

“Securities Act” shall have the meaning set forth in Section 9.10 hereof.

“Securitization” shall have the meaning set forth in Section 9.9 hereof.

“Second Period” shall mean the period from the end of the First Period to and
including September 9, 2012 (being the first Payment Date occurring after the
twenty-fourth month following the Closing Date).

“Senior Unsecured Notes” shall mean HOC’s Senior Unsecured Notes issued pursuant
to the Senior Unsecured Notes Indenture and any notes issued by HOC in exchange
for, and as contemplated by, the Senior Unsecured Notes and the related
registration rights agreement with substantially identical terms as the Senior
Unsecured Notes.

“Senior Unsecured Notes Indenture” shall mean the Indenture dated as of
February 1, 2008 pursuant to which the Senior Unsecured Notes were issued, among
HOC and certain of its subsidiaries party thereto and the trustee named therein
from time to time, as amended, restated, supplemented or otherwise modified from
time to time in accordance with the requirements thereof.

“Servicer” shall have the meaning set forth in Section 9.1 hereof.

“Seventh Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XIX hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Seventh Mezzanine Borrower” shall mean one of the Seventh Mezzanine Borrowers
individually, or the Seventh Mezzanine Borrowers collectively, as the context
shall require.

 

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“Seventh Mezzanine Debt Service” shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments due under the
Seventh Mezzanine Notes.

“Seventh Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Seventh Mezzanine Loan Agreement from time to time. The
Seventh Mezzanine Lenders as of the date hereof are listed on Schedule XXXII.

“Seventh Mezzanine Loan” shall mean that certain loan made by the Seventh
Mezzanine Lenders to Seventh Mezzanine Borrower as of the Original Closing Date.
When made, the Seventh Mezzanine Loan was in the original principal amount of
Two Hundred Seventy Five Million and no/100 Dollars ($275,000,000.00). As of the
date hereof, the Seventh Mezzanine Loan is in the outstanding principal amount
of Fifty Million Four Hundred Twelve Thousand Eighty Three and 34/100 Dollars
($50,412,083.34). The Seventh Mezzanine Loan is evidenced and/or secured by the
Seventh Mezzanine Loan Agreement and the Seventh Mezzanine Loan Documents.

“Seventh Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Seventh Mezzanine Loan Agreement, dated as of the date hereof, between
Seventh Mezzanine Lenders and Seventh Mezzanine Borrower, as the same may
hereafter be amended, supplemented, or otherwise modified from time to time.

“Seventh Mezzanine Loan Documents” shall mean the Seventh Mezzanine Loan
Agreement, the Seventh Mezzanine Notes and all other documents and instruments
executed and delivered in connection with the Seventh Mezzanine Loan, as such
documents may be amended, modified and restated in accordance with their
respective terms.

“Seventh Mezzanine Notes” shall mean the “Notes” as defined in the Seventh
Mezzanine Loan Agreement.

“Severed Loan Documents” shall have the meaning set forth in Section 8.2(b)
hereof.

“Shared Services Agreement” shall mean that certain Second Amended and Restated
Shared Services Agreement dated as of the date hereof among HOC, Holdings,
Borrower, Mezzanine Borrower, Operating Company and each Manager, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“Significant Obligor” shall have the meaning set forth in Section 5.1.11(e)
hereof.

“Sixth Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XVIII hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Sixth Mezzanine Borrower” shall mean one of the Sixth Mezzanine Borrowers
individually, or the Sixth Mezzanine Borrowers collectively, as the context
shall require.

 

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“Sixth Mezzanine Debt Service” shall mean, with respect to any particular period
of time, scheduled principal and/or interest payments due under the Sixth
Mezzanine Notes.

“Sixth Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Sixth Mezzanine Loan Agreement from time to time. The Sixth
Mezzanine Lenders as of the date hereof are listed on Schedule XXXI.

“Sixth Mezzanine Loan” shall mean that certain loan made by the Sixth Mezzanine
Lenders to Sixth Mezzanine Borrower as of the Original Closing Date. When made,
the Sixth Mezzanine Loan was in the original principal amount of Two Hundred
Seventy Five Million and no/100 Dollars ($275,000,000.00). As of the date
hereof, the Sixth Mezzanine Loan is in the outstanding principal amount of
Ninety One Million Six Hundred Sixty Six Thousand Six Hundred Sixty Six and
67/100 Dollars ($91,666,666.67). The Sixth Mezzanine Loan is evidenced and/or
secured by the Sixth Mezzanine Loan Agreement and the Sixth Mezzanine Loan
Documents.

“Sixth Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Sixth Mezzanine Loan Agreement, dated as of the date hereof, between
Sixth Mezzanine Lenders and Sixth Mezzanine Borrower, as the same may hereafter
be amended, supplemented, or otherwise modified from time to time.

“Sixth Mezzanine Loan Documents” shall mean the Sixth Mezzanine Loan Agreement,
the Sixth Mezzanine Notes and all other documents and instruments executed and
delivered in connection with the Sixth Mezzanine Loan, as such documents may be
amended, modified and restated in accordance with their respective terms.

“Sixth Mezzanine Notes” shall mean the “Notes” as defined in the Sixth Mezzanine
Loan Agreement.

“Special Member” shall mean a Springing Member in a given Delaware limited
liability company who has become a member in such limited liability company to
the extent so provided in such limited liability company’s operating agreement.

“Special Purpose Entity” shall mean a corporation, limited partnership or
limited liability company which at all times on and after the Original Closing
Date (or, with respect to each of the Paris Individual Borrower and the Laughlin
Individual Borrower, the Swap Closing Date):

(a) was and is organized solely for the purpose of (i) acquiring, developing,
owning, holding, selling, leasing, transferring, exchanging, managing and
operating the Properties, entering into this Agreement, refinancing the
Properties in connection with a permitted repayment of the Loan, and transacting
lawful business that is incident, necessary and appropriate to accomplish the
foregoing; or (ii) acting as a general partner of the limited partnership that
owns the Properties or member of the limited liability company that owns the
Properties;

 

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(b) has not engaged, is not engaged and will not engage in any business
unrelated to (i) the acquisition, development, ownership, management or
operation of the Properties, (ii) acting as general partner of the limited
partnership that owns the Properties or (iii) acting as a member of the limited
liability company that owns the Properties, as applicable;

(c) has not had, does not have and will not have any assets other than the
related Individual Property and personal property related to such Individual
Property or its partnership interest in the limited partnership or the member
interest in the limited liability company that owns the Properties or acts as
the general partner or managing member thereof, as applicable;

(d) has not engaged, sought or consented to and will not engage in, seek or
consent to any dissolution, winding up, liquidation, consolidation, merger, sale
of all or substantially all of its assets, transfer of partnership or membership
interests (if such entity is a general partner in a limited partnership or a
member in a limited liability company) or any amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement (as applicable) with respect to
the matters set forth in this definition;

(e) if such entity is a limited partnership, has, as its only general partners,
Special Purpose Entities that are corporations, limited partnerships or limited
liability companies satisfying the requirements of this definition “Special
Purpose Entity”;

(f) if such entity is a corporation, has at least two (2) Independent Directors,
and has not caused or allowed and will not cause or allow the board of directors
of such entity to take any Bankruptcy Action unless two Independent Directors
shall have participated in such vote;

(g) if such entity is a limited liability company without a Springing Member,
has as its manager a Special Purpose Entity that is a Delaware corporation or
limited liability company that has at least two Independent Directors;

(h) if such entity is a limited liability company with a Springing Member, is a
limited liability company organized in the State of Delaware that has (i) at
least two Independent Managers and has not caused or allowed and will not cause
or allow the board of managers of such entity to take any Bankruptcy Action
unless two Independent Managers shall have participated in such vote and (ii) at
least one Springing Member that will become a member of such entity upon the
dissolution, resignation or withdrawal of the existing member;

(i) if such entity is (i) a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement, as
applicable, (ii) a limited partnership, has a limited partnership agreement, or
(iii) a corporation, has a certificate of incorporation or articles that, in
each case, provide that such entity will not, while any obligations remain
outstanding under the Loan Documents: (A) dissolve, merge, liquidate,
consolidate; (B) sell all or substantially all of its assets or the assets of
the

 

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Borrower (as applicable), except as permitted in connection with the release of
an Individual Property as provided in Section 2.5.1; (C) engage in any other
business activity, or amend its organizational documents with respect to the
matters set forth in this definition of Special Purpose Entity without the
consent of Lender; or (D) without the affirmative vote of two Independent
Directors and of all other directors of such entity or the general partner or
managing member of such entity, take any Bankruptcy Action with respect to
itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest;

(j) has been, is and will remain solvent and has paid and will pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from and to the extent of its assets as the same shall become due, and is
maintaining and will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations; provided, however, that the foregoing
shall not require the Member to make additional capital contributions to the
company;

(k) has not failed and will not fail to correct any known misunderstanding
regarding the separate identity of such entity;

(l) has maintained, maintains and will maintain its bank accounts, books and
records separate from any other Person and will file its own tax returns
separate from those of any other Person, except to the extent the company is
treated as a “disregarded entity” for tax purposes and is not required to file
tax returns under applicable law; Borrower shall not have any obligation to
reimburse its equityholders for any taxes that such equityholder may incur as a
result of any profits or losses of the Borrower;

(m) has maintained, maintains and will maintain its own records, books,
resolutions and agreements;

(n) except as contemplated by the Loan Documents with respect to co-borrowers
under the Loan, has not commingled, does not commingle and will not commingle
its funds or assets with assets of any other Person;

(o) has held, holds and will hold its assets in its own name;

(p) has conducted, conducts and will conduct its business in its own name;

(q) has maintained, maintains and will maintain its financial statements,
accounting records and other entity documents separate and apart from any other
Person and has not permitted and will not permit its assets to be listed on the
financial statement of any other Person; provided, however, that, the company’s
assets may be included in consolidated financial statement of its Affiliates,
provided that (i) appropriate notation shall be made on such consolidated
financial statements to indicate the separateness of the company from such
Affiliate and to indicate the company’s assets and credit are not available to
satisfy the debts and other obligations of such Affiliate or any other Person
and (ii) such assets shall also be listed on the company’s own separate balance
sheet;

 

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(r) has paid, pays and will pay its own liabilities and expenses, including the
salaries of its own employees (if any), out of its own funds and assets, and has
maintained and will maintain a sufficient number of employees (if any) in light
of its contemplated business operations;

(s) has observed, observes and will observe all partnership, corporate or
limited liability company formalities necessary to maintain its separate
existence;

(t) has not, does not and will not incur, create, or assume any Indebtedness
other than (i) the Loan, and other Permitted Indebtedness and (ii) certain
Indebtedness to Affiliates that was incurred in connection with the formation of
Borrower and Operating Company and the transfer of the Properties to Borrower
and was satisfied and/or released in full prior to the funding of the Loan
hereunder;

(u) has not, does not and will not assume or guarantee or become obligated for
the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person except as co-borrowers of the Loan
or as general partner of a Borrower that is a limited partnership, in such
capacity;

(v) has not, does not and will not acquire obligations or securities of its
partners, members or shareholders or any Affiliate (other than the Gaming
Equipment Facility Agreements);

(w) has allocated, allocates and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not limited
to, paying for shared office space and services performed by any employee of an
Affiliate;

(x) has maintained and used, does maintain and use and will maintain and use
separate stationery, invoices and checks, if any, bearing its name. The
stationery, invoices, and checks, if any, utilized by the Special Purpose Entity
or utilized to collect its funds or pay its expenses shall bear its own name and
shall not bear the name of any other entity unless such entity is clearly
designated as being the Special Purpose Entity’s agent;

(y) has not pledged, does not pledge and will not pledge its assets for the
benefit of any Person except as co-borrowers of the Loan;

(z) has held itself out and identified itself, holds itself out, and will hold
itself out to the public and all other Persons and identify itself as a separate
and distinct entity under its own name or in a name franchised or licensed to it
by an entity other than an Affiliate of Borrower and not as a division or part
of any other Person;

(aa) has maintained, maintains and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;

 

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(bb) has not made, does not make and will not make loans to any Person or hold
evidence of indebtedness issued by any other Person or entity (other than cash
and investment-grade securities issued by an entity that is not an Affiliate of
or subject to common ownership with such entity and other than the Gaming
Equipment Facility Agreements);

(cc) has corrected and will correct any known misunderstanding regarding its
separate identity and has not identified and will not identify its partners,
members or shareholders, or any Affiliate of any of them, as a division or part
of it, and has not identified itself and shall not identify itself as a division
of any other Person;

(dd) except for capital contributions or capital distributions permitted under
the terms and conditions of this Agreement and properly reflected on the books
and records of this company, has not entered into or been a party to, is not a
party to, and will not enter into or be a party to, any transaction with its
partners, members, shareholders or Affiliates except in the ordinary course of
its business and on terms which are commercially reasonable and are comparable
to those that would be obtained in an arm’s-length transaction with an unrelated
third party (including an appropriate shared services agreement with
Affiliates);

(ee) has no and will not have any obligation to, and will not, indemnify its
partners, officers, directors or members, as the case may be, unless such an
obligation is fully subordinated to the Debt and will not constitute a claim
against it in the event that cash flow in excess of the amount required to pay
the Debt is insufficient to pay such obligation;

(ff) if such entity is a corporation, it shall consider the interests of its
creditors in connection with all corporate actions;

(gg) has not, does not and will not have any of its obligations guaranteed by
any Affiliate (except each Borrower as a co-borrower under the Loan, and except
for any Guaranty);

(hh) has complied, complies with and will comply with all of the terms and
provisions contained in its organizational documents. The statement of facts
contained in its organizational documents are true and correct and will remain
true and correct; and

(ii) has not formed, acquired or held, does not hold, and will not form,
acquire, or hold any subsidiary (whether corporate, partnership, limited
liability company, or other) or own any equity interest in any other entity,
except (1) in the case of a general partner of Borrower that is a limited
partnership with respect to the partnership interests in the Borrower or a
member of Borrower that is a limited liability company with more than one member
with respect to such membership interest and (2) in connection with the
conveyances of O’Shea’s and the RDE Parcels contemplated by Sections 2.5.3 and
2.5.4 of this Agreement, the formation of any subsidiary of Borrower for the
purpose of contributing O’Shea’s or the RDE Parcels to such subsidiary, the
equity of which will be substantially concurrently with such contribution
distributed to the equity owners of the Borrower and any Mezzanine Borrower in
order to facilitate the conveyance of O’Shea’s and the RDE Parcels pursuant to
Sections 2.5.3 and 2.5.4.

 

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For the purposes of this definition as well as Section 4.1.30, all references to
co-borrower shall include the Harrah’s LV Individual Borrower, the Harrah’s AC
Individual Borrower, the Rio Individual Borrower and the Flamingo Individual
Borrower as well as (i) the Original Tahoe Borrower and the Original Showboat
Borrower from the Original Closing Date to the Swap Closing Date, (ii) the Paris
Individual Borrower and the Laughlin Individual Borrower from and after the Swap
Closing Date and (iii) Holdings, Paris Holding, Inc. and Harrah’s Laughlin, Inc.
for the limited time that such entities assumed the obligations of the Original
Loan in connection with the substitution of the Swap Property pursuant to
Section 2.5.2 of the Original Loan Agreement.

“Special Rio Conditions” shall have the meaning set forth in Section 2.5.1.

“Specified Mezzanine Lender” shall have the meaning set forth in the Note Sales
Agreement.

“SPE Party” shall mean Borrower and any other Person that is required to be a
“Special Purpose Entity” under applicable Rating Agency criteria so as to make
Borrower a Special Purpose Entity.

“Sponsor” shall mean (i) Apollo Management VI, L.P. and other affiliated
co-investment partnerships (collectively, “Apollo”) and each Affiliate of Apollo
(but not including, however, any of its portfolio companies), (ii) TPG Partners
V, L.P. and other affiliated co-investment partnerships (collectively, “TPG”)
and each Affiliate of TPG (but not including, however, any of its portfolio
companies), and (iii) any individual who is a partner or employee of Apollo
Management, L.P., Apollo, the Texas Pacific Group or TPG, to the extent such
individual is licensed by a relevant Gaming Authority on the Original Closing
Date or thereafter replaces any such licensee.

“Spread” shall mean (i) until the Initial Maturity Date, three percent
(3.00%) per annum, (ii) from the Initial Maturity Date until the First Extended
Maturity Date, three and one-half percent (3.5%) per annum, and (iii) from the
First Extended Maturity Date until the Second Extended Maturity Date, four
percent (4%) per annum.

“Springing Member” shall mean a Person who has signed the limited liability
company agreement of a given Delaware limited liability company, which agreement
provides that, upon the withdrawal, dissolution or disassociation of the last
remaining member of such limited liability company (subject to applicable Gaming
Laws), such Person shall become a member of such limited liability company
having no economic interest therein.

“State” shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.

“Strike Price” shall mean four and one-half percent (4.5%).

“Subject Fees” shall have the meaning set forth in Section 5.1.22 hereof.

 

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“Survey” shall mean a survey of the Individual Property in question prepared
pursuant to the requirements contained in Section 4.1.27 hereof.

“Swap Agreement” shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions (other than the Interest
Rate Cap Agreement).

“Swap Closing Date” shall mean May 22, 2008.

“Swap Property” means, individually and collectively, as the context may
require, each of the Paris Las Vegas and Harrah’s Laughlin.

“Syndication” shall have the meaning set forth in Section 9.8 hereof.

“Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.2
hereof.

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against any Individual Property or part thereof.

“Termination Date” shall have the meaning set forth in Section 11.6 hereof.

“Terrorism Premium Limit” with respect to all Properties in the aggregate shall
mean $8 million. If the Captive Insurance Company shall be utilized to provide
terrorism coverage hereunder, then the Terrorism Premium Limit shall be
applicable, but the only amounts taken into account in determining whether more
than the Terrorism Premium Limit is expended shall be reinsurance premiums paid
to third parties.

“Third Mezzanine Borrower” shall mean, collectively, the entities set forth on
Schedule XV hereto, each a Delaware limited liability company, together with
their respective successors and permitted assigns. As used herein, the term
“Third Mezzanine Borrower” shall mean one of the Third Mezzanine Borrowers
individually, or the Third Mezzanine Borrowers collectively, as the context
shall require.

“Third Mezzanine Debt Service” shall mean, with respect to any particular period
of time, scheduled principal and/or interest payments due under the Third
Mezzanine Notes.

“Third Mezzanine Lenders” shall mean, collectively, the Persons referred to as
“Lender” under the Third Mezzanine Loan Agreement from time to time. The Third
Mezzanine Lenders as of the date hereof are listed on Schedule XXVIII.

 

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“Third Mezzanine Loan” shall mean that certain loan made by the Third Mezzanine
Lenders to Third Mezzanine Borrower as of the Original Closing Date. When made,
the Third Mezzanine Loan was in the original principal amount of Two Hundred
Seventy Five Million and No/100 Dollars ($275,000,000). As of the date hereof,
the Third Mezzanine Loan is in the outstanding principal amount of Two Hundred
Sixty Five Million Eight Hundred Forty Two Thousand Five Hundred and no/100
Dollars ($265,842,500). The Third Mezzanine Loan is evidenced and/or secured by
the Third Mezzanine Loan Agreement and the Third Mezzanine Loan Documents.

“Third Mezzanine Loan Agreement” shall mean that certain Second Amended and
Restated Third Mezzanine Loan Agreement, dated as of the date hereof, between
Third Mezzanine Lenders and Third Mezzanine Borrower, as the same may hereafter
be amended, supplemented, or otherwise modified from time to time.

“Third Mezzanine Loan Documents” shall mean the Third Mezzanine Loan Agreement,
the Third Mezzanine Notes and all other documents and instruments executed and
delivered in connection with the Third Mezzanine Loan, as such documents may be
amended, modified and restated in accordance with their respective terms.

“Third Mezzanine Notes” shall mean the “Notes” as defined in the Third Mezzanine
Loan Agreement.

“Third Period” shall mean the period from the end of the Second Period to and
including the Initial Maturity Date.

“Threshold Amount” shall have the meaning set forth in the definition of
Material Alteration.

“Title Insurance Policies” shall mean, with respect to each Individual Property,
an ALTA mortgagee title insurance policy in a form acceptable to Lender (or, if
an Individual Property is in a State which does not permit the issuance of such
ALTA policy, such form as shall be permitted in such State and acceptable to
Lender) issued with respect to such Individual Property and insuring the lien of
the Mortgage encumbering such Individual Property.

“Trademark Assignment” shall mean, collectively, those certain short-form
Trademark assignment agreements dated as of the date hereof by and between IP
Licensor and each Borrower pursuant to which IP Licensor transfers and assigns
to each Borrower all right, title and interest in and to those certain
Property-Specific Trademarks applicable to such Borrower.

“Trademark Security Agreement” shall mean collectively, those certain short-form
Trademark security agreements dated as of the date hereof by and between each
Borrower and Collateral Agent, pursuant to which each Borrower grants a security
interest in all Property-Specific Trademarks owned by such Borrower to
Collateral Agent (for the benefit of Lender), subject to the terms and
conditions of each Mortgage, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, and which is to be
recorded with the United States Patent and Trademark Office and any State
Trademark Offices, as applicable.

 

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“Transfer” shall mean to, directly or indirectly, sell, assign, convey,
mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in,
exchange or otherwise dispose of any beneficial interest or grant any option or
warrant with respect to, or where used as a noun, a direct or indirect sale,
assignment, conveyance, transfer, pledge or other disposition of any beneficial
interest by any means whatsoever whether voluntary, involuntary, by operation of
law or otherwise. A Transfer shall include, but not be limited to, (a) an
installment sales agreement wherein Borrower agrees to sell an Individual
Property or any part thereof for a price to be paid in installments; and (b) an
agreement by Borrower leasing all or a substantial part of an Individual
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (c) if a
Person restricted or affected by the provisions of this Agreement is a
corporation, any merger, consolidation or sale or pledge of such corporation’s
stock or the creation or issuance of new stock; (d) if a Person restricted or
affected by the provisions of this Agreement is a limited or general partnership
or joint venture, any merger or consolidation or the change, removal,
resignation or addition of a general partner or the sale or pledge of the
partnership interest of any general partner or any profits or proceeds relating
to such partnership interest, or the sale or pledge of limited partnership
interests or any profits or proceeds relating to such limited partnership
interest or the creation or issuance of new limited partnership interests;
(e) if a Person restricted or affected by the provisions of this Agreement is a
limited liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the sale or pledge of the membership interest of
a managing member (or if no managing member, any member) or any profits or
proceeds relating to such membership interest, or the sale or pledge of
non-managing membership interests or the creation or issuance of new
non-managing membership interests; or (f) if a Person restricted or affected by
the provisions of this Agreement is a trust or nominee trust, any merger,
consolidation or the sale or pledge of the legal or beneficial interest in such
Person or the creation or issuance of new legal or beneficial interests.

“Transferee” shall mean the Person to whom a Transfer is being effected.

“TRIA” shall mean the Terrorism Risk Insurance Act of 2002, as in effect as of
the date hereof and, for purposes of this Agreement, without giving effect to
any amendments that would impair in any respects the intended benefits to any
Lender under the terms hereof.

“Trigger Date” shall mean the date on which the outstanding principal balance of
the Mezzanine Loans is less than or equal to $625,000,000.00 in the aggregate;
provided that, if there are any ECF Purchases that are outstanding on such date
(because they have previously been accepted but have not been completed in
accordance with Article III of the Note Sales Agreement), then the Trigger Date
shall be the date on which such outstanding ECF Purchases have been completed or
revoked in accordance with the provisions of the Note Sales Agreement.

“True Lease Opinion” shall mean (a) with respect to each Operating Lease (other
than those Operating Leases relating to a Swap Property) those certain true
lease opinion letters dated as of the Original Closing Date and delivered by
Cleary Gottlieb Steen & Hamilton LLP in connection with the Loan, and updated by
Cleary Gottlieb Steen & Hamilton LLP as of the Swap Closing Date, and (b) with
respect to each Operating Lease relating to a Swap Property, those certain true
lease opinion letters dated as of the Swap Closing Date and delivered by Cleary
Gottlieb Steen & Hamilton LLP in connection with the Loan.

 

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“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the applicable State in which an Individual Property is located.

“Unrestricted Cash” shall mean cash or cash equivalents of any of the
Consolidated Entities that would not appear as “restricted” on a consolidated
balance sheet of the Consolidated Entities prepared in conformity with GAAP,
including without limitation all “cage cash”.

“U.S. Obligations” shall mean non-redeemable securities evidencing an obligation
to timely pay principal and/or interest in a full and timely manner that are
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or other “government securities” within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended.

“Voting Matters” shall have the meaning set forth in Section 9.11(a) hereof.

“Windstorm Insurance Intercreditor Agreement” means that certain Windstorm
Insurance Intercreditor Agreement, dated as of the Original Closing Date, by and
among JPM (as Lender), the mezzanine lenders a party thereto, each of the “Other
Owners” named therein and made a party thereto, Holdings, Bank of America, N.A.,
and the “Other Secured Parties” named therein and made a party thereto, as
supplemented by that certain Supplemental Agreement Regarding Windstorm
Insurance Intercreditor Agreement dated as of the Swap Closing Date, by and
among Original Showboat Borrower, Holdings and Lender, as amended by the Omnibus
Amendment (Windstorm Intercreditor) and as the same may hereafter be further
amended, supplemented, or otherwise modified from time to time.

“Working Capital” shall mean, with respect to the Consolidated Entities on a
consolidated basis at any date of determination, Current Assets at such date of
determination minus Current Liabilities at such date of determination; provided,
that, for purposes of calculating Excess Cash Flow, increases or decreases in
Working Capital shall be calculated without regard to any changes in Current
Assets or Current Liabilities as a result of (a) any reclassification in
accordance with GAAP of assets or liabilities, as applicable, between current
and noncurrent or (b) the effects of purchase accounting.

“Working Capital Account” shall mean, individually or collectively as the
context indicates, those certain segregated Eligible Accounts established by or
on behalf of each Operating Company with a Working Capital Bank into which each
such Operating Company may cause, subject to the terms hereof, amounts to be
deposited and held as provided in Section 2.6.4.

“Working Capital Account Agreement” shall mean, collectively, (a) each of the
agreements among Borrower, Operating Company, Collateral Agent and a Working
Capital Bank set forth on Schedule IV attached hereto and (b) any agreement
entered into by Borrower, Operating Company, Lender and any replacement Working
Capital Bank, in each case as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

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“Working Capital Banks” shall mean, initially, Bank of America, N.A. and, if any
Operating Company desires to replace Bank of America, N.A. as a Working Capital
Bank, then, (a) each Eligible Institution designated by such Operating Company
as a Working Capital Bank and reasonably approved by Lender from time to time in
accordance with the terms hereof, or (b) any other financial institution
designated by such Operating Company as Working Capital Bank and reasonably
approved by Lender and, if a Securitization has occurred, with respect to which
a Rating Agency Confirmation has been obtained.

Section 1.2. Principles of Construction. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified. All uses of the word “including” shall mean “including, without
limitation” unless the context shall indicate otherwise. Unless otherwise
specified, the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined and, for the
avoidance of doubt, any use of a singular term to define more than one
(“Borrower” or “Lender”, for example) shall mean any or all of such term unless
the context shall indicate otherwise. All uses of the words “term of the Loan”
or words of similar import when used in this Agreement shall refer to the “term
of the Loan” commencing as of the Original Closing Date.

II. GENERAL TERMS

Section 2.1. Loan Commitment; Disbursement to Borrower.

2.1.1. Agreement to Lend and Borrow. Borrower acknowledges that the Loan was
made on the Original Closing Date, in a single borrowing.

2.1.2. Single Borrowing. Any amount repaid hereunder in respect of the Loan may
not be reborrowed.

2.1.3. The Note, Mortgages and Loan Documents. The Loan shall be evidenced by
the Note (in the original aggregate principal amount of Four Billion and no/100
Dollars ($4,000,000,000)) and secured by the Mortgages, the Assignments of
Leases and the other Loan Documents.

2.1.4. Use of Proceeds. Pursuant to the terms of the Original Loan Agreement,
Borrower was to use the proceeds of the Loan to (a) acquire the Properties
and/or repay and discharge any existing loans relating to the Properties,
(b) pay all past due Basic Carrying Costs, if any, with respect to the
Properties, (c) make deposits into the Reserve Funds on the Original Closing
Date in the amounts provided in the Original Loan Agreement, (d) pay costs and
expenses incurred in connection with the closing of the Original Loan, as
approved by Lender, (e) fund any working capital requirements of the Properties
and (f) distribute the balance, if any, to Borrower.

 

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2.1.5. Component Notes. Lender shall have the right at any time to modify the
Loan or a Note in order to create an additional note or additional notes, reduce
the number of notes, reallocate the principal balances of the Notes or notes or
eliminate the component note structure of the Loan provided that (a) the
aggregate stated principal amount of the Loan on the date of each such
adjustment shall equal the aggregate stated principal amount of the Loan
immediately prior to such adjustment, (b) the interest rate spread of the Loan
or any Note shall not be modified and (c) subject to the provisions of, and the
prepayments as described in, the Note Sales Agreement, all payments of principal
in respect of the Loan (other than payments of principal on account of the
Specified Mezzanine Notes) shall be applied ratably to all Notes and new notes
or modified notes (including in respect of any amortization payments and any
applications of Net Proceeds or Net Sales Proceeds or otherwise). In connection
with any such modification of the Note and notes, or the creation of additional
note(s), (i) Borrower shall cooperate with all reasonable requests of Lender and
shall execute and deliver such documents as shall reasonably be requested by
Lender in connection therewith, all in form and substance reasonably
satisfactory to the Borrower and Lender and, following a Securitization, the
Rating Agencies, including, without limitation, (y) revised title insurance
policies and Interest Rate Protection Agreements, and (z) such amendments to the
Loan Documents as are reasonably requested; (ii) Lender shall have received
opinions of legal counsel with respect to due execution, authority and
enforceability of the amended Loan Documents, and additional or updated
nonconsolidation opinions for the Loan, each in form reasonably acceptable to
Lender (and, following a Securitization, the Rating Agencies); and (iii) other
than following the occurrence and during the continuance of an Event of Default,
Lender (on a pro rata basis as between the Noteholders) in the case of a request
made by all of the Noteholders (or, in the case of the severance (or
combination) of an individual Note (or individual Notes) at the request of an
individual Noteholder or individual Noteholders, such Noteholder(s)), shall pay
the actual, reasonable out of pocket costs and expenses incurred by Borrower in
connection with the foregoing, including, without limitation, the actual,
reasonable out-of-pocket legal fees incurred by Borrower in connection with any
of the foregoing matters. For the avoidance of doubt, and notwithstanding
anything to the contrary contained herein, such modifications shall not
adversely affect the overall economics to Borrower of the Loan, taken as a
whole, or expose Borrower to any additional costs (other than as set forth
above) or increased risk of any liability (beyond that or greater than that
existing in the Loan Documents in effect on the date hereof), and Borrower shall
not be required to execute any document or agreement which would materially
decrease its rights or materially increase its obligations relative to those set
forth herein and in the other Loan Documents.

Section 2.2. Interest Rate.

2.2.1. Interest Generally. Except as herein provided with respect to interest
accruing at the Default Rate, interest on the principal balance of the Loan
outstanding from time to time shall accrue from the Original Closing Date up to
and including the Maturity Date (including, without limitation, all interest
that would accrue on the outstanding principal balance of the Loan through the
end of the Interest Period during which the Maturity Date occurs (even if such
period extends beyond the Maturity Date)) at the Applicable Interest Rate.
Interest on the outstanding principal balance of the Loan existing on the
commencement of an Interest Period shall accrue for the entire Interest Period
and shall be owed by Borrower for the entire Interest Period regardless of
whether any principal portion of the Loan is repaid prior to the expiration of
such Interest Period.

 

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2.2.2. Interest Calculation. Interest on the outstanding principal balance of
the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year (that is, the Applicable
Interest Rate or the Default Rate, as then applicable, expressed as an annual
rate divided by 360) by (c) the outstanding principal balance.

2.2.3. Determination of Interest Rate. (a) The Applicable Interest Rate with
respect to the Loan shall be: (i) LIBOR plus the Spread with respect to the
applicable Interest Period for a LIBOR Loan or (ii) the Prime Rate plus the
Prime Rate Spread for a Prime Rate Loan if the Loan is converted to a Prime Rate
Loan pursuant to the provisions of Section 2.2.3(c) or Section 2.2.3(f).

(b) Subject to the terms and conditions of this Section 2.2.3, the Loan shall be
a LIBOR Loan and Borrower shall pay interest on the outstanding principal amount
of the Loan at LIBOR plus the Spread for the applicable Interest Period. Any
change in the rate of interest hereunder due to a change in the Applicable
Interest Rate shall become effective as of the opening of business on the first
day on which such change in the Applicable Interest Rate shall become effective.
Each determination by Lender of the Applicable Interest Rate shall be conclusive
and binding for all purposes, absent manifest error.

(c) In the event that any Lender shall have determined (which determination
shall be conclusive and binding upon Borrower absent manifest error) that by
reason of circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining LIBOR, then such Lender (or
Servicer on behalf of such Lender) shall forthwith give notice by telephone of
such determination, confirmed in writing, to Borrower at least one (1) Business
Day prior to the last day of the related Interest Period. If such notice is
given, the related outstanding LIBOR Loan shall be converted, on the last day of
the then current Interest Period, to a Prime Rate Loan.

(d) If, pursuant to the terms of this Agreement, any portion of the Loan has
been converted to a Prime Rate Loan and the applicable Lender shall determine
(which determination shall be conclusive and binding upon Borrower absent
manifest error) that the event(s) or circumstance(s) which resulted in such
conversion shall no longer be applicable, such Lender (or Servicer on behalf of
such Lender) shall give notice by telephone of such determination, confirmed in
writing, to Borrower at least one (1) Business Day prior to the last day of the
related Interest Period. If such notice is given, the related outstanding Prime
Rate Loan shall be converted to a LIBOR Loan on the last day of the then current
Interest Period.

(e) With respect to a LIBOR Loan, all payments made by Borrower hereunder shall
be made free and clear of, and without reduction for or on account of, income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions,
reserves or withholdings imposed, levied, collected, withheld or assessed by any
Governmental Authority and imposed on any non-U.S. Noteholder due to a change in
U.S. law after the date such non-U.S. Noteholder acquired its interest in the
Loan (such non-excluded taxes, levies, imports, duties,

 

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charges, fees, deductions, reserves or withholdings being referred to
collectively as “Foreign Taxes”), excluding (i) income and franchise taxes,
(ii) any Taxes imposed by reason of any connection between the non-U.S.
Noteholder and the taxing jurisdiction other than entering into this Agreement
and receiving payments hereunder, and (iii) any Taxes imposed by reason of the
non-U.S. Noteholder’s failure to complete and deliver to the Borrower, prior to
the date on which the first payment to such Noteholder is due hereunder and (so
long as it remains eligible to do so) from time to time thereafter, (x) (i) an
Internal Revenue Service Form W-9 (or successor form) establishing that the
Noteholder is not subject to U.S. backup withholding tax, (ii) an Internal
Revenue Service Form W-8BEN (or successor form) certifying that such Noteholder
is entitled to benefits under an income tax treaty to which the United States is
a party that reduces the rate of withholding tax on payments of interest to
zero, or (iii) an Internal Revenue Service Form W-8ECI certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, as appropriate; and (y) any
successor or additional form required by the Internal Revenue Service or any
taxing authority reasonably requested by the Borrower in order to secure an
exemption from, or reduction in the rate of, Foreign Taxes. If any Foreign Taxes
are required to be withheld from any amounts payable to a Noteholder hereunder,
the amounts so payable to such Noteholder shall be increased to the extent
necessary to yield to such Noteholder (after payment of all Foreign Taxes)
interest or any such other amounts payable hereunder at the rate or in the
amounts specified hereunder. Whenever any Foreign Tax is payable pursuant to
applicable law by Borrower, as promptly as possible thereafter, Borrower shall
send to such Noteholder an original official receipt, if available, or certified
copy thereof showing payment of such Foreign Tax. Borrower hereby indemnifies
each Noteholder for any incremental Foreign Taxes, interest or penalties that
may become payable by each such Noteholder which may result from any failure by
Borrower to pay any such Foreign Tax when due to the appropriate taxing
authority or any failure by Borrower to remit to each such Noteholder (as
appropriate) the required receipts or other required documentary evidence
thereof (provided such documents are reasonably available to the Borrower).

(f) If any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for any Lender to make or
maintain a LIBOR Loan as contemplated hereunder and the events giving rise
thereto affect similarly situated banks or financial institutions generally,
(i) the obligation of such Lender hereunder to make a LIBOR Loan or to convert a
Prime Rate Loan to a LIBOR Loan shall be canceled forthwith and (ii) any
outstanding LIBOR Loan shall be converted automatically to a Prime Rate Loan on
the next succeeding Payment Date or within such earlier period as required by
law.

(g) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) hereafter issued
from any central bank or other Governmental Authority and the events giving rise
thereto affect similarly situated banks or financial institutions generally:

(i) shall hereafter impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, the office of
the Lender that holds the interest in the Loan which is not otherwise included
in the determination of LIBOR hereunder;

 

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(ii) shall hereafter require such Lender to hold additional capital against the
Loan in excess of that currently required by Governmental Authorities to be held
against loans similar in nature to the Loan; or

(iii) shall hereafter impose on such Lender any other condition affecting loans
to borrowers subject to LIBOR-based interest rates and such Lender determines
that, by reason thereof, the cost to such Lender of making or maintaining the
Loan to Borrower is increased, or any amount received by such Lender hereunder
in respect of any portion of the Loan is reduced, in each case by an amount
deemed by such Lender in good faith to be material;

then, in any such case, Borrower shall promptly pay such Lender, upon demand,
any additional amounts necessary to compensate such Lender for such additional
cost or reduced amount receivable which such Lender deems to be material as
determined in good faith by such Lender. If such Lender becomes entitled to
claim any additional amounts pursuant to this Section 2.2.3(g), such Lender
shall provide Borrower with not less than ninety (90) days notice specifying in
reasonable detail the event by reason of which it has become so entitled and the
additional amount required to fully compensate such Lender for such additional
cost or reduced amount. A certificate as to any additional costs or amounts
payable pursuant to the foregoing sentence submitted by a Lender to Borrower
shall be conclusive in the absence of manifest error. This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the Loan Documents.

(h) No Lender shall be entitled to claim compensation pursuant to this
Section 2.2.3 for any Foreign Taxes or other amounts incurred or which accrued
more than ninety (90) days before the date such Lender notified Borrower of the
change in law or other circumstance on which such claim of compensation is based
and delivered to Borrower a written statement setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
Section 2.2.3, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.

(i) For purposes of this Section 2.2.3, the term “Lender” shall include the
present and future participants of each Lender to the extent of Foreign Taxes
imposed by reason of such Lender or participant’s interest in the Loan and each
such Lender’s or participant’s increased costs or reduction in amount received
or receivable hereunder or any reduced rate of return, in each case payable by
Borrower under this Section 2.2.3.

2.2.4. Additional Costs. Each Lender will use reasonable efforts (consistent
with legal and regulatory restrictions) to maintain the availability of the
LIBOR Loan and to avoid or reduce any increased or additional costs payable by
Borrower under Section 2.2.3, including, if requested by Borrower, a transfer or
assignment of the Loan to a branch, office or Affiliate of such Lender in
another jurisdiction, or a redesignation of its lending office with respect to
the Loan, in order to maintain the availability of the LIBOR Loan or to avoid or
reduce such increased or additional costs, provided that the transfer or
assignment or redesignation

 

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(a) would not result in any material additional costs, expenses or risk to such
Lender that are not reimbursed by Borrower and (b) would not be disadvantageous
in any other material respect to such Lender as determined by such Lender in its
sole but reasonable discretion.

2.2.5. Default Rate. In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal balance of the
Loan and, to the extent permitted by law, all accrued and unpaid interest in
respect of the Loan and any other amounts due pursuant to the Loan Documents,
shall accrue interest at the Default Rate, calculated from the date such payment
was due without regard to any grace or cure periods contained herein.

2.2.6. Usury Savings. This Agreement, the Note and the other Loan Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject any Lender to either civil or criminal liability as a result of
being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or
the other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder. All sums paid or agreed to be paid to any Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.

2.2.7. Interest Rate Cap Agreement. (a) The Interest Rate Cap Agreement in
effect on the Closing Date has a LIBOR strike price equal to the Strike Price
and a scheduled termination date of the Initial Maturity Date. The Interest Rate
Cap Agreement (i) is in a form and substance reasonably acceptable to Lender,
(ii) is with an Acceptable Counterparty, (iii) directs such Acceptable
Counterparty to pay directly to an account pledged to Lender any amounts due
Borrower under such Interest Rate Cap Agreement unless and until otherwise
instructed by Lender (it being agreed as between Lender and Borrower that Lender
will so instruct the Counterparty at such time as the Debt shall no longer
exist, provided that the Debt shall be deemed to exist if the Properties are
transferred by judicial or non-judicial foreclosure or deed-in-lieu thereof),
and (iv) has a notional amount at least equal to the principal balance of the
Loan outstanding on the Closing Date (it being understood that the notional
amount of the Interest Rate Cap Agreement may be reduced, from time to time, as
the principal balance of the Loan is reduced (in the amounts of such reduction
in principal) pursuant to clause (g) below). Borrower shall collaterally assign
to Collateral Agent (for the benefit of Lender), pursuant to the Collateral
Assignment of Interest Rate Cap Agreement, all of its right, title and interest
to receive any and all payments under the Interest Rate Cap Agreement, and shall
deliver to Collateral Agent an executed counterpart of such Interest Rate Cap
Agreement (which shall, by its terms, authorize the assignment to Collateral
Agent (for the benefit of Lender) and require that payments be paid directly
into an account pledged to Collateral Agent (for the benefit of Lender) as
provided above in this Section 2.2.7). Provided no Event of Default has occurred
and is

 

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continuing, amounts contained in the foregoing pledged account shall be released
to Borrower on a monthly basis to the extent not applied toward debt service on
the Loan.

(b) Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement to Borrower or Lender shall
be deposited immediately into a Collection Account. Borrower shall take all
actions reasonably requested by Collateral Agent to enforce Collateral Agent’s
rights under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and, except as set forth in the Collateral Assignment of Interest
Rate Cap Agreement, shall not waive, amend or otherwise modify any of its rights
thereunder.

(c) In the event of any downgrade, withdrawal or qualification of the rating of
the Counterparty by S&P or Moody’s to below the ratings set forth in the
definition of “Acceptable Counterparty”, Borrower (i) shall replace the Interest
Rate Cap Agreement with a Replacement Interest Rate Cap Agreement (or cause the
Counterparty or an Affiliate thereof to post collateral acceptable to Lender)
not more than fifteen (15) Business Days following receipt of notice of such
downgrade, withdrawal or qualification (and meeting the requirements set forth
in this Section 2.2.7) from an Acceptable Counterparty, (ii) if a Replacement
Interest Rate Cap Agreement is provided to Lender, then if requested by Lender,
shall provide to Lender an opinion of counsel to such Acceptable Counterparty in
the form and containing the substance of the form of opinion set forth in
Exhibit A (with such changes as shall be reasonably approved by Lender), and
(iii) shall collaterally assign to Collateral Agent (for the benefit of Lender),
pursuant to an assignment in the form of the Collateral Assignment of Interest
Rate Cap Agreement, all of its right, title and interest to receive any and all
payments under the Replacement Interest Rate Cap Agreement.

(d) In the event that Borrower fails to purchase and deliver to Lender the
Interest Rate Cap Agreement or fails to maintain the Interest Rate Cap Agreement
in accordance with the terms and provisions of this Agreement, Lender may
purchase the Interest Rate Cap Agreement and the cost incurred by Lender in
purchasing such Interest Rate Cap Agreement shall be paid by Borrower to Lender
with interest thereon at the Default Rate from the date such cost was incurred
by Lender until such cost is reimbursed by Borrower to Lender.

(e) In connection with any Interest Rate Cap Agreement provided to Lender as
herein required, if requested by Lender, Borrower shall obtain and deliver to
Lender an opinion of counsel (which counsel may be in-house counsel for the
Counterparty) for the Counterparty (upon which Lender and its successors and
assigns may rely) in the form and containing the substance of the form of
opinion set forth in Exhibit A (with such changes as shall be reasonably
approved by Lender).

(f) Borrower hereby represents, warrants and covenants that all of the terms,
covenants, and conditions contained in the Interest Rate Cap Agreement (as
amended as of the Closing Date and assigned to the Collateral Agent) shall be
and remain in full force and effect, and the Interest Rate Cap Agreement is
hereby ratified, reaffirmed and republished in its entirety. Further, it is
expressly understood that any assignments and amendments to the Interest Rate
Cap Agreement effected simultaneously herewith do not and shall not (i) give
rise to any defense, set-off, right of recoupment, claim or counterclaim with
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Borrower’s obligations under the Interest Rate Cap Agreements or the Collateral
Assignment of Interest Rate Cap Agreement, (ii) operate as a waiver of any of
Lender’s rights, powers or privileges under the Interest Rate Cap Agreement or
the Collateral Assignment of Interest Rate Cap Agreement, or (iii) prejudice,
limit or affect in any way any present or future rights, remedies, powers or
benefits available to Lender (or Collateral Agent) under the Interest Rate Cap
Agreement or the Collateral Assignment of Interest Rate Cap Agreement. Lastly,
Borrower hereby agrees and acknowledges that (a) all references in the Interest
Rate Cap Agreement and Collateral Assignment of Interest Rate Caps to the “Loan
Agreement” shall mean this Agreement and (b) all references in the Interest Rate
Cap Agreement and Collateral Assignment of Interest Rate Cap to the “Loan” shall
mean the Loan, as defined in this Agreement. The foregoing representations,
warranties and agreements are made for the benefit of Borrower, Collateral
Agent, the Lenders and the existing Counterparty under the Interest Rate Cap
Agreement (that is intended to be a third party beneficiary of the provisions of
this paragraph).

(g) The Interest Rate Cap Agreement in effect on the date hereof shall terminate
on the Initial Maturity Date (unless such Interest Rate Cap Agreement terminates
sooner upon the occurrence of certain events of default or termination events,
as more fully provided therein). Borrower has advised Lenders that if and when
Borrower reduces the notional amounts of the Interest Rate Cap Agreement
hereunder and under the Mezzanine Loans (as more fully provided in this
Section), Borrower intends to apply the cash proceeds resulting from any such
reductions in notional amount to extending the term of the Interest Rate Cap
Agreements (beyond the Initial Maturity Date, initially, and thereafter beyond
such further dates to which the Interest Rate Cap Agreement may be extended, as
described in this Section). In connection therewith, the parties agree that in
connection with any prepayment or reduction in the principal amount of the Loan
and the Mezzanine Loans (including reductions in the principal amount thereof
prior to the Closing Date), provided no Event of Default shall have occurred and
be continuing, Borrower may at any time and from time to time, upon no less than
ten (10) days prior written notice to the Counterparty, Collateral Agent and
Servicer (or such lesser time as the Counterparty, Collateral Agent and Servicer
may agree) and (to the extent the consent of the Counterparty is required with
respect to such matter under the terms of the Interest Rate Cap Agreement then
in effect) with the consent of the Counterparty, either:

(x) (1) amend the existing (or the then existing) Interest Rate Cap Agreement to
reduce the notional amount of such existing Interest Rate Cap Agreement (so
that, after giving effect to such reduction, the notional amount under the
Interest Rate Cap Agreement is equal to the outstanding principal balance of the
Loan at such time); and (2) any amounts constituting termination payments or any
other amounts due and payable by the Counterparty to the Borrower in connection
with any such reduction of the notional amount shall be deposited by the
Borrower into the Cap Reserve Account and the Cap Reserve Fund may be applied by
the Borrower in connection with such notional reduction to extend the scheduled
termination date of the Interest Rate Cap Agreement (but in no event later than
the Second Extended Maturity Date), provided that such notional amount reduction
and extension of term shall not affect any of the other terms of the Interest
Rate Cap Agreement (including, without limitation, the Strike Price) or the
Collateral Assignment of Interest Rate Cap Agreement (or Lender’s rights in
respect thereof); or

 

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(y) terminate the existing Interest Rate Cap Agreement and utilizing the cash
proceeds available to the Borrower arising from such termination (including any
other amounts constituting the Cap Reserve Fund) to purchase a Replacement
Interest Rate Cap Agreement (i) having a notional amount equal to the principal
balance of the Loan on the date of such purchase, (ii) in form and substance
substantially the same as the Interest Rate Cap Agreement being terminated at
such time (as such terms may be modified after the date hereof as contemplated
hereunder), with such other modifications to the terms as are reasonably
acceptable to Collateral Agent (so long as in each case the requirements of this
Section 2.2.7(g) are otherwise satisfied), (iii) from an Acceptable
Counterparty, (iv) having a scheduled termination date which extends beyond the
scheduled termination date of the existing (or then existing) Interest Rate Cap
Agreement (but in no event later than the Second Extended Maturity Date),
(v) having a LIBOR strike price equal to the Strike Price, and (vi) directing
such Acceptable Counterparty to pay directly to an account pledged to Collateral
Agent any amounts due Borrower under such Interest Rate Cap Agreement unless and
until otherwise instructed by Lender (it being agreed as between Servicer (on
behalf of the Lenders) and Borrower that Lender will so instruct the
Counterparty at such time as the Debt shall no longer exist, provided that the
Debt shall be deemed to exist if the Properties are transferred by judicial or
non-judicial foreclosure or deed-in-lieu thereof). In connection with (and as a
condition to executing) any such purchase, Borrower, Collateral Agent and the
Counterparty shall enter into a Collateral Assignment of Interest Rate Cap
Agreement in substantially the same form as the Collateral Assignment of
Interest Rate Cap in effect as of the Closing Date, and, in addition, Borrower
shall obtain and deliver to Servicer an opinion from counsel (which counsel may
be in-house counsel for the Counterparty) for the Counterparty (upon which
Collateral Agent, Lender and their respective successors and assigns may rely)
in the form and containing the substance of the form of opinion set forth in
Exhibit A (in each case with such changes as shall be reasonably approved by
Collateral Agent).

Notwithstanding anything to the contrary in this Agreement, (i) in connection
with any extension or replacement described in the foregoing Section 2.2.7(g),
in no event shall Borrower agree to amend any existing Interest Rate Cap
Agreement to shorten (or have the right to shorten) the scheduled termination
date of any existing Interest Rate Cap Agreement or Replacement Interest Rate
Cap Agreement, and (ii) the Borrower and its Affiliates shall not be required to
spend in the aggregate during the term of this Agreement (as may extended
pursuant to Section 2.7 hereof) more than the Cap Reserve Fund (meaning, for the
avoidance of doubt, the sum of $5,000,000 and the additional amount deposited in
the Cap Reserve Account pursuant to Section 2.2.7(g)) on any extension of any
Interest Rate Cap Agreement or purchase of any Replacement Interest Rate Cap
Agreement by the Borrower pursuant to this Section 2.2.7(g) or in connection
with any extension of the Loan as described in Section 2.7 and on any extension
of any interest rate cap agreement or purchase of a replacement interest rate
cap agreement pursuant to the corresponding provisions of any Mezzanine Loan
Agreement by any Mezzanine Borrower,

 

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including in connection with any extension of the Mezzanine Loan as described in
the corresponding provision of any Mezzanine Loan Agreement (it being
acknowledged that such limitation will result in the strike price in effect with
respect to any period after the Initial Maturity Date being greater than the
Strike Price on the Closing Date and/or the related notional amount being less
than the principal balance of the Loan outstanding at such time if the Interest
Rate Cap Agreement may not be extended otherwise to the Second Extended Maturity
Date with a lower strike price and/or greater notional amount with (and given)
the amount of Cap Reserve Funds available to effect the purchase of such an
extension (and in such event the Borrower will determine, subject to the consent
of the Lender (not to be unreasonably withheld) and (to the extent the consent
of the Counterparty is required with respect to such matter under the terms of
the Interest Rate Cap Agreement then in effect) with the consent of the
Counterparty, which of the following will apply: (i) the strike price will be
greater than the Strike Price in effect on the Closing Date, (ii) the notional
amount will be less than the principal balance of the Loan outstanding or
(iii) some combination of (i) or (ii)). It is understood and agreed that this
Agreement shall not amend or modify (expressly or impliedly) any rights of the
Counterparty with respect to any Interest Rate Cap Agreement, including without
limitation any rights to consent to an amendment or termination of such Interest
Rate Cap Agreement.

Section 2.3. Loan Payment.

2.3.1. Payments Generally. (a) On the Original Closing Date and each Payment
Date thereafter through and including August 9, 2010, Borrower was required to
make a payment to (or as directed by) JPM of interest accruing under the
Original Loan Agreement. On the Payment Date occurring on September 9, 2010
Borrower shall make a payment to Lender of interest (x) accruing under the
Original Loan Agreement from the last “Payment Date” under the Original Loan
Agreement to the date hereof and (y) accruing hereunder during the entire
Interest Period in which such Payment Date occurs, calculated in the manner set
forth herein. On each Payment Date thereafter to and including the Maturity
Date, Borrower shall make a payment to Lender of interest accruing hereunder
during the entire Interest Period in which such Payment Date occurs, calculated
in the manner set forth herein. All amounts due pursuant to this Agreement and
the other Loan Documents shall be payable without setoff, counterclaim, defense
or any other deduction whatsoever. Each payment shall be applied pro rata and
pari passu (a) first to accrued and unpaid interest on all of the Notes and
(b) the balance shall be applied to principal of all the Notes.

(b) If any Lender shall obtain payment in respect of any principal of or
interest on its ratable share of the Loan resulting in such Lender receiving
payment in excess of its pro rata share of the aggregate amount of such
principal and accrued interest thereon, then the Lender receiving such excess
payment shall purchase participations in the interests of each other Lender in
the Loan to the extent necessary so that the benefit of all such payments shall
be shared by each Lender ratably in accordance with their pro rata shares of the
Loan; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made pursuant to and in accordance with
this Agreement or the other Loan Documents or any direct or indirect sale,
assignment, participation or other transfer of any interest in the Loans to any
Person (including without limitation to the Borrower, Holdings or

 

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any Affiliate thereof, whether in connection with any Upfront Purchase,
Subsequent Upfront Purchase, ECF Purchase, Optional Note Purchase or otherwise).
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against Borrower rights of set-off
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of Borrower in the amount of such participation.

2.3.2. Payment on Maturity Date. Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Notes, the Mortgage
and the other Loan Documents, including, without limitation, all interest that
would accrue on the outstanding principal balance of the Loan through and
including the end of the Interest Period in which the Maturity Date occurs (even
if such Interest Period extends beyond the Maturity Date).

2.3.3. Late Payment Charge. If any principal, interest or any other sums due
under the Loan Documents, other than the payment of principal due on the
Maturity Date, is not paid by Borrower by the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of one percent
(1%) of such unpaid sum or the maximum amount permitted by applicable law in
order to defray the expense incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment; provided, however that, except with respect to the payment
of any monthly Debt Service payments with respect to which no notice or demand
shall be required, no such late payment charge shall be due unless such payment
of principal, interest or other sum shall be delinquent for more than five
(5) Business Days following the date of demand therefor. Any such amount shall
be secured by the Mortgages and the other Loan Documents to the extent permitted
by applicable law.

2.3.4. Method and Place of Payment. Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be
made to Lender not later than 3:00 P.M., New York City time, on the date when
due and shall be made in lawful money of the United States of America in
immediately available funds as directed by Servicer (in accordance with the
provisions of Section 9.1), and any funds received by Servicer (on behalf of
Lender) after such time shall, for all purposes hereof, be deemed to have been
paid on the next succeeding Business Day.

Section 2.4. Prepayments.

2.4.1. Voluntary Prepayments. Borrower may, at its option, prepay the Debt in
whole or in part, provided, the following conditions are satisfied:

(a) No Event of Default shall have occurred and be continuing (unless, in the
case of a prepayment upon the release of an Individual Property, the Event of
Default relates solely to such Individual Property and therefore would be fully
cured by the release of such Individual Property);

 

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(b) Borrower shall provide prior written notice to Lender specifying the date
upon which the prepayment is to be made (the “Prepayment Date”), which notice
shall be delivered to Lender not less than ten (10) days prior to such
Prepayment Date (or such shorter period of time as may be permitted by Lender in
its sole discretion), and which notice shall be irrevocable; provided, that,
notwithstanding the foregoing, Lender hereby agrees that Borrower may revoke any
notice of prepayment up until the date that is one (1) Business Day prior to the
proposed Prepayment Date (provided that Borrower shall be required to pay
Lender, promptly upon demand, any actual, out-of-pocket expenses incurred by
Lender resulting from any such revocation));

(c) each such prepayment, in the case of partial prepayments, shall be in an
amount not less than Five Million and no/100 Dollars ($5,000,000.00), unless the
outstanding principal balance of the Loan (prior to such prepayment) shall be
less than Five Million and no/100 Dollars ($5,000,000.00), in which event the
amount of the prepayment shall be in such amount as shall prepay the Debt and
all other amounts due in connection therewith in full, as more fully provided
herein;

(d) if such prepayment is made on or prior to the Payment Date occurring in the
Interest Period in which such prepayment was made, then, in connection with such
prepayment, Borrower shall pay to Lender, simultaneously with such prepayment,
all interest on the principal balance of the Note then being prepaid which would
have accrued through the end of the Interest Period then in effect
notwithstanding that such Interest Period extends beyond the Prepayment Date;

(e) if such prepayment is made after a Payment Date occurring in the Interest
Period in which such prepayment was made, but prior to the last two (2) Business
Days in such Interest Period, Borrower shall make such prepayment without paying
any interest thereon (Borrower having already paid interest on such amount on
the Payment Date occurring in such Interest Period);

(f) if such prepayment is made on either of the last two (2) Business Days in an
Interest Period, Borrower will pay to Lender, simultaneously with such
prepayment, interest on the principal amount of the Loan prepaid through the
last day of the Interest Period immediately following the Interest Period in
which such prepayment occurs, calculated at the Applicable Interest Rate; and

(g) if such prepayment is a prepayment of the Loan in full, Lender shall have
received a written consent to the repayment from each Mezzanine Lender under
each Mezzanine Loan or receipt by Lender of other evidence satisfactory to
Lender that all conditions imposed under the terms of each Mezzanine Loan shall
have been complied with by the borrower thereunder or otherwise waived by the
applicable Mezzanine Lender, including the simultaneous pro rata prepayment of
each Mezzanine Loan if required thereunder.

Any prepayment received by Lender on a day other than a Payment Date (but not
any amount received between a Payment Date and the second to last Business Day
in an Interest Period) shall be held by Lender in an interest-bearing account as
collateral security for the Loan and shall be applied to the Debt on the next
occurring Payment Date (with all interest and other income earned on such amount
being for the account of Borrower and being remitted by Lender to Borrower
promptly following such next Payment Date). Any prepayment made pursuant to this

 

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Section 2.4.1 shall be applied pro rata and pari passu (a) first to accrued and
unpaid interest on all of the Notes and (b) the balance shall be applied to
principal of all the Notes. Following any prepayment of the Loan as described in
this Section 2.4.1, the Allocated Loan Amounts shall be reduced (on a pro rata
basis) in an amount equal to such prepayment.

2.4.2. Minimum Amortization from Excess Cash Flow.

(a) From and after the Amortization Commencement Date, on the first Payment Date
occurring after quarterly financial statements are delivered (or required to be
delivered) under Section 5.1.11(c) with respect to each Excess Cash Flow Period
commencing with the first Excess Cash Flow Period in which the Amortization
Commencement Date occurs, Borrower shall prepay the Debt by an amount equal to
the greater of (a) one hundred percent (100%) of Excess Cash Flow for such
Excess Cash Flow Period and (b) $31,250,000.

(b) If such prepayment is made on or prior to the Payment Date occurring in the
Interest Period in which such prepayment was made, then, in connection with such
prepayment, Borrower shall pay to Lender, simultaneously with such prepayment,
all interest on the principal balance of the Note then being prepaid which would
have accrued through the end of the Interest Period then in effect
notwithstanding that such Interest Period extends beyond the Payment Date.

(c) Any prepayment received by Lender pursuant to this Section 2.4.2 on a date
other than a Payment Date shall be held by Lender as collateral security for the
Loan in an interest bearing account, with such interest accruing to the benefit
of Borrower, and shall be applied by Lender on the next Payment Date.

(d) Any prepayment of the Notes made pursuant to this Section 2.4.2 shall be
applied pro rata and pari passu (i) first to accrued and unpaid interest on all
of the Notes and (ii) the balance shall be applied to principal of all the
Notes.

(e) Following any prepayment of the Loan as described in this Section 2.4.2, the
Allocated Loan Amounts shall be reduced (on a pro rata basis determined based on
the then amounts of the Allocated Loan Amounts) in an amount equal to such
prepayment.

2.4.3. Mandatory Prepayments from Net Proceeds. On the next occurring Payment
Date following the date on which Lender actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower for the
Restoration of any Individual Property, Borrower shall prepay, or authorize
Lender to apply Net Proceeds as a prepayment of, the outstanding principal
balance of the Notes in an amount equal to 100% of such Net Proceeds, together
with interest accruing on such amount calculated through and including the end
of the Interest Period in which such Payment Date occurs (with the balance of
the Net Proceeds, if any, to be paid over to the First Mezzanine Lender for
application in accordance with the First Mezzanine Loan Agreement (or to the
Mezzanine Lender for the most senior Mezzanine Loan then outstanding for
application in accordance with the Mezzanine Loan Agreement in effect with
respect to such most senior Mezzanine Loan)). Any prepayment received by Lender
pursuant to this Section 2.4.3 on a date other than a Payment Date shall be held
by Lender as collateral security for the Loan in an interest bearing account,
with such

 

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interest accruing to the benefit of Borrower, and shall be applied by Lender on
the next Payment Date. Following any prepayment made as described in this
Section 2.4.3, the Allocated Loan Amount for the affected Individual Property,
as set forth in this Agreement, shall be reduced in an amount equal to such
prepayment. Any prepayment of the Notes made pursuant to this Section 2.4.3
shall be applied pro rata and pari passu (a) first to accrued and unpaid
interest on all of the Notes and (b) the balance shall be applied to principal
of all the Notes.

2.4.4. Prepayments After Default. If, following the occurrence and during the
continuance of an Event of Default, payment of all or any part of the Debt is
tendered by Borrower or any other Person and accepted by Lender or otherwise
recovered by Lender (including through application of any Reserve Funds),
Borrower shall pay to Lender, in addition to the outstanding principal balance,
(a) all accrued and unpaid interest at the Default Rate (including, without
limitation, (i) in the event that such prepayment is received on a Payment Date
or on any date in any Interest Period prior to a Payment Date, interest accruing
(at the Default Rate) on such amount calculated through and including the end of
the Interest Period in which such payment occurs, or (ii) in the event that such
prepayment is received on a date after a Payment Date up to (and including) the
last day of the Interest Period in which such Payment Date occurs, interest
accruing (at the Default Rate) on such amount calculated through and including
the end of the Interest Period in which the next Payment Date occurs), and
(b) any and all other amounts payable under the Loan Documents. Any payment
under this Section 2.4.4 shall be applied in such order, priority and
proportions as Lender may direct in its sole and absolute discretion.

Section 2.5. Release of Properties. Except as set forth in this Section 2.5, no
repayment or prepayment of all or any portion of any Note shall cause, give rise
to a right to require, or otherwise result in, the release or assignment in lieu
of the release of any Lien of any Mortgage on any Individual Property.

2.5.1. Release of Individual Property. Borrower may obtain the release of an
Individual Property from the Lien of the Mortgage thereon (and related Loan
Documents) and the release of Borrower’s obligations under the Loan Documents
with respect to such Individual Property (other than those expressly stated to
survive), upon the satisfaction of each of the following conditions:

(a) No Event of Default shall have occurred and be continuing (unless, in the
case of a prepayment upon the release of an Individual Property, the Event of
Default relates solely to such Individual Property and therefore would be fully
cured by the release of such Individual Property);

(b) Borrower shall submit to Collateral Agent, not less than ten (10) Business
Days prior to the date of such release, a release of Lien (and related Loan
Documents) for such Individual Property for execution by Collateral Agent. Such
release shall be in a form appropriate in each jurisdiction in which the
Individual Property is located and that contains standard provisions, if any,
protecting the rights of Lender and Collateral Agent (as releasing secured
parties);

 

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(c) After giving effect to such release, the Debt Service Coverage Ratio for the
Properties then remaining subject to the Liens of the Mortgages (including
giving pro forma effect to the payment of the Release Price and any additional
prepayment(s) or reductions in the principal amount of the Loans or Mezzanine
Loans in connection with such release) shall be equal to or greater than the
greatest of (i) the Debt Service Coverage Ratio for the twelve (12) full
calendar months immediately preceding the release of the Individual Property
(assuming the contemplated release had not occurred, i.e., for all Properties
subject to the Liens of the Mortgage prior to the proposed release), (ii) 1.09
(which is 90% of the Debt Service Coverage Ratio as of the date hereof (which
the parties agree is 1.21)), and (iii) 1.0;

(d) (i) The Individual Property to be released shall be conveyed to a Person
other than a Borrower or Mezzanine Borrower, and other than to an Affiliate of
Borrower unless, in the latter case, such Affiliate is refinancing the Loan with
a construction or development loan (or repaying the Loan with equity
contributions to such Affiliate) and (ii) it is such Affiliate’s immediate
intention to materially redevelop such Individual Property, which loan (or
equity contribution) and intention shall be described in reasonable detail and
represented to in an Officer’s Certificate submitted to Lender concurrently with
(or prior to) the materials described in clause (b) of this Section 2.5.1;

(e) in the case of a sale of an Individual Property other than the Rio Las
Vegas, simultaneously with and as a condition to the closing of the sale of such
Individual Property, Lender (or Servicer on its behalf) shall have received a
wire transfer of immediately available federal funds in an amount equal to the
Release Price for the applicable Individual Property (plus the amount of any
Excess Proceeds, if any, available upon the sale of such Individual Property),
to be applied to the principal of the Loan on a pro rata and pari passu basis,
together with (i) all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid as provided in
Section 2.4.1(d) or (e), as applicable, and (ii) all other sums due under this
Agreement, the Note or the other Loan Documents in connection with a partial
prepayment (it being understood and agreed that any Post-Closing Reserve Amount
constituting Excess Proceeds released to Lender shall likewise be applied to the
principal of the Loan on a pro rata and pari passu basis, together with the
amount described in the preceding subclauses (i) and (ii));

(f) Lender shall have received evidence that, contemporaneously with the
conveyance of an Individual Property in compliance with the provisions hereof,
the Operating Lease for such Individual Property shall be terminated and
cancelled (and such termination and cancellation shall be permitted hereunder
and under the other Loan Documents);

(g) Lender shall have received a written consent to the transfer from the
Mezzanine Lender under each Mezzanine Loan or receipt by Lender of other
evidence satisfactory to Lender that all conditions imposed under the terms of
each Mezzanine Loan shall have been complied with by the borrower thereunder or
otherwise waived by the applicable Mezzanine Lender; and

(h) Collateral Agent shall have received payment of all Collateral Agent’s
reasonable out-of-pocket costs and expenses, including reasonable counsel fees
and disbursements incurred in connection with the release of the Individual
Property from the lien

 

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of the related Mortgage and the review and approval of the documents and
information required to be delivered in connection therewith. Each of Lender and
Collateral Agent acknowledges that it shall not charge any fee (other than costs
and expenses, as provided in the preceding sentence) in connection with the
release of an Individual Property.

Notwithstanding the foregoing requirements, in the case of a sale of the Rio Las
Vegas, the sale and release of the Rio Las Vegas shall be permitted hereunder if
(1) the sales price for the sale of the Rio Las Vegas is at least Three Hundred
Million and no/100 Dollars ($300,000,000.00), (2) no Event of Default shall have
occurred and be continuing on the date on which the Rio Las Vegas is sold
(unless the Special Rio Conditions exist, in which event the sale and release of
the Rio Las Vegas shall be permitted hereunder notwithstanding the existence of
an Event of Default as and to the extent described in the definition of “Special
Rio Conditions” (provided all other conditions to such release, as set forth
herein, are satisfied)), (3) the requirements of subparagraphs (b), (f), (g) and
(h) above are satisfied, (4) the sale is to a Person other than an Affiliate of
any of the Consolidated Entities, any Manager, Holdings, HOC and/or any of the
Sponsors, and (5) the Blocked Account shall have been established in accordance
with Section 2.6.3 hereof and pledged to Lender in accordance with
Section 2.6.3(c) hereof. For purposes hereof, the “Special Rio Conditions” shall
exist if (i) the purchase and sale agreement for the sale of the Rio Las Vegas
(the “Rio Contract of Sale”) is fully executed and delivered by the parties
thereto on or prior to February 28, 2011, (ii) there exists no Event of Default
on the date on which the Rio Contract of Sale is executed and delivered by the
parties thereto, (iii) the closing under the Rio Contract of Sale occurs within
no more than nine (9) months following the date on which the Rio Contract of
Sale is executed and delivered by the parties thereto and (iv) Events of Default
exist on the date on which the Rio Las Vegas is to be sold pursuant to the Rio
Contract of Sale but such Events of Default (A) arise by virtue of non-monetary
defaults under this Agreement or the other Loan Documents and (B) do not arise
by virtue of the existence of any of the events described in Sections 8.1(iii),
(iv), (vi), (vii) or (viii).

In connection with a sale of the Rio Las Vegas:

(i) if the sales price for the sale of the Rio Las Vegas is equal to or greater
than Three Hundred Million and no/100 Dollars ($300,000,000.00) but less than
Four Hundred Twenty Five Million and no/100 Dollars ($425,000,000.00) and the
conditions to the sale of the Rio Las Vegas are satisfied, then,
(A) simultaneously with and as a condition of closing the sale of the Rio Las
Vegas, Lender (or Servicer on its behalf) shall receive a wire transfer of
immediately available federal funds in an amount equal to the Net Sales Proceeds
available upon the sale of the Rio Las Vegas to apply to the outstanding
principal balance of the Notes on a pro rata and pari passu basis, together with
(i) all accrued and unpaid interest calculated at the Applicable Interest Rate
on the amount of principal being prepaid as provided in Section 2.4.1(d) or (e),
as applicable, and (ii) all other sums due under this Agreement, the Notes or
the other Loan Documents in connection with a partial prepayment of the Loan and
(B) simultaneously with the release thereof from the escrow or reserve account
established therefor, Lender (or Servicer on its behalf) shall receive a wire
transfer of immediately available federal funds in an amount equal to the
Post-Closing Reserve Amount in respect of the Rio Las Vegas, to apply to the
outstanding principal balance of the Notes on a pro rata and pari passu basis,
together with (i) all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid as provided in
Section 2.4.1(d) or (e), as applicable and (ii) all other sums due under this
Agreement, the Notes or the other Loan Documents in connection with a partial
prepayment of the Loan;

 

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(ii) if the sales price for the sale of the Rio Las Vegas is equal to or greater
than Four Hundred Twenty Five Million and no/100 Dollars ($425,000,000.00) and
both the conditions to the sale of the Rio Las Vegas are satisfied and the
Special Rio Conditions exist, then, (A) simultaneously with and as a condition
of closing the sale of the Rio Las Vegas, Lender (or Servicer on its behalf)
shall receive a wire transfer of immediately available federal funds in an
amount equal to the Net Sales Proceeds available upon the sale of the Rio Las
Vegas to apply to the outstanding principal balance of the Notes on a pro rata
and pari passu basis, together with (i) all accrued and unpaid interest
calculated at the Applicable Interest Rate on the amount of principal being
prepaid as provided in Section 2.4.1(d) or (e), as applicable, and (ii) all
other sums due under this Agreement, the Notes or the other Loan Documents in
connection with a partial prepayment of the Loan and (B) simultaneously with the
release thereof from the escrow or reserve account established therefor, Lender
(or Servicer on its behalf) shall receive a wire transfer of immediately
available federal funds in an amount equal to the Post-Closing Reserve Amount in
respect of the Rio Las Vegas, to apply to the outstanding principal balance of
the Notes on a pro rata and pari passu basis, together with (i) all accrued and
unpaid interest calculated at the Applicable Interest Rate on the amount of
principal being prepaid as provided in Section 2.4.1(d) or (e), as applicable
and (ii) all other sums due under this Agreement, the Notes or the other Loan
Documents in connection with a partial prepayment of the Loan;

(iii) if the sales price for the sale of the Rio Las Vegas is equal to or
greater than Four Hundred Twenty Five Million and no/100 Dollars
($425,000,000.00), the conditions to the sale of the Rio Las Vegas are satisfied
and the Special Rio Conditions do not exist (and, for the avoidance of doubt, no
Event of Default exists on the date on which the Rio Las Vegas is sold), then,
(A) simultaneously with and as a condition of closing the sale of the Rio Las
Vegas, Lender (or Servicer on its behalf) shall receive a wire transfer of
immediately available federal funds in an amount equal to the Net Sales Proceeds
available upon the sale of the Rio Las Vegas, (B) Lender (or Servicer on its
behalf) shall apply (1) such Net Sales Proceeds as directed by the applicable
Harrah’s Parties (as such term is defined in the Note Sales Agreement) in order
for such Harrah’s Parties to purchase Mezzanine Notes pursuant to and in
accordance with Article VII of the Note Sales Agreement and (2) the balance (if
any) remaining after the purchase of Mezzanine Notes effected pursuant to and in
accordance with Article VII of the Note Sales Agreement, to the outstanding
principal balance of the Notes on a pro rata and pari passu basis, together with
(i) all accrued and unpaid interest calculated at the Applicable Interest Rate
on the amount of principal being prepaid as provided in Section 2.4.1(d) or (e),
as applicable, and (ii) all other sums due under this Agreement, the Notes or
the other Loan Documents in connection with a partial prepayment of the Loan,
and (C) simultaneously with the release thereof from the escrow or reserve
account established therefor, Lender (or Servicer on its behalf) shall receive a
wire transfer of immediately available federal funds in an amount equal to the
Post-Closing Reserve Amount in respect of the Rio Las Vegas, and (D) Lender (or
Servicer on its behalf) shall apply (1) such Post-Closing Reserve Amount as
directed by the applicable Harrah’s Parties (as such term is defined in the Note
Sales Agreement) in order for such Harrah’s Parties to purchase Mezzanine Notes
pursuant to and in accordance with Article VII of the Note Sales Agreement and
(2) the balance (if any) remaining after the purchase of Mezzanine Notes
effected pursuant to and in accordance with Article VII of the Note Sales
Agreement to the outstanding principal

 

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balance of the Notes on a pro rata and pari passu basis, together with (i) all
accrued and unpaid interest calculated at the Applicable Interest Rate on the
amount of principal being prepaid as provided in Section 2.4.1(d) or (e), as
applicable, and (ii) all other sums due under this Agreement, the Notes or the
other Loan Documents in connection with a partial prepayment of the Loan; and

(iv) simultaneously with the closing of the sale of the Rio Las Vegas, the
Allocated Loan Amounts for each Individual Property set forth on Schedule II
attached hereto and the Allocated Loan Amounts for each Individual Property
under each Mezzanine Loan Agreement shall be automatically adjusted as follows:

(1) the Allocated Loan Amount attributable to the Rio Las Vegas (under this
Agreement and under each Mezzanine Loan Agreement) shall be reduced to zero;

(2) if the Mortgage Loan Reallocation Amount (as such term is hereinafter
defined) is positive, the Allocated Loan Amounts attributable to the Individual
Properties other than the Rio Las Vegas (as the same may have been adjusted
pursuant to Section 2.4.1, 2.4.2 or 2.4.3 prior to the date on which the Rio Las
Vegas is sold) shall be increased by an amount equal to the Mortgage Loan
Reallocation Amount on a pro rata basis as among such Properties other than the
Rio Las Vegas;

(3) if the Mortgage Loan Reallocation Amount is negative, the Allocated Loan
Amounts attributable to the Individual Properties other than the Rio Las Vegas
(as the same may have been adjusted pursuant to Section 2.4.1, 2.4.2 or 2.4.3
prior to the date on which the Rio Las Vegas is sold) shall be decreased by an
amount equal to the Mortgage Loan Reallocation Amount on a pro rata basis as
among such Properties other than the Rio Las Vegas;

(4) if a Mezzanine Loan Reallocation Amount (as such term is hereinafter
defined) for a particular Mezzanine Loan is positive, the Allocated Loan Amounts
attributable to the Individual Properties other than the Rio Las Vegas under the
Mezzanine Loan Agreement for such Mezzanine Loan (as the same may have been
adjusted pursuant to Section 2.4.1, 2.4.2 or 2.4.3 of the relevant Mezzanine
Loan Agreement prior to the date on which the Rio Las Vegas is sold) shall be
increased by an amount equal to the Mezzanine Loan Reallocation Amount for such
Mezzanine Loan on a pro rata basis as among such Properties other than the Rio
Las Vegas; and

(5) if a Mezzanine Loan Reallocation Amount for a particular Mezzanine Loan is
negative, the Allocated Loan Amounts attributable to the Individual Properties
other than the Rio Las Vegas under the Mezzanine Loan Agreement for such
Mezzanine Loan (as the same may have been adjusted pursuant to Section 2.4.1,
2.4.2 or 2.4.3 of the relevant Mezzanine Loan Agreement prior to the date on
which the Rio Las Vegas is sold) shall be decreased by an amount equal to the
Mezzanine Loan Reallocation Amount for such Mezzanine Loan on a pro rata basis
as among such Properties other than the Rio Las Vegas.

For the avoidance of doubt, the parties confirm that any “pro rata”
re-allocation made as described in this Section shall be made taking into
account the Allocated Loan Amounts (and the percentage ratios among such
amounts) in effect immediately prior to the re-allocation

 

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to be effected as described in this Section. For purposes hereof, the term
“Mortgage Loan Reallocation Amount” shall be an amount equal to (i) the
Allocated Loan Amount for the Rio Las Vegas immediately prior to the sale of the
Rio Las Vegas minus (ii) the amount of Loan principal that is repaid, if any,
utilizing Net Sales Proceeds from the sale of the Rio Las Vegas. For purposes
hereof, the term “Mezzanine Loan Reallocation Amount” shall be an amount,
determined for each Mezzanine Loan, equal to (i) the Allocated Loan Amount for
the Rio Las Vegas (under the Mezzanine Loan Agreement for each such Mezzanine
Loan) immediately prior to the sale of the Rio Las Vegas minus (ii) the amount
of principal under such Mezzanine Loan that is purchased, if any, utilizing Net
Sales Proceeds from the sale of the Rio Las Vegas.

2.5.2. Release of Convention Center Parcel. At any time after the date hereof,
Borrower may obtain the release of the Convention Center Parcel and the release
of Borrower’s obligations under the Loan Documents with respect to such parcel
of land (other than those expressly stated to survive), without the payment of a
Release Price and upon the satisfaction of each of the following conditions:

(a) No Event of Default shall have occurred and be continuing (unless, in the
case of a release of the Convention Center Parcel, the Event of Default relates
solely to such parcel and therefore would be fully cured by the release of the
Convention Center Parcel);

(b) Borrower shall submit to Collateral Agent, not less than ten (10) Business
Days prior to the date of such release, a release of Lien (and related Loan
Documents) for the Convention Center Parcel for execution by Collateral Agent.
Such release shall be in a form appropriate in the jurisdiction in which the
Convention Center Parcel is located and that contains standard provisions, if
any, protecting the rights of Lender and Collateral Agent (as releasing secured
parties);

(c) The Convention Center Parcel shall be conveyed to a Person other than a
Borrower or any Mezzanine Borrower;

(d) Borrower will enter into a restrictive covenant agreement, restricting the
use of the Convention Center Parcel to the development of a Convention Center
and ancillary uses which agreement shall be in form and substance reasonably
satisfactory to Lender;

(e) Prior to the transfer and release of the Convention Center Parcel, each
applicable municipal authority exercising jurisdiction over the Convention
Center Parcel shall have approved a lot-split ordinance or other applicable
action under local law dividing the Convention Center Parcel from the remainder
of the Harrah’s Atlantic City Property, and a separate tax identification number
has been issued for the Convention Center Parcel (with the result that, upon the
transfer and release of the Convention Center Parcel, no part of the remaining
Harrah’s Atlantic City Property shall be part of a tax lot which includes any
portion of the Convention Center Parcel);

(f) All requirements under all laws, statutes, rules and regulations (including,
without limitation, all zoning and subdivision laws, setback requirements,
sideline requirements, parking ratio requirements, use requirements, building
and fire code requirements, environmental requirements and wetlands
requirements) applicable to the

 

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Harrah’s Atlantic City Property necessary to accomplish the lot split shall have
been fulfilled, and all necessary variances, if any, shall have been obtained,
and Borrower shall have delivered to Lender either (1) letters or other evidence
from the appropriate municipal authorities confirming such compliance with laws,
or (2) a zoning report or legal opinion confirming such compliance with laws, in
each case in substance reasonably satisfactory to Lender;

(g) As a result of the lot split, the remaining Harrah’s Atlantic City Property
with all easements appurtenant and other Permitted Encumbrances thereto will not
be in violation of any then applicable law, statute, rule or regulation
(including, without limitation, all zoning and subdivision laws, setback
requirements, sideline requirements, parking ratio requirements, use
requirements, building and fire code requirements, environmental requirements
and wetland requirements) and all necessary variances, if any, shall have been
obtained and evidence thereof has been delivered to Lender which in form and
substance is appropriate for the jurisdiction in which the Harrah’s Atlantic
City Property is located;

(h) If reasonably necessary, appropriate reciprocal easement agreements for the
benefit and burden of the remaining Harrah’s Atlantic City Property and the
Convention Center Parcel requiring no cost or expense to Borrower regarding the
use of common facilities of such parcels, including, but not limited to,
roadways, parking areas, utilities and community facilities, in a form and
substance that would be reasonably acceptable to an ordinary prudent lender and
which easements will not materially adversely affect the remaining Harrah’s
Atlantic City Property, shall be declared and recorded, and the remaining
Harrah’s Atlantic City Property and the Convention Center Parcel shall be in
compliance with all applicable covenants under all easements and property
agreements contained in the Permitted Encumbrances for the Harrah’s Atlantic
City Property;

(i) Borrower has delivered an Officer’s Certificate to the effect that, to such
officer’s knowledge after diligent inquiry, the conditions in subsection
(a)-(h) hereof have occurred or shall occur concurrently with the transfer and
release of the Convention Center Parcel;

(j) Borrower shall execute such documents and instruments and obtain such
opinions of counsel as are typical for similar transactions;

(k) Collateral Agent shall have received payment of all Collateral Agent’s
reasonable out-of-pocket costs and expenses, including reasonable counsel fees
and disbursements incurred in connection with the release of the Convention
Center Parcel from the lien of the related Mortgage and the review and approval
of the documents and information required to be delivered in connection
therewith. Each of Lender and Collateral Agent acknowledges that it shall not
charge any fee (other than costs and expenses, as provided in the preceding
sentence) in connection with the release of the Convention Center Parcel; and

(l) Lender shall have received evidence reasonably satisfactory to it that the
Mezzanine Borrowers shall have satisfied all of the conditions to the proposed
release set forth in and each of the Mezzanine Loan Agreements.

 

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2.5.3. Release of O’Shea’s. At any time after the date hereof, Borrower may
obtain the release of the portion of the Flamingo Las Vegas known as O’Shea’s,
without the payment of a Release Price, upon the satisfaction of each of the
following conditions:

(a) No Event of Default shall have occurred and be continuing (unless the Event
of Default relates solely to O’Shea’s and therefore would be fully cured by the
release of O’Shea’s);

(b) Borrower shall submit to Collateral Agent and Servicer, not less than ten
(10) Business Days prior to the date of the proposed release (or such lesser
time as Collateral Agent and Servicer shall agree), a release of Lien (and
related Loan Documents) and/or authorization to the trustee under the Mortgage
to release such Lien, as applicable, for O’Shea’s for execution by Collateral
Agent. Such release and/or authorization shall be in a form appropriate in the
jurisdiction in which O’Shea’s is located and that contains standard provisions,
if any, protecting the rights of Lender and Collateral Agent (as releasing
secured parties);

(c) O’Shea’s shall be conveyed to a Person other than a Borrower or any
Mezzanine Borrower (other than, for the avoidance of doubt, distributions of
O’Shea’s to the equity owners of the Borrower and any Mezzanine Borrower in
order to facilitate such conveyance to such Person other than a Borrower or any
Mezzanine Borrower);

(d) Prior to the transfer and release of O’Shea’s, (i) each applicable municipal
authority exercising jurisdiction over the Flamingo Las Vegas shall have
approved a lot-split ordinance or other applicable action under local law
dividing O’Shea’s from the remainder of Flamingo Las Vegas, and a separate
assessor parcel number will thereafter be issued for O’Shea’s (with the result
that, following the issuance of a separate assessor parcel number for O’Shea’s,
no part of the remaining Flamingo Las Vegas shall be part of a tax lot which
includes any portion of O’Shea’s), (ii) the separate assessor parcel number
referred to in the foregoing clause (i) shall have been applied for and
(iii) Borrower shall have received an amount (from a Person other than Borrower,
Mezzanine Borrower or Operating Company) that shall approximate the
proportionate unpaid real property taxes for O’Shea’s, such amount to be based
upon the amount of the current year’s real property tax for Flamingo Las Vegas,
the proportionate size of O’Shea’s in relation to the entire parcel subject to
such real property tax and the anticipated waiting time for issuance of the
assessor parcel number referred to in the foregoing clause (i), which Borrower
shall use to pay in accordance with the terms of this Agreement any real
property tax exposure in respect of O’Shea’s for any period after the release of
O’Shea’s for which Borrower is liable (and any remaining amounts of which shall
be returned promptly after the payment of any such taxes);

(e) All requirements under all laws, statutes, rules and regulations (including,
without limitation, all zoning and subdivision laws, setback requirements,
sideline requirements, parking ratio requirements, use requirements, building
and fire code requirements, environmental requirements and wetlands
requirements) applicable to the Flamingo Las Vegas necessary to accomplish the
lot split shall have been fulfilled, and after such lot split, the remaining
Flamingo Las Vegas with all easements appurtenant and other Permitted
Encumbrances thereto will not be in violation of any then applicable law,
statute,

 

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rule or regulation (including, without limitation, all zoning and subdivision
laws, setback requirements, sideline requirements, parking ratio requirements,
use requirements, building and fire code requirements, environmental
requirements and wetland requirements), and all necessary variances (in form and
substance appropriate for the jurisdiction in which the Flamingo Las Vegas is
located), if any, shall have been obtained, as evidenced by (1) an Officer’s
Certificate or (2) Borrower having delivered to Servicer, at Borrower’s option,
either (A) letters or other evidence from the appropriate municipal authorities
confirming such compliance with laws in substance reasonably satisfactory to
Servicer and Collateral Agent, or (B) a zoning report confirming such compliance
with laws in substance reasonably satisfactory to Servicer and Collateral Agent,
or (3) a legal opinion confirming such compliance with laws in substance
reasonably satisfactory to Servicer and Collateral Agent;

(f) If reasonably necessary, appropriate reciprocal easement (or condominium)
agreements for the benefit and burden of the remaining Flamingo Las Vegas and
O’Shea’s requiring no cost or expense to Borrower regarding the use of common
facilities of such parcels, including, but not limited to, roadways, parking
areas, utilities and community facilities, in a form and substance that would be
reasonably acceptable to an ordinary prudent lender and which easements will not
materially adversely affect the remaining Flamingo Las Vegas, shall be declared
and recorded, and the remaining Flamingo Las Vegas and O’Shea’s shall be in
compliance with all applicable covenants under all easements and property
agreements contained in the Permitted Encumbrances for the Flamingo Las Vegas;

(g) Borrower has delivered an Officer’s Certificate to the effect that, to such
officer’s knowledge after diligent inquiry, the conditions in subsection
(a)-(f) hereof have occurred or shall occur concurrently with the release of
O’Shea’s;

(h) (1) Collateral Agent and Servicer shall have received an appropriate title
policy endorsement to the effect that the release of O’Shea’s will not have an
adverse affect on the priority of the Lien of the related Mortgage on the
balance of the Flamingo Las Vegas (following the release of O’Shea’s), provided,
however, the Lien of the Mortgage on the balance of the Flamingo Las Vegas shall
be subordinated to any easements created in connection with the release of
O’Shea’s pursuant to this Section 2.5.3 (and Collateral Agent agrees to execute
a subordination agreement in form reasonably requested by Borrower); (2) In
connection with the release of O’Shea’s, the Flamingo Individual Borrower shall
have obtained, to the extent reasonably available at such time, an appropriate
title policy endorsement to its owners policy on title, to the effect that the
release of O’Shea’s will not have an adverse affect on such Borrower’s ownership
of the balance of the Flamingo Las Vegas (following the release of O’Shea’s);

(i) Delivery of evidence reasonably satisfactory to Servicer and Collateral
Agent, which may be in the form of an Officer’s Certificate, that the release
will not have either an Individual Material Adverse Effect on the remainder of
the Flamingo Las Vegas or an Aggregate Material Adverse Effect (it being
understood that, for purposes of such determinations, O’Shea’s shall be deemed
to have been released as of the Original Closing Date and to have no value) and
the representations and warranties set forth in Sections 4.1.14, 4.1.16 (from
and after the issuance of the separate assessor parcel number for O’Shea’s),
4.1.21, 4.1.22, 4.1.25, 4.1.30, 4.1.39 and 4.1.40 shall continue to be true and
complete with respect to the remainder of the Flamingo Las Vegas;

 

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(j) Borrower shall have delivered evidence reasonably satisfactory to Servicer
and Collateral Agent, which may be in the form of an Officer’s Certificate, that
each Mezzanine Borrower has complied with all of the terms and conditions set
forth in Section 2.5.3 of the applicable Mezzanine Loan Agreement with respect
to such release;

(k) Flamingo Individual Borrower and the related Operating Company shall have
executed and delivered to Servicer a certified copy of an amendment to the
applicable Operating Lease reflecting the release of O’Shea’s and the reduction
in the “Initial Annual Rent” (as such term is defined in such Operating Lease
relating to the Flamingo Las Vegas) by Fifteen Million and No/100 Dollars
($15,000,000.00) (it being understood that so long as the conditions to release
described in this Section 2.5.3 are satisfied, the amendment to the Operating
Lease relating to the Flamingo Las Vegas shall be permitted under the Loan
Documents and such Operating Lease without the consent of Lender notwithstanding
any provision thereof to the contrary); and

(l) The payment by Borrower of Collateral Agent’s and Servicer’s reasonable
out-of-pocket costs and expenses in connection with the release contemplated by
this paragraph, including reasonable counsel fees and disbursements; and the
payment by Borrower of (i) all recording charges and fees relating to the
recordation of any easements executed as contemplated in this Section 2.5.3, any
deed(s) or any mortgage releases relating to O’Shea’s and (ii) any title
insurance, zoning reports, or other materials or instruments delivered to
Collateral Agent and Servicer as may be required pursuant to this Section 2.5.3.

Notwithstanding anything to the contrary contained herein (but subject to
Section 9.1(d)), each of Servicer, Lender and Collateral Agent acknowledges that
it shall not charge any fee (other than costs and expenses, as provided in the
preceding sentence) in connection with the release of O’Shea’s in accordance
with this paragraph. The parties acknowledge and agree that the Operating
Company in respect of the Flamingo Las Vegas, both before and after the release
contemplated by this paragraph, shall be permitted to provide management and
other similar services for O’Shea’s and shall be reimbursed for the allocable
share of expenses attributable to O’Shea’s. For the avoidance of doubt, the
parties agree that (for so long as O’Shea’s has not been released) O’Shea’s
shall be included in computations of EBITDAM and Excess Cash Flow.

2.5.4. RDE Project. In connection with the RDE Project, (i) Borrower may,
subject to the satisfaction of the conditions set forth in Section 2.5.4(A),
enter into the RDE Project Easements and/or RDE Project Leases with the RDE
Project Rights Holder and (ii) Borrower may, in connection with obtaining the
RDE Project Financing, if such releases are necessary in the good faith
determination of Borrower after using reasonable efforts to obtain the RDE
Project Financing without such releases, obtain, subject to the satisfaction of
the conditions set forth in Section 2.5.4(B), the release of any or all of the
RDE Parcels.

(A) Pursuant to clause (i) of the foregoing paragraph, Borrower may,
notwithstanding anything to the contrary set forth in the Loan Documents, enter
into (in Borrower’s discretion) (i) any easement or access agreements (or
condominium or other agreements) proposed to be entered into between RDE Project
Rights Holder and Flamingo Individual Borrower and/or Harrah’s LV Individual
Borrower, as applicable, for all or any portion of the RDE Parcels in connection
with the RDE Project (“RDE Project Easements”) or

 

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(ii) any leases proposed to be entered into between RDE Project Rights Holder
and Flamingo Individual Borrower and/or Harrah’s LV Individual Borrower, as
applicable, for all or any portion of the RDE Parcels in connection with the RDE
Project (“RDE Project Leases”), in each case subject to the satisfaction of each
of the following conditions:

(a) The RDE Project Easement and/or RDE Project Lease is executed in connection
with the pursuit of the RDE Project by the RDE Project Rights Holder;

(b) No Event of Default shall have occurred and be continuing;

(c) Borrower shall submit to Collateral Agent and Servicer, not less than thirty
(30) days prior to the date of any proposed RDE Project Easement (or such lesser
time as Collateral Agent and Servicer shall agree), drafts of such RDE Project
Easement for review and reasonable approval by the Collateral Agent and
Servicer. RDE Project Rights Holder shall have no obligation to pay any fee,
cost or expense to Borrower under any RDE Project Easement; provided that the
RDE Project Rights Holder shall be responsible for all operating costs and
expenses, including real property taxes and insurance premiums, attributable to
the RDE Parcel applicable to such RDE Project Easement, and any such RDE Project
Easement shall not impose any fee, cost or expense on Borrower (whether for the
use or maintenance of such areas or facilities, or otherwise), other than
Borrower’s pro rata portion of any such cost or expense attributable to
Borrower’s use of the RDE Parcel in question, and any such RDE Project Easement
shall be in a form appropriate in Clark County, Nevada (“Clark County”);

(d) Borrower shall submit to Collateral Agent and Servicer, not less than thirty
(30) days prior to the date of any proposed RDE Project Lease (or such lesser
time as Collateral Agent and Servicer shall agree), drafts of such RDE Project
Lease for review and reasonable approval by the Collateral Agent and Servicer.
RDE Project Rights Holder shall have no obligation to pay any fee, cost or
expense to Borrower under any RDE Project Lease; provided that the RDE Project
Rights Holder shall be responsible for all operating costs and expenses,
including real property taxes and insurance premiums, attributable to the RDE
Parcel applicable to such RDE Project Lease, and any such RDE Project Lease
shall not impose any fee, cost or expense on Borrower (whether for the use or
maintenance of such areas or facilities, or otherwise), other than Borrower’s
pro rata portion of any such cost or expense attributable to Borrower’s use of
the RDE Parcel in question, and such RDE Project Lease shall be in a form
appropriate in Clark County;

(e) Borrower shall submit to Collateral Agent and Servicer, not less than thirty
(30) days prior to the date of the proposed RDE Project Easement and/or RDE
Project Lease, as applicable (or such lesser time as Collateral Agent and
Servicer shall agree) (it being understood that the executed Officer’s
Certificate referred to below may be provided on or prior to the date of the
proposed RDE Project Easement and/or RDE Project Lease, as applicable), evidence
reasonably satisfactory to Collateral Agent and Servicer, which in the case of
the immediately following subclause (i) may be in the form of an Officer’s
Certificate, that (i) the proposed RDE Project Easement and/or RDE Project
Lease, as applicable, will not have either an Individual Material Adverse Effect
on the remainder of the Flamingo Las Vegas or the remainder of the Harrah’s Las
Vegas (as applicable), whether in connection with ingress or egress to or use of
such Properties or otherwise, or an Aggregate Material Adverse Effect (it being
understood

 

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that, for purposes of such determinations, the RDE Parcel in question shall be
deemed to have been a part of such RDE Project Easement and/or RDE Project
Lease, as applicable, as of the Original Closing Date and to have no value), or
materially adversely affect gaming operations at the remainder of the Flamingo
Las Vegas or the remainder of the Harrah’s Las Vegas (as applicable) and
(ii) ingress and egress to the remainder of the Flamingo Las Vegas or the
remainder of the Harrah’s Las Vegas (as applicable) will not be materially
adversely affected by the proposed RDE Project Easement and/or RDE Project
Lease, as applicable;

(f) Borrower shall have delivered to Collateral Agent and Servicer, not less
than ten (10) Business Days prior to the date of the proposed RDE Project
Easement and/or RDE Project Lease, as applicable (or such lesser time as
Collateral Agent and Servicer shall agree) (it being understood that the
executed Officer’s Certificates referred to below may be provided on or prior to
the date of the proposed RDE Project Easement and/or RDE Project Lease, as
applicable), (i) evidence reasonably satisfactory to Collateral Agent and
Servicer, which may be in the form of an Officer’s Certificate, that each
Mezzanine Borrower has complied with all of the terms and conditions set forth
in Section 2.5.4(A) of the applicable Mezzanine Loan Agreement with respect to
such RDE Project Easement and/or RDE Project Lease, as applicable; (ii) to the
extent any such consent is required in order to execute the RDE Project Easement
and/or RDE Project Lease or to record any RDE Project Lease and/or RDE Project
Easement, evidence reasonably satisfactory to Collateral Agent and Servicer that
any holders of easement rights whose rights would be materially adversely
affected by the execution of such RDE Project Easement and/or RDE Project Lease
or by the recordation of any RDE Project Lease and/or RDE Project Easement have
given their written consent to same in recordable form; and (iii) an Officer’s
Certificate confirming which Leases have been terminated, or are proposed to be
terminated, in connection with the execution of the RDE Project Easement and/or
RDE Project Lease, as applicable (and the construction that will occur in such
areas), and describing the status of such terminations or surrenders;

(g) Borrower shall submit to Collateral Agent and Servicer, on or prior to the
date of the proposed RDE Project Easement and/or RDE Project Lease, as
applicable, evidence reasonably satisfactory to Collateral Agent and Servicer
that the Harrah’s Las Vegas or the Flamingo Las Vegas (as applicable) complies
with all applicable zoning and code requirements (including, without limitation,
building codes, fire codes and parking requirements) in connection with the
execution of the RDE Project Easement and/or RDE Project Lease, as applicable;

(h) Collateral Agent and Servicer shall have received, to the extent reasonably
available at such time, an appropriate title policy endorsement to the effect
that the execution of the RDE Project Easement or RDE Project Lease, as
applicable, will not have an adverse affect on the priority of the Lien of the
related Mortgage on the balance of the Flamingo Las Vegas or the Harrah’s Las
Vegas, as applicable (following the execution of the RDE Project Easement or RDE
Project Lease, as applicable), provided, however, the Lien of the Mortgage on
the Flamingo Las Vegas and/or the Harrah’s Las Vegas, as applicable, shall be
subordinated to any RDE Project Easement or RDE Project Lease, as applicable,
created pursuant to this Section 2.5.4(A) (and Collateral Agent agrees to
execute a subordination agreement in form reasonably requested by Borrower);

 

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(i) RDE Project Rights Holder shall maintain liability insurance on the RDE
Parcels subject to any such RDE Project Leases and/or RDE Project Easements that
is substantially consistent with the insurance required hereunder, and such
insurance shall include the applicable Borrower and the Collateral Agent for the
benefit of the Lenders as additional insureds; and

(j) The payment by Borrower of Collateral Agent’s and Servicer’s reasonable
out-of-pocket costs and expenses in connection with the execution of the RDE
Project Leases or RDE Project Easements contemplated by this Section 2.5.4(A),
including reasonable counsel fees and disbursements; and the payment by Borrower
of all recording charges and fees relating to the recordation of any RDE Project
Easements or RDE Project Leases.

Notwithstanding anything to the contrary contained herein (but subject to
Section 9.1(d)), each of Servicer, Lender and Collateral Agent acknowledges that
it shall not charge any fee (other than costs and expenses, as provided in the
preceding sentence) in connection with the RDE Project Leases or RDE Project
Easements in accordance with this Section 2.5.4(A).

(B) Pursuant to and subject to the satisfaction of the condition in clause
(ii) of the initial paragraph to this Section 2.5.4, Borrower may,
notwithstanding anything to the contrary set forth in the Loan Documents but
subject to the satisfaction of each of the following conditions, obtain the
release of any or all of the RDE Parcels without the payment of a Release Price
(in each case):

(a) No Event of Default shall have occurred and be continuing (unless the Event
of Default relates solely to the RDE Parcel or RDE Parcels proposed to be
released and therefore would be fully cured by the release of such RDE Parcel or
RDE Parcels);

(b) The RDE Parcel or RDE Parcels being released is conveyed to a Person other
than a Borrower, Operating Company or any Mezzanine Borrower (other than, for
the avoidance of doubt, distributions of such RDE Parcels to the equity owners
of the Borrower and any Mezzanine Borrower in order to facilitate such
conveyance to such Person other than a Borrower, Operating Company or any
Mezzanine Borrower); and the Flamingo Individual Borrower and the Harrah’s LV
Individual Borrower (as applicable, in light of which RDE Parcel is being
conveyed) shall continue to remain in compliance with the provisions of
Section 4.1.30 and the requirements and obligations set forth in the definition
of “Special Purpose Entity” following the release of the RDE Parcel in question;

(c) Borrower shall submit to Collateral Agent and Servicer, not less than thirty
(30) days prior to the date of the proposed release (or such lesser time as
Collateral Agent and Servicer shall agree)(it being understood that the executed
Officer’s Certificate referred to below may be provided on or prior to the date
of the proposed release), evidence reasonably satisfactory to Collateral Agent
and Servicer, which in the case of the immediately following subclauses (i) and
(iii) may be in the form of an Officer’s Certificate, that (i) the proposed
release will not have either an Individual Material Adverse Effect on the
remainder of the Flamingo Las Vegas or the remainder of the Harrah’s Las Vegas
(as applicable), whether in connection with ingress or egress to or use of such
Properties or otherwise, or an Aggregate Material Adverse Effect (it being
understood that, for purposes of such determinations, the RDE Parcel in question

 

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shall be deemed to have been released as of the Original Closing Date and to
have no value), or materially adversely affect gaming operations at the
remainder of the Flamingo Las Vegas or the remainder of the Harrah’s Las Vegas
(as applicable), (ii) ingress and egress to the remainder of the Flamingo Las
Vegas or the remainder of the Harrah’s Las Vegas (as applicable) will not be
materially adversely affected by the proposed release and (iii) the
representations and warranties set forth in Sections 4.1.14, 4.1.16 (from and
after the issuance of the separate assessor parcel number for the RDE Parcel in
question), 4.1.21, 4.1.22, 4.1.24, 4.1.25, 4.1.30, 4.1.39 and 4.1.40 shall
continue to be true and complete with respect to the remainder of the Flamingo
Las Vegas or the remainder of the Harrah’s Las Vegas, as applicable, following
the release of the RDE Parcel in question;

(d) Borrower shall submit to Collateral Agent and Servicer, not less than thirty
(30) days prior to the date of the proposed release (or such lesser time as
Collateral Agent and Servicer shall agree), drafts of any easement or access
agreements (or condominium or other agreements) proposed to be entered into in
connection with the release of the RDE Parcel in question and the remaining
Flamingo Las Vegas or the remaining Harrah’s Las Vegas, as applicable, and the
common use of and access to any of such areas or facilities related thereto, for
review and reasonable approval by the Collateral Agent and Servicer. Any such
easement, access or other agreements (collectively, “RDE Easements”) shall not
impose any fee, cost or expense on Borrower (whether for the use or maintenance
of such areas or facilities, or otherwise), other than Borrower’s pro rata
portion of any such cost or expense attributable to Borrower’s use of the RDE
Parcel in question, and shall be in a form appropriate in the jurisdiction in
which the RDE Parcel to be released is located;

(e) Borrower shall have delivered to Collateral Agent and Servicer, not less
than ten (10) Business Days prior to the date of the proposed release (or such
lesser time as Collateral Agent and Servicer shall agree) (it being understood
that the executed Officer’s Certificates referred to below may be provided on or
prior to the date of the proposed release), (i) evidence reasonably satisfactory
to Collateral Agent and Servicer, which may be in the form of an Officer’s
Certificate, that each Mezzanine Borrower has complied with all of the terms and
conditions set forth in Section 2.5.4(B) of the applicable Mezzanine Loan
Agreement with respect to such release; (ii) to the extent any such consent is
required in order to release the RDE Parcel in question or to record any RDE
Easements, evidence reasonably satisfactory to Collateral Agent and Servicer
that any holders of easement rights whose rights would be materially adversely
affected by the release of the RDE Parcel in question or by the recordation of
any RDE Easements have given their written consent to same in recordable form;
and (iii) an Officer’s Certificate confirming which Leases have been terminated,
or are proposed to be terminated, in connection with the release of the RDE
Parcel in question, as applicable (and the construction that will occur in such
areas), and describing the status of such terminations or surrenders;

(f) Borrower shall submit to Collateral Agent and Servicer, on or prior to the
date of the proposed release, (1) an unconditional commitment from the Title
Company to issue (i.e., all stated conditions and requirements shall be marked
off as completed, excepting only the recording of the release) promptly upon
release of the RDE Parcel in question an updated title policy (or date down
endorsements in lieu thereof) in form and substance reasonably satisfactory to
Collateral Agent and Servicer, to include, in each case to the extent reasonably
available at

 

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such time and requested by Collateral Agent and Servicer: (A) an updated
“Schedule B” legal description to reflect released parcels and added insurable
easements; (B) an updated zoning endorsement that will confirm that the
remaining Harrah’s Las Vegas or the Flamingo Las Vegas (as applicable) complies
with all applicable laws, regulations and code requirements (including, without
limitation, building codes, fire codes and parking requirements) following the
release of the RDE Parcel in question (unless, in the case of this subclause
(B), the zoning report referred to in the following clause (2)(ii) will be
provided); (C) an updated tax map endorsement (following issuance of a separate
assessor parcel number for the RDE Parcel in question); (D) an updated lender’s
comprehensive endorsement; (E) an updated easement use endorsement; (F) an
updated access endorsement; (G) an updated contiguity endorsement; and (H) an
updated subdivision endorsement; and (2) evidence reasonably satisfactory to
Collateral Agent and Servicer that the remaining Harrah’s Las Vegas or the
Flamingo Las Vegas (as applicable) complies with all applicable zoning and code
requirements (including, without limitation, building codes, fire codes and
parking requirements) following the release of the RDE Parcel in question (which
may be satisfied, at the Borrower’s option, by providing (i) an updated zoning
endorsement referred to in the foregoing clause (1)(B), (ii) a zoning report
confirming that the Flamingo Las Vegas and the Harrah’s Las Vegas, as
applicable, comply with the Development Laws and Requirements following the
release of the RDE Parcel in question (which zoning report shall be in form and
substance reasonably satisfactory to Collateral Agent and Servicer), (iii) a
legal opinion confirming that the Flamingo Las Vegas and the Harrah’s Las Vegas,
as applicable, comply with the Development Laws and Requirements following the
release of the RDE Parcel in question (which opinion shall be in form and
substance reasonably satisfactory to Collateral Agent and Servicer) or
(iv) other evidence reasonably satisfactory to Collateral Agent and Servicer;

(g) Borrower shall submit to Collateral Agent and Servicer, not less than ten
(10) Business Days prior to the date of the proposed release (or such lesser
time as Collateral Agent and Servicer shall agree), a release of Lien (and
related Loan Documents) and/or authorization to the trustee under the Mortgage
to release such Lien, as applicable, for the RDE Parcel or RDE Parcels proposed
to be released, for execution by Collateral Agent. Such release and/or
authorization shall be in a form appropriate in the jurisdiction in which the
RDE Parcel or RDE Parcels to be released are located and that contains standard
provisions, if any, protecting the rights of Lender and Collateral Agent (as
releasing secured parties);

(h) Collateral Agent and Servicer shall have received, to the extent reasonably
available at such time, an appropriate title policy endorsement to the effect
that the release of the RDE Parcel in question will not have an adverse affect
on the priority of the Lien of the related Mortgage on the balance of the
Flamingo Las Vegas or the Harrah’s Las Vegas, as applicable (following the
release of the RDE Parcel in question), provided, however, the Lien of the
Mortgage on the balance of the Flamingo Las Vegas or the Harrah’s Las Vegas, as
applicable, shall be subordinated to any easements created in connection with
the release of the RDE Parcel in question pursuant to this Section 2.5.4(B) (and
Collateral Agent agrees to execute a subordination agreement in form reasonably
requested by Borrower);

(i) Prior to the transfer and release of the RDE Parcel in question, (i) each
applicable municipal authority exercising jurisdiction over the Flamingo Las
Vegas or the Harrah’s Las Vegas (as applicable) shall have approved a commercial
subdivision or other

 

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applicable action under local law dividing the RDE Parcel proposed to be
released from the remainder of the Flamingo Las Vegas or the Harrah’s Las Vegas
(as applicable), and a separate assessor parcel number shall thereafter be
issued for the RDE Parcel in question (with the result that, following the
issuance of a separate assessor parcel number for the RDE Parcel in question, no
part of the remaining Flamingo Las Vegas or the Harrah’s Las Vegas, as
applicable, shall be part of a tax lot which includes any portion of the RDE
Parcel being released), (ii) the separate assessor parcel number referred to in
the foregoing clause (i) shall have been applied for, (iii) Borrower shall have
received an amount (from a Person other than Borrower, Mezzanine Borrower or
Operating Company) that shall approximate the proportionate unpaid real property
taxes for each RDE Parcel to be released, such amount to be based upon the
amount of the current year’s real property tax for Flamingo Las Vegas or
Harrah’s Las Vegas, as applicable, the proportionate size of the RDE Parcel to
be released in relation to the entire parcel subject to such real property tax
and the anticipated waiting time for issuance of the assessor parcel number
referred to in the foregoing clause (i), which Borrower shall use to pay in
accordance with the terms of this Agreement any real property tax exposure in
respect of the RDE Parcel to be released for any period after the release of
such RDE Parcel for which Borrower is liable (and any remaining amounts of which
shall be returned promptly after the payment of any such taxes) and (iv) all
requirements under all laws, statutes, rules and regulations (including, without
limitation, all zoning and subdivision laws, setback requirements, sideline
requirements, parking ratio requirements, use requirements, building and fire
code requirements, environmental requirements and wetlands requirements,
collectively referred to as “Development Laws and Requirements”) applicable to
the Flamingo Las Vegas or the Harrah’s Las Vegas (as applicable) necessary to
accomplish the lot split/subdivision shall have been fulfilled;

(j) Immediately prior to the transfer and release of the RDE Parcel in question,
the applicable RDE Easements shall be recorded;

(k) Borrower has delivered an Officer’s Certificate to the effect that, to such
officer’s knowledge after diligent inquiry, the conditions in subsection
(a)-(i) hereof have occurred or shall occur concurrently with the release of the
RDE Parcel in question;

(l) Flamingo Individual Borrower and the related Operating Company shall have
executed and delivered to Servicer a certified copy of an amendment to the
applicable Operating Lease reflecting the release of the RDE Parcel in question;
and/or (as applicable) Harrah’s Las Vegas Individual Borrower and the related
Operating Company shall have executed and delivered to Servicer a certified copy
of an amendment to the applicable Operating Lease reflecting the release of the
RDE Parcel in question (it being understood that so long as the conditions to
release described in this Section 2.5.4(B) are satisfied, the amendment(s) to
the applicable Operating Leases shall be permitted under the Loan Documents and
such Operating Leases without the consent of Lender notwithstanding any
provision thereof to the contrary); and

(m) Flamingo Individual Borrower and/or Harrah’s LV Individual Borrower, as
applicable, shall have received on or prior to the date of the proposed release,
(1) an unconditional commitment from the Title Company to issue (i.e., all
stated conditions and requirements shall be marked off as completed, excepting
only the recording of the release) promptly upon release of the RDE Parcel in
question an updated owners policy of title (or date down endorsements in lieu
thereof) in form and substance reasonably satisfactory to Collateral

 

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Agent and Servicer, to include, in each case to the extent reasonably available
at such time and requested by Collateral Agent and Servicer: (A) an updated
“Schedule B” legal description to reflect released parcels and added insurable
easements; (B) an updated zoning endorsement that will confirm that the
remaining Harrah’s Las Vegas or the Flamingo Las Vegas (as applicable) complies
with all applicable laws, regulations and code requirements (including, without
limitation, building codes, fire codes and parking requirements) following the
release of the RDE Parcel in question (unless, in the case of this
subclause (B), the zoning report referred to in the following clause (2)(ii)
will be provided); (C) an updated tax map endorsement (following issuance of a
separate assessor parcel number for the RDE Parcel in question);
(D) intentionally omitted; (E) an updated easement use endorsement; (F) an
updated access endorsement; (G) an updated contiguity endorsement; and (H) an
updated subdivision endorsement; and (2) evidence reasonably satisfactory to
Collateral Agent and Servicer that the remaining Harrah’s Las Vegas or the
Flamingo Las Vegas (as applicable) complies with all applicable zoning and code
requirements (including, without limitation, building codes, fire codes and
parking requirements) following the release of the RDE Parcel in question (which
may be satisfied, at the Borrower’s option, by providing (i) an updated zoning
endorsement to Flamingo Individual Borrower and/or the Harrah’s LV Individual
Borrower owners policy of title referred to in the foregoing clause (1)(B),
(ii) a zoning report confirming that the Flamingo Las Vegas and the Harrah’s Las
Vegas, as applicable, comply with the Development Laws and Requirements
following the release of the RDE Parcel in question (which zoning report shall
be in form and substance reasonably satisfactory to Collateral Agent and
Servicer), (iii) a legal opinion confirming that the Flamingo Las Vegas and the
Harrah’s Las Vegas, as applicable, comply with the Development Laws and
Requirements following the release of the RDE Parcel in question (which opinion
shall be in form and substance reasonably satisfactory to Collateral Agent and
Servicer) or (iv) other evidence reasonably satisfactory to Collateral Agent and
Servicer;

(n) The payment by Borrower of Collateral Agent’s and Servicer’s reasonable
out-of-pocket costs and expenses in connection with the release contemplated by
this paragraph, including reasonable counsel fees and disbursements; and the
payment by Borrower of (i) all recording charges and fees relating to the
recordation of any RDE Easements, any deed(s) or any mortgage releases relating
to the RDE Parcel in question (ii) any title insurance, zoning reports, or other
materials or instruments delivered to Collateral Agent and Servicer as may be
required pursuant to this Section 2.5.4(B).

Notwithstanding anything to the contrary contained herein (but subject to
Section 9.1(d)), each of Servicer, Lender and Collateral Agent acknowledges that
it shall not charge any fee (other than costs and expenses, as provided in the
preceding sentence) in connection with the release of the RDE Parcels in
accordance with this paragraph. For the avoidance of doubt, the parties agree
that (until such time as they shall be released from the Lien of a Mortgage),
the RDE Parcels shall be included in computations of EBITDAM and Excess Cash
Flow.

In the event that construction on the RDE Project is commenced and then
subsequently terminated without having been completed, Borrower shall or shall
cause RDE Project Rights Holder to promptly restore any portion of the Flamingo
Las Vegas and Harrah’s Las Vegas affected by such construction to a condition as
good as or better than that of such property at the commencement of such
construction on the RDE Project, reasonable wear and tear excepted (which shall
include the removal of all equipment and personal property related to the RDE
Project from the subject RDE Parcel).

 

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2.5.5. Release on Payment in Full. Collateral Agent shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest due on the Loan and all other amounts due and payable under the
Loan Documents in accordance with the terms and provisions of the Note and this
Agreement, release the Lien of the Mortgage on each Individual Property not
theretofore released.

Section 2.6. Cash Management; Working Capital Account; Blocked Account.

2.6.1. Establishment of Collection Accounts. (a) (i) In accordance with the
provisions of the Operating Lease, Operating Company established and is
currently maintaining (and will maintain throughout the term of the Loan) for
the benefit of Borrower, as lessor under each Operating Lease, the Collection
Accounts with Collection Banks and (ii) the rights of Borrower (as landlord)
under the Operating Lease have been collaterally assigned to Collateral Agent
(for the benefit of Lender). All Revenues, other than amounts retained on-site
by each Operating Company as a Gaming Operating Reserve and amounts collected
and maintained in Off-Shore Accounts, shall be deposited in the Collection
Accounts (whether by Operating Company or by Manager).

(b) Operating Company shall be responsible for payment of any federal, state or
local income or other tax applicable to the interest or income earned on the
Collection Accounts (and Operating Company shall be entitled to all such
interest and income). The Collection Accounts have been assigned the federal tax
identification numbers of each Operating Company which are as set forth in
Schedule III attached hereto. Borrower shall cause Operating Company to provide
Lender, at any time upon request of Lender, with Forms W-8 or W-9 to evidence
that Operating Company and Manager are not subject to any back-up withholding
under the Code. All costs and expenses of establishing and maintaining the
Collection Accounts have been and shall continue to be at Borrower’s or
Operating Company’s sole cost and expense.

(c) Borrower hereby represents and warrants as follows: the Collection Accounts
and the Borrower Deposit Accounts are the only accounts maintained by Operating
Company or Borrower in any jurisdiction that include funds arising out of, or
are otherwise attributable to, the Properties or relate to the operation and
management of any of the Properties other than accounts (collectively, the “OC
Accounts”) that contain amounts theretofore released from Collection Accounts in
accordance herewith, and other than Off-Shore Accounts, which shall not be
subject to this Agreement); and, other than the Borrower Deposit Accounts,
Borrower maintains no accounts that include funds arising out of, or are
otherwise attributable to, any of the Properties or relate to the operation and
management of any of the Properties or otherwise (except for accounts containing
funds released from the Collection Accounts as herein provided and the Off-Shore
Accounts). Borrower shall not (and Borrower shall not permit Operating Company
to), without the prior consent of Lender (not to be unreasonably withheld,
conditioned or delayed), open any accounts or new accounts or in any way alter
the flow of funds and payment into the Borrower Deposit Account and/or the

 

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Collection Accounts, including, without limitation, changing the source, type or
currency of any payments currently deposited and maintained in any such account
(it being understood that the foregoing restriction shall not preclude Operating
Company or Borrower from accepting and depositing in any Collection Accounts or
Borrower Deposit Account any capital contributions, or any disbursements from
any Collection Accounts or Borrower Deposit Account in accordance with the
provisions of this Agreement). Borrower shall not (and Borrower shall not permit
Operating Company to), without the prior consent of Lender (not to be
unreasonably withheld, conditioned or delayed), establish and maintain any
accounts with financial institutions outside of the United States of America,
other than the Off-Shore Accounts.

(d) Borrower shall, or shall cause Operating Company to, deliver irrevocable
written instructions to each tenant under any Lease at any of the Properties, in
form and substance reasonably acceptable to Lender, directing each such tenant
to deliver all Rents payable thereunder directly to the Collection Account.
Borrower shall, or shall cause Operating Company to, deliver irrevocable written
instructions to each of the credit card companies or credit card clearing banks
delivering receipts or Revenues from any of the Properties, in form and
substance reasonably acceptable to Lender, directing each such credit card
company or credit card clearing bank to deliver all receipts payable with
respect to any of the Properties directly to the Collection Accounts.

(e) Borrower and its Affiliates shall deposit (and Borrower shall cause each
Operating Company to deposit) all Revenue received by, paid or payable to or
paid for the benefit of Borrower or Operating Company or in connection with any
of the Properties (of whatever kind and nature), other than (x) each Gaming
Operating Reserve and (y) amounts theretofore released from a Collection Account
in accordance herewith, into the Collection Accounts within three (3) Business
Days after receipt. Borrower shall diligently and continuously use all
commercially reasonable efforts to cause (and shall cause each Operating Company
to use all commercially reasonable efforts to cause) any other Person to deposit
all Revenue received by, paid or payable to or paid for the benefit of Borrower
or Operating Company or in connection with any of the Properties (of whatever
kind and nature), other than (x) each Gaming Operating Reserve and (y) amounts
theretofore released from a Collection Account in accordance herewith, into the
Collection Accounts within three (3) Business Days after receipt.

(f) Rents under each Operating Lease are paid monthly in advance, on the dates
set forth in each Operating Lease. Borrower covenants to reserve each month
(and, each month, to retain in the Borrower Deposit Account from the first
Rents paid and collected during each such month) an amount equal to the sum of
the Debt Service due and payable under this Agreement and the Mezzanine Debt
Service due and payable under the Mezzanine Loan Agreements on the Payment Date
occurring during each such month. Any such amounts on deposit in the Borrower
Deposit Account shall be applied on each Payment Date (i) to the Debt Service
due on each such Payment Date and (ii) the Mezzanine Debt Service due on each
such Payment Date (with the balance of any such amounts, if any, being disbursed
to or as directed by Borrower).

 

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2.6.2. Disbursements from, Security Interest in, Collection Accounts. The
Operating Lease provides, among other things, that all Revenues shall be
collaterally assigned by Operating Company to Borrower as additional security
for Operating Company’s obligations under the Operating Lease and that Borrower
shall collaterally assign and pledge all of its interest in such Revenues to
Collateral Agent (for the benefit of Lender) as additional security for the
Loan. In furtherance thereof, Lender, Collateral Agent and Borrower agree as
follows:

(a) Operating Company has granted to Borrower a first priority security interest
in and to all right, title and interest of Operating Company in the Collection
Accounts and all deposits at any time contained therein and the proceeds thereof
(whether now owned or existing or hereafter acquired or arising and regardless
of where located), and Borrower has granted to Collateral Agent (for the benefit
of Lender) a first priority security interest in and to all right, title and
interest of Borrower in the Collection Accounts and all deposits at any time
contained therein and the proceeds thereof (whether now owned or existing or
hereafter acquired or arising and regardless of where located). Borrower will
cause Operating Company to take all actions necessary to maintain in favor of
Borrower (and Borrower will take all actions necessary to maintain in favor of
Collateral Agent, for the benefit of Lender) a perfected first priority security
interest in the Collection Accounts including, without limitation, executing,
delivering and maintaining one or more account control agreements that comply
with Article 9 of the Uniform Commercial Code as in effect from time to time in
any applicable jurisdictions and filing UCC-1 Financing Statements and
continuations thereof upon Lender’s (or Collateral Agent’s) request therefor.
Except as otherwise provided in subparagraphs (b) and (c) hereof, all amounts
collected in the Collection Accounts shall be transferred on each Business Day
to (or as directed by) Operating Company for use or distribution by the
Operating Company in its discretion free of any rights or encumbrances of
Collateral Agent or any Lender .

(b) Upon the occurrence and during the continuance of an Event of Default
hereunder or under any of the Mezzanine Loan Documents, and provided no Event of
Default (as such term is defined in the Operating Lease) shall have occurred and
be continuing under any Operating Lease (in which event the provisions of
Section 2.6.2(c) shall apply), the applicable Controlling Party and/or Operating
Company shall direct and cause Collection Bank to deposit directly into the Cash
Management Account an amount not less than all Rent payable under the applicable
Operating Lease for the next thirty (30) days (it being the intent and agreement
that, during the continuance of an Event of Default, the Cash Management Account
shall at all times contain such amounts sufficient to cover the ensuing 30-day
period), including the Monthly Tax and Insurance Amount and the Monthly FF&E
Reserve Amount (the amounts described in the preceding sentence, collectively,
the “Monthly Disbursements”); provided that, notwithstanding the foregoing,
Lender may not apply such Monthly Disbursements to the payment of amounts due
hereunder in an amount in excess of the amounts owed by the Operating Company
under the Operating Lease. In the event that the applicable Controlling Party or
Operating Company shall have failed to so instruct Collection Bank, any of
Lender, Collateral Agent and Servicer shall have the right to so direct the
Collection Bank on behalf of the applicable Controlling Party and Operating
Company. Any amounts not required to be so deposited into the Cash Management
Account shall be transferred on each Business Day thereafter to (or as directed
by) Operating Company for use or distribution by the Operating Company in its
discretion free of any rights or encumbrances

 

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of any Lender or Collateral Agent. If no Event of Default has occurred and is
continuing hereunder but an Event of Default has occurred and is continuing
under any of the Mezzanine Loan Documents, to the extent Monthly Disbursements
are not applied to the payment of amounts due hereunder, such excess shall be
remitted to the First Mezzanine Lender or to an account designated by the First
Mezzanine Lender (or to the Mezzanine Lender for the most senior Mezzanine Loan
then outstanding or an account designated by such Mezzanine Lender); provided
that, notwithstanding the foregoing, Lender shall not remit any such amounts in
excess of the amounts owed by the Operating Company under the Operating Lease.
If an Event of Default hereunder or under any of the Mezzanine Loan Documents
has occurred and is continuing, to the extent Monthly Disbursements are not
applied to the payment of amounts due hereunder, Collateral Agent and Servicer
shall have the right to retain such excess as collateral for the Loan and/or
apply (or cause to be applied) such excess to the payment of the Debt.
Notwithstanding anything to the contrary contained in this Agreement, Borrower
acknowledges and agrees that any and all reasonable and customary costs and
expenses (including, without limitation, any reasonable attorneys’ fees)
incurred by any of Lender, Collateral Agent or Servicer in remitting to
Operating Company pursuant to this Section 2.6.2(b) any amounts in excess of
Monthly Disbursements shall be borne by, and be the responsibility of, Borrower
and shall constitute part of the Debt. Each of Collateral Agent and Servicer
shall be entitled to rely on, and shall be held harmless in relying on, any
instructions from Borrower or Operating Company in connection with the
remittance of any funds from the Cash Management Account to Operating Company
pursuant to this Section 2.6.2(b).

(c) Upon the occurrence and during the continuance of an Event of Default (as
such term is defined in the Operating Lease) under any Operating Lease, the
applicable Controlling Party and/or Operating Company shall notify Collection
Bank to transfer to the Cash Management Account on each Business Day (in
immediately available funds by federal wire transfer) all amounts on deposit in
each Collection Account and, in the event the applicable Controlling Party or
Operating Company shall have failed to do so, any of Lender, Collateral Agent
and Servicer shall have the right to direct the Collection Bank on behalf of the
applicable Controlling Party and Operating Company to transfer to the Cash
Management Account on each Business Day (in immediately available funds by
federal wire transfer) all amounts on deposit in each Collection Account up to
the aggregate amount owed by Operating Company under the Operating Lease,
including, without limitation, any damages pursuant to Section 12.2(a) thereof,
and thereafter (as well as pending the determination of such damages) Operating
Company shall not receive any monies from the Collection Account except to the
extent they exceed the aggregate amount owed by Operating Company under the
Operating Lease (or pending such determination, such aggregate amount estimated
by Borrower and Lender), including, without limitation, any damages pursuant to
Section 12.2(a) thereof. Collateral Agent and Servicer shall have the right to
retain all amounts to be paid into the Cash Management Account in accordance
with the first sentence of this Section 2.6.2(c) as collateral for the Loan
and/or apply such amounts to the payment of the Debt.

(d) Borrower and its Affiliates shall (and Borrower shall cause Operating
Company to) execute and deliver such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable,
to evidence, preserve and/or protect, maintain and perfect the security interest
of Collateral Agent (for the benefit of Lender) in the Collection Accounts.

 

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2.6.3. Blocked Account; Cash Management Account.

(a) Lender shall establish or shall direct Servicer to establish (prior to the
sale of the Rio Las Vegas in accordance with Section 2.5 hereof, or at such
earlier time as Lender or Servicer shall determine) a segregated Eligible
Account (the “Blocked Account”) to be held in the name of Collateral Agent (for
the benefit of Lender). The Blocked Account shall be under the sole dominion and
control of Collateral Agent (which may be exercised through Servicer).
Collateral Agent and Servicer shall have the sole right to make withdrawals from
the Blocked Account in accordance with the terms and conditions of this
Agreement and the other Loan Documents, except as otherwise expressly provided
in this Agreement or the other Loan Documents.

(b) Upon the occurrence and during the continuance of a Rio Leverage Event, on
each Payment Date following a sale of the Rio Las Vegas (and during the
continuance of a Rio Leverage Event), the Borrower shall deposit in the Blocked
Account (1) the Subject Fees and (2) any amounts Borrower deposits pursuant to
Section 4.1(a)(iv)(B) of the Note Sales Agreement.

(c) Borrower hereby grants to Collateral Agent (for the benefit of Lender) a
first priority security interest in any and all interest, if any, of Borrower in
the Blocked Account and all deposits at any time contained therein and the
proceeds thereof (the “Rio Leverage Event Cash Collateral”) and will take all
actions necessary to maintain in favor of Collateral Agent (for the benefit of
Lender) a perfected first priority security interest in any and all interest of
Borrower, if any, in the Blocked Account and the Rio Leverage Event Cash
Collateral, including, without limitation, executing, delivering and maintaining
one or more account control agreements that comply with Article 9 of the Uniform
Commercial Code as in effect from time to time in any applicable jurisdictions,
and filing UCC 1 Financing Statements and continuations thereof upon Lender’s
request therefor. All costs and expenses of establishing and maintaining the
Blocked Account (and any sub account thereof) shall be at Borrower’s sole cost
and expense. Collateral Agent and Lender agree to release (or direct the
Servicer to release) the Rio Leverage Event Cash Collateral (i) on quarterly
Payment Dates as necessary to consummate ECF Purchases (as and when such
purchases are effected in accordance with the provisions of the Note Sales
Agreement) and (ii) at any time upon the election of the Borrower to utilize
funds to repay the Loan. In addition, from and after the Rio Leverage Event
ceasing to be in effect, Collateral Agent and Lender shall release (or direct
the Servicer to release) promptly upon the request of Borrower the Rio Leverage
Event Cash Collateral to Borrower or as directed by Borrower (it being
understood that Borrower may elect to distribute the Rio Leverage Event Cash
Collateral to Holdings as and to the extent permitted in Section 4.1 of the Note
Sales Agreement); provided, that, in connection with any such release of Rio
Leverage Event Cash Collateral, if the Rio Leverage Event ceased to be in effect
because of a Blocked Cash Buildup, then the maximum amount of cash that may be
withdrawn from the Blocked Account at such time shall be the amount that may be
withdrawn from the Blocked Account without causing the Post-Rio Leverage Ratio
in effect at such time (after giving pro forma effect to such withdrawal) to be
greater than the Pre-Rio Leverage Ratio.

 

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(d) In addition, Lender may establish and maintain, or may direct Servicer to
establish and maintain (upon the occurrence of an Event of Default, or at such
time as Lender or Servicer shall determine) a segregated Eligible Account (the
“Cash Management Account”) to be held in the name of Collateral Agent (for the
benefit of Lender). The Cash Management Account shall be under the sole dominion
and control of Collateral Agent (which may be exercised through Servicer).
Collateral Agent and Servicer shall have the sole right to make withdrawals from
the Cash Management Account in accordance with the terms and conditions of this
Agreement and the other Loan Documents, except as otherwise expressly provided
in this Agreement or the other Loan Documents.

(e) Borrower hereby grants to Collateral Agent (for the benefit of Lender), a
first priority security interest in any and all interest, if any, of Borrower in
the Cash Management Account and all deposits at any time contained therein and
the proceeds thereof and will take all actions necessary to maintain in favor of
Collateral Agent, for the benefit of Lender a perfected first priority security
interest in any and all interest of Borrower, if any, in the Cash Management
Account and the deposits therein and proceeds thereof, including, without
limitation, executing, delivering and maintaining one or more account control
agreements that comply with Article 9 of the Uniform Commercial Code as in
effect from time to time in any applicable jurisdictions, and filing UCC 1
Financing Statements and continuations thereof upon Lender’s request therefor.
All costs and expenses for establishing and maintaining the Cash Management
Account (and any sub account thereof) shall be at Borrower’s sole cost and
expense.

(f) Borrower has established the Borrower Deposit Account with the Deposit
Account Bank. The Borrower Deposit Account shall be under the sole dominion and
control of Collateral Agent (which may be exercised through Servicer); provided,
however, that so long as an Event of Default has not occurred and is continuing,
subject to the provisions of Section 2.6.1(f), Borrower may make withdrawals
from the applicable Borrower Deposit Account at any time and from time to time.
Borrower hereby grants to Collateral Agent (for the benefit of Lender), a first
priority security interest in the Borrower Deposit Account and all of Borrower’s
rights, title and interest therein and all deposits at any time contained
therein and the proceeds thereof and will take all actions necessary to maintain
in favor of Collateral Agent, for the benefit of Lender a perfected first
priority security interest in the Borrower Deposit Account and all rights, title
and interest of Borrower in the Borrower Deposit Account and the deposits
therein and proceeds thereof, including, without limitation, executing,
delivering and maintaining one or more account control agreements that comply
with Article 9 of the Uniform Commercial Code as in effect from time to time in
any applicable jurisdictions, and filing UCC 1 Financing Statements and
continuations thereof upon Lender’s request therefor. All costs and expenses for
establishing and maintaining the Borrower Deposit Account (and any sub account
thereof) shall be at Borrower’s sole cost and expense.

(g) Borrower shall be responsible for payment of any federal, state or local
income or other tax applicable to the interest or income earned on the Blocked
Account, the Cash Management Account, the Borrower Deposit Account and any
sub-account of the Blocked Account, the Cash Management Account or the Borrower
Deposit Account. The Blocked Account, the Cash Management Account and the
Borrower Deposit Account and any sub-account thereof shall be assigned the
federal tax identification numbers of each Borrower set forth on Schedule I
attached hereto. Borrower shall provide Lender, at any time upon request of
Lender, with a Form W-8 or W-9 to evidence that Borrower is not subject to any
back-up withholding under the Code.

 

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(h) Upon the occurrence and during the continuance of an Event of Default, all
funds on deposit in the Blocked Account, the Cash Management Account and the
Borrower Deposit Account shall be applied by Lender or Servicer in such order
and priority as Lender or Servicer shall determine.

(i) The insufficiency of funds on deposit in the Blocked Account, the Cash
Management Account and/or the Borrower Deposit Account shall not relieve
Borrower from the obligation to make any payments, as and when due pursuant to
this Agreement and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or circumstance
whatsoever.

2.6.4. Working Capital Account.

(a) Simultaneously herewith, each Operating Company has established a Working
Capital Account with Working Capital Bank. The Working Capital Account shall be
in the name of, and under the sole dominion and control of, Collateral Agent
(which may be exercised through Servicer); provided, however, that so long as an
Event of Default has not occurred and is continuing, Operating Company (or
Manager, on behalf of Operating Company) may make withdrawals from the
applicable Working Capital Account at any time and from time to time to fund the
ordinary-course working capital needs of such Operating Company. Each Operating
Company may deposit into the applicable Working Capital Account from time to
time during any Excess Cash Flow Period cash to be reserved on account of its
anticipated, ordinary course working capital needs, provided that (i) the
aggregate amount of cash that may be deposited by all Operating Companies into
the Working Capital Accounts during any Excess Cash Flow Period shall not exceed
$20,000,000 (which amount shall be reduced proportionally, following the sale of
any Individual Property, based on the Allocated Loan Amount of the Individual
Property sold and the Allocated Loan Amounts of all of the Properties, in each
case as of the date hereof) and (ii) immediately after giving effect to any such
deposit into any Working Capital Account, the aggregate balance in all Working
Capital Accounts shall not exceed $50,000,000 (which amount shall be reduced
proportionally, following the sale of any Individual Property, based on the
Allocated Loan Amount of the Individual Property sold and the Allocated Loan
Amounts of all of the Properties, in each case as of the date hereof).

(b) Pursuant to the Working Capital Account Agreement, Operating Company has
granted to Borrower a first priority security interest in and to all right,
title and interest of Operating Company in the Working Capital Account and all
deposits at any time contained therein and the proceeds thereof (whether now
owned or existing or hereafter acquired or arising and regardless of where
located), and Borrower has granted to Collateral Agent (for the benefit of
Lender) a first priority security interest in and to all right, title and
interest of Borrower in the Working Capital Accounts and all deposits at any
time contained therein and the proceeds thereof (whether now owned or existing
or hereafter acquired or arising and regardless of where located). Borrower will
cause Operating Company to take all

 

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actions necessary to maintain in favor of Borrower (and Borrower will take all
actions necessary to maintain in favor of Collateral Agent, for the benefit of
Lender) a perfected first priority security interest in the Working Capital
Account including, without limitation, executing, delivering and maintaining one
or more account control agreements that comply with Article 9 of the Uniform
Commercial Code as in effect from time to time in any applicable jurisdictions
and filing UCC-1 Financing Statements and continuations thereof upon Lender’s
(or Collateral Agent’s) request therefor. All costs and expenses for
establishing and maintaining the Working Capital Account (and any sub account
thereof) shall be at the sole cost and expense of Borrower.

(c) Each Operating Company shall be responsible for payment of any federal,
state or local income or other tax applicable to the interest or income earned
on the Working Capital Account and any sub-account of the Working Capital
Account. The Working Capital Account and any sub-account thereof shall be
assigned the federal tax identification numbers of each Operating Company. Each
Operating Company shall provide Lender, at any time upon request of Lender, with
a Form W-8 or W-9 to evidence that Borrower is not subject to any back-up
withholding under the Code.

(d) Upon the occurrence and during the continuance of an Event of Default, all
funds on deposit in the Working Capital Account shall be applied by Lender or
Servicer in such order and priority as Lender or Servicer shall determine.

Section 2.7. Extension of the Maturity Date. (a) Borrower shall have the option
to extend the term of the Loan beyond the Initial Maturity Date for one year,
until the First Extended Maturity Date, upon satisfaction of the following terms
and conditions:

(i) no Default or Event of Default shall have occurred and be continuing on the
Initial Maturity Date;

(ii) Borrower shall notify Lender of its irrevocable election to extend the
Initial Maturity Date as aforesaid not earlier than six (6) months, and no later
than one (1) month, prior to the Initial Maturity Date;

(iii) Borrower shall have delivered to Lender an Officer’s Certificate
reaffirming and restating for the benefit of each Lender each of Borrower’s
representations and warranties as of the Initial Maturity Date (or, if any such
representation or warranty speaks of a particular date, as of such date);

(iv) if the Interest Rate Cap Agreement then in effect is scheduled to mature
prior to the First Extended Maturity Date, Borrower shall obtain and deliver to
Lender not later than two (2) Business Days prior to the Initial Maturity Date
either (i) one or more Replacement Interest Rate Cap Agreements from an
Acceptable Counterparty with an effective date as of the Initial Maturity Date
or (ii) an amendment to the Interest Rate Cap Agreement, which in the case of
either (i) or (ii) shall have a scheduled termination date no earlier than the
First Extended Maturity Date;

 

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(v) Borrower shall have paid or reimbursed Lender for all out-of-pocket costs
and expenses actually incurred by Lender (including, without limitation,
reasonable fees and disbursements of outside counsel, if any, engaged to review
the Interest Rate Cap Agreement) in connection with the foregoing. Lender
acknowledges and agrees that it shall not charge any fee (other than costs and
expenses, as provided in the preceding sentence and the extension fee described
in clause (vi) below) in connection with any extension of the Loan as described
in this Section 2.7;

(vi) Borrower shall have paid to Lender an extension fee in the amount of one
half of one percent (0.5%) of the then outstanding principal balance of the
Loan;

(vii) each of the Specified Mezzanine Notes (as defined in the Note Sales
Agreement) have been purchased in accordance with the Note Sales Agreement on or
prior to the Specified Payment Date (as defined in the Note Sales Agreement);
and

(viii) each Mezzanine Loan shall be contemporaneously extended.

(b) Borrower shall have the option to extend the term of the Loan beyond the
First Extended Maturity Date for one year, until the Second Extended Maturity
Date, upon satisfaction of the following terms and conditions:

(i) no Default or Event of Default shall have occurred and be continuing on the
First Extended Maturity Date;

(ii) Borrower shall notify Lender of its irrevocable election to extend the
First Extended Maturity Date as aforesaid not earlier than six (6) months, and
no later than one (1) month, prior to the First Extended Maturity Date;

(iii) Borrower shall have delivered to Lender an Officer’s Certificate
reaffirming and restating to each Lender each of Borrower’s representations and
warranties as of the First Extended Maturity Date (or, if any such
representation or warranty speaks of a particular date, as of such date);

(iv) if the Interest Rate Cap Agreement then in effect is scheduled to mature
prior to the Second Extended Maturity Date, Borrower shall obtain and deliver to
Lender not later than two (2) Business Days prior to the First Extended Maturity
Date either (i) one or more Replacement Interest Rate Cap Agreements from an
Acceptable Counterparty with an effective date as of the First Extended Maturity
Date or (ii) an amendment to the Interest Rate Cap Agreement, which in either
the case of (i) or (ii) shall have a scheduled termination date no earlier than
the Second Extended Maturity Date;

(v) Borrower shall have paid or reimbursed Lender for all out-of-pocket costs
and expenses actually incurred by Lender (including, without limitation,
reasonable fees and disbursements of outside counsel, if any, engaged to review
the Interest Rate Cap Agreement) in connection with the foregoing. Lender
acknowledges and agrees that it shall not charge any fee (other than costs and
expenses, as provided in the preceding sentence and the extension fee described
in clause (vi) below) in connection with any extension of the Loan as described
in this Section 2.7;

 

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(vi) Borrower shall have paid to Lender an extension fee in the amount of one
half of one percent (0.5%) of the then outstanding principal balance of the
Loan; and

(vii) each Mezzanine Loan shall be contemporaneously extended.

III. RESERVED

IV. REPRESENTATIONS AND WARRANTIES

Section 4.1. Borrower Representations. Borrower represents and warrants as of
the date hereof and as of the Original Closing Date (or, (i) with respect to
Paris Las Vegas, Paris Individual Borrower, Harrah’s Laughlin and Laughlin
Individual Borrower, as of the date hereof and as of the Swap Closing Date, and
provided that, with respect to each Swap Property, the references in this
Article 4 to “Original Closing Date” shall be to the Swap Closing Date and
(ii) with respect to Manager, as of the date hereof only), except as disclosed
in Schedule XXIII, that:

4.1.1. Organization. (a) Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own the
Individual Properties and to transact the businesses in which it is (or each of
them is) now engaged. Borrower is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations. Borrower possesses
all rights, licenses, permits and authorizations (governmental or otherwise)
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged and the failure to possess which would reasonably be
expected to have an Individual Material Adverse Effect. The sole business of
Borrower is the ownership of the Properties. The ownership interests of Borrower
are as set forth on the organizational chart attached hereto as Schedule VIII.

(b) Each Operating Company has been duly organized and is validly existing and
in good standing with requisite power and authority to own its properties or
assets, including the Gaming Equipment, and to transact the businesses in which
it is now engaged. Each Operating Company is duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so qualified
in connection with its properties, businesses and operations, including the
operation of the Casino Components at each Individual Property. Each Operating
Company possesses all rights, licenses, permits and authorizations (governmental
or otherwise) necessary to entitle it to operate the Properties currently
operated by each such Operating Company and to transact the businesses in which
it is now engaged and the failure to possess which would reasonably be expected
to have an Individual Material Adverse Effect. The sole business of each
Operating Company is the management and operation of the Individual Property or
Properties currently operated by each such Operating Company. The ownership
interests of each Operating Company are as set forth on the organizational chart
attached hereto as Schedule VIII.

(c) Manager has been duly organized and is validly existing and in good standing
with requisite power and authority to own its properties or assets and to
transact the businesses in which it is now engaged. Manager is duly qualified to
do business and is in good standing in each jurisdiction where it is required to
be so qualified in connection with its

 

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properties, businesses and operations, including the operation of the Casino
Components at each Individual Property. From and after the effectiveness of the
Management Agreement with respect to an Individual Property, the applicable
Manager will possess all rights, licenses, permits and authorizations
(governmental or otherwise) necessary to entitle it to operate such Individual
Property and to transact the businesses in which it is now engaged and the
failure to possess which would reasonably be expected to have an Individual
Material Adverse Effect. The sole business of each Manager is the management and
operation of one or more Individual Properties. The ownership interests of
Manager are as set forth on the organizational chart attached hereto as Schedule
VIII.

4.1.2. Proceedings. Borrower, Manager and Operating Company have taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents. This Agreement and such other Loan
Documents have been duly executed and delivered by or on behalf of Borrower,
Manager and Operating Company, and constitute legal, valid and binding
obligations of Borrower, Manager and Operating Company enforceable against
Borrower, Manager and Operating Company (as applicable) in accordance with their
respective terms, subject only to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law).

4.1.3. No Conflicts; Approvals. (a) The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower, Manager and Operating
Company will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance (other than pursuant to the Loan
Documents) upon any of the property or assets of Borrower, Manager or Operating
Company pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement, management agreement, material lease or other
material agreement or instrument to which Borrower, Manager or Operating Company
(as applicable) is a party or by which any of Borrower’s or Operating Company’s
property or assets is or are subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower, Manager or
Operating Company any of Borrower’s, Manager’s or Operating Company’s properties
or assets, and any consent, approval, authorization, order, registration or
qualification of or with any such Governmental Authority required for the
execution, delivery and performance by Borrower, Manager and Operating Company
of this Agreement or any other Loan Documents (and the execution by Lender of
the remedies provided in the Loan Documents, subject to the limitations thereon
pursuant to applicable Gaming Laws) has been obtained and is in full force and
effect.

(b) Borrower, Manager (from and after the effectiveness of the Management
Agreement) and Operating Company have obtained all consents and approvals,
including all approvals of Governmental Authorities including Gaming
Authorities, if required, in connection with the execution, delivery and
performance of the Loan Documents (including by Lender and each Mezzanine
Lender), the Operating Lease, the Operating Lease Guaranty, the Management
Agreement, the Shared Services Agreement, each IP License, and the operation of
the business currently conducted at any of the Properties, and shall promptly
execute any and all such instruments and documents, deliver any certificates and
do all such other acts or things required by the Gaming Authorities to maintain
or keep current such approvals.

 

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4.1.4. Litigation. There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency now pending or,
to Borrower’s knowledge, threatened against or affecting any Loan Party, any
Affiliates of Borrower, including Holdings, Operating Company, Manager or any
Individual Property, or any prior owner or other holder of any interest in any
Individual Property, which actions, suits or proceedings, if determined against
any Loan Party, Holdings, Operating Company, Manager, any other Affiliate or any
Individual Property, (taking into account the reasonably estimated damages
payable in connection therewith), is reasonably likely to materially adversely
affect the condition (financial or otherwise) or business of any Loan Party, any
Affiliate of Borrower that is a direct or indirect owner of Borrower, including
Holdings, Manager and Operating Company, or the condition or ownership of any
Individual Property, or any of the material rights, interests and remedies of
Lender under the Loan Documents (taken as a whole). None of the actions
described on Schedule XXIV, if determined adversely to Borrower, Operating
Company, Manager and/or any of their respective Affiliates, as applicable, would
result in the payment by Borrower, Operating Company, Manager or such Affiliate
of an amount in excess of Ten Million and no/100 Dollars ($10,000,000.00),
except to the extent covered by insurance.

4.1.5. Agreements. None of Borrower, Manager or Operating Company is in default,
in any material respect, in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party or by which Borrower, Manager, Operating
Company or any of the Properties are bound. None of Borrower, Manager or
Operating Company has any material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Borrower, Manager or Operating Company is a party or by which Borrower,
Manager, Operating Company or the Properties is otherwise bound, other than
(a) obligations incurred in the ordinary course of the operation of the
Properties as permitted pursuant to clause (t) of the definition of “Special
Purpose Entity” set forth in Section 1.1 hereof, and (b) obligations under the
Loan Documents and the Operating Lease and in the case of Borrower, Permitted
Indebtedness and, in the case of Operating Company, Permitted Indebtedness
(Operating Company).

4.1.6. Title. (a) Borrower has good, marketable and insurable fee simple title
to the real property comprising part of each Individual Property and that is
owned in fee, and good title to the balance of such Individual Property, free
and clear of all Liens whatsoever except the Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. Borrower has good title to the Property-Specific Trademarks,
free and clear of all Liens whatsoever except the Permitted Encumbrances and the
interests of the licensees under the IP Licenses. Each Operating Company has
good, marketable and insurable leasehold title to the real property demised to
it, free and clear of all Liens whatsoever except the Permitted Encumbrances and
such other Liens as are permitted pursuant to or created by the Loan Documents.
To Borrower’s best knowledge, the Permitted Encumbrances in the aggregate do not
materially and adversely affect the value, operation or use of any of the
Properties (as currently used) or Borrower’s ability to repay the Loan. Each
Mortgage created (a) a valid first priority lien on each Individual Property in
favor

 

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of JPM, subject only to the Permitted Encumbrances and such other Liens
permitted pursuant to or created by the Loan Documents, and (b) together with
the Uniform Commercial Code financing statements that were filed in connection
therewith, perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases) in favor of JPM, all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. Each Mortgage is being
assigned by JPMorgan Chase Bank N.A. to the Initial Lenders (immediately prior
to the execution and delivery of this Agreement) and by the Initial Lenders to
the Collateral Agent (immediately following the execution and delivery of this
Agreement) and each Mortgage does and will continue to create (a) a valid, first
priority lien on each Individual Property in favor of Collateral Agent (as the
beneficiary/mortgagee of record for the benefit of Lender), subject only to
Permitted Encumbrances and the Liens permitted pursuant to or created by the
Loan Documents, and (b) together with the Uniform Commercial Code financing
statement amendments that will be filed in connection therewith, perfected
security interests in and to, and perfected collateral assignments of, all
personalty (including the Leases) in favor of Collateral Agent (as the secured
party of record for the benefit of Lender), all in accordance with the terms
thereof, in each case subject only to any applicable Permitted Encumbrances,
such other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents. Except as insured over by the Title Insurance
Policy to the reasonable satisfaction of Lender, there are no claims for payment
for work, labor or materials affecting any of the Properties which are or may
become a Lien prior to, or of equal priority with, the Liens created by the Loan
Documents.

(b) When the Trademark Security Agreement or a summary thereof is properly filed
in the United States Patent and Trademark Office and the United States Copyright
Office, Collateral Agent (for the benefit of Lender) shall have a fully
perfected Lien on, and security interest in, all right, title and interest of
Borrower in the Property-Specific Trademarks, in each case prior and superior in
right to the Lien of any other Person, except for Permitted Encumbrances.

(c) Each Operating Company has good, marketable title to the Gaming Equipment,
free and clear of all Liens whatsoever (except equipment financing and leasing
arrangements entered into by Operating Company in the ordinary course of its
business (subject to the limitations set forth in the definition of “Permitted
Indebtedness (Operating Company)”).

4.1.7. Solvency. Borrower has (a) not entered into the transaction or executed
the Note, this Agreement or any other Loan Documents with the actual intent to
hinder, delay or defraud any creditor and (b) received reasonably equivalent
value in exchange for its obligations under such Loan Documents. The fair
saleable value of Borrower’s assets exceeds and will, immediately following the
making of the Loan, exceed Borrower’s total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
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and does not believe that it will, incur debt and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debt and liabilities as they mature (taking into account the timing and amounts
of cash to be received by Borrower and the amounts to be payable on or in
respect of obligations of Borrower). No petition in bankruptcy has been filed
against Borrower, Manager, Operating Company, any Loan Party or any constituent
Person, and none of Borrower, Manager, Operating Company, any Loan Party or any
constituent Person has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors. None of
Borrower, Manager, Operating Company, any Loan Party or any of their respective
constituent Persons are contemplating either the filing of a petition by it
under any state or federal bankruptcy or insolvency laws or the liquidation of
all or a major portion of Borrower’s, Manager’s, Operating Company’s or any Loan
Party’s assets or properties, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it, Manager, Operating
Company, any Loan Party or such constituent Persons.

4.1.8. Full and Accurate Disclosure. No statement of fact made by Borrower in
this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to Lender which
has, nor as far as Borrower can foresee, might reasonably be expected to have an
Individual Material Adverse Effect or an Aggregate Material Adverse Effect.

4.1.9. No Plan Assets. Borrower is not an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of
Borrower constitutes or will constitute “plan assets” of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is
not a “governmental plan” within the meaning of Section 3(32) of ERISA and
(b) transactions by or with Borrower are not subject to any state statute
regulating investments of, or fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Loan Agreement.

4.1.10. Compliance. Except as disclosed in the zoning reports obtained by Lender
in connection with the origination of the Loan, Borrower, Manager, Operating
Company and each Individual Property (including the use thereof) comply in all
material respects with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes and Prescribed Laws.
Borrower, Manager and Operating Company are not in default or violation of
(i) any material order, writ, injunction, decree or demand of any Gaming
Authority or (ii) any material order, writ, injunction, decree or demand of any
other Governmental Authority. There has not been committed by Borrower, Manager,
Operating Company or any other Person in occupancy of or involved with the
operation or use of the Properties any act or omission affording the federal
government or any other Governmental Authority the right of forfeiture as
against any Individual Property or any part thereof or any monies paid in
performance of Borrower’s obligations under any of the Loan Documents.

 

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4.1.11. Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in connection with the Loan, the Properties and
each Loan Party (i) are true, complete and correct in all material respects,
(ii) accurately represent in all material respects the financial condition of
the Properties as of the date of such reports, and (iii) to the extent prepared
or audited by an independent certified public accounting firm, have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein. Except for Permitted Encumbrances, Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a materially adverse
effect on Borrower, any Loan Party, any Individual Property or the operation
thereof as mixed-use hotel and casino properties, except as referred to or
reflected in said financial statements. Borrower has no Indebtedness other than
the Loan and other Permitted Indebtedness. Except for Permitted Indebtedness
(Operating Company), Operating Company does not have any Indebtedness or
contingent liabilities, or due and unpaid liabilities for taxes, that are known
to Borrower or Operating Company and reasonably likely to have a materially
adverse effect on Borrower, any Loan Party, any Individual Property or the
operation thereof as mixed-use hotel and casino properties, except as referred
to or reflected in said financial statements. Since the date of such financial
statements, there has been no material adverse change in the financial
condition, operation or business of Borrower or Operating Company from that set
forth in said financial statements.

4.1.12. Condemnation. No Condemnation or other similar proceeding has been
commenced or, to Borrower’s best knowledge, is threatened or contemplated with
respect to all or any portion of any Individual Property or for the relocation
of roadways providing access to any Individual Property.

4.1.13. Federal Reserve Regulations. No part of the proceeds of the Loan has
been used for the purpose of purchasing or acquiring any “margin stock” within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System or for any other purpose which would be inconsistent with such Regulation
U or any other Regulations of such Board of Governors, or for any purposes
prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.

4.1.14. Utilities and Public Access. Each Individual Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service such Individual Property for its respective
intended uses. All public utilities necessary or convenient to the full use and
enjoyment of each Individual Property are located either in the public
right-of-way abutting such Individual Property (which are connected so as to
serve such Individual Property without passing over other property) or in
recorded easements serving such Individual Property and such easements are set
forth in and insured by the Title Insurance Policies. All roads necessary for
the use of each Individual Property for their current respective purposes have
been completed and dedicated to public use and accepted by all Governmental
Authorities.

4.1.15. Not a Foreign Person. Borrower is not a “foreign person” within the
meaning of § 1445(f)(3) of the Code.

 

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4.1.16. Separate Lots. Each Individual Property is comprised of one (1) or more
parcels which constitute a separate tax lot or lots and does not constitute a
portion of any other tax lot not a part of such Individual Property.

4.1.17. Assessments. There are no pending or, to Borrower’s knowledge, proposed
special or other assessments for public improvements or otherwise affecting any
Individual Property, nor are there any contemplated improvements to any
Individual Property that may result in such special or other assessments.

4.1.18. Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, any Affiliates of
Borrower including Holdings, Manager, Operating Company or Guarantor, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable (subject to principles of equity and bankruptcy, insolvency and
other laws generally affecting creditors’ rights and the enforcement of debtors’
obligations), and Borrower, any Affiliates of Borrower including Holdings,
Manager, Operating Company and Guarantor have not asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.

4.1.19. No Prior Assignment. There are no prior assignments of the Leases
(including the Operating Leases) or of the Rents (or any Revenue) due and
payable or to become due and payable which are presently outstanding except in
accordance with the Loan Documents.

4.1.20. Insurance. Borrower (or Operating Company) has obtained and has
delivered to Lender certified copies of all Policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. No
material claims have been made under any such Policies except such as have been
disclosed to Lender, and no Person, including Borrower, Manager and Operating
Company, has done, by act or omission, anything which would impair the coverage
of any such Policies.

4.1.21. Use of Properties. Each Individual Property is used exclusively as a
mixed-use hotel and casino operation, and other appurtenant and related uses.

4.1.22. Gaming Licenses and Operating Permits.

(a) Schedule IX contains a correct and complete list of all Gaming Licenses and
other material licenses, certification and permits for each of the Properties
(and the holder thereof).

(b) Borrower possesses all licenses, permits, franchises, authorizations,
certificates, approvals and consents, including, without limitation, all
certificates of occupancy, which are material to the ownership and use of each
of the Properties, and each Manager (from and after the effectiveness of the
applicable Management Agreement) and Operating Company possess all licenses,
permits, franchises, authorizations, certificates, approvals and consents,
including, without limitation, all environmental, liquor, Gaming Licenses,
health and safety licenses of all Governmental Authorities which are material to
the conduct of their business and the use, occupation and operation of each of
the Properties and the failure to possess which would have an Individual
Material Adverse Effect (collectively, “Operating Permits”); each

 

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such Operating Permit is and will be in full force and effect (unless, in the
case of any Operating Permit, such Operating Permit is no longer necessary or
advisable for the conduct of Borrower’s or Operating Company’s business);
Borrower, each Manager (from and after the effectiveness of the applicable
Management Agreement), Operating Company and each of its Affiliates are in
compliance in all material respects with all such Operating Permits, and no
event (including, without limitation, any material violation of any law, rule or
regulation) has occurred which would be reasonably likely to lead to the
revocation or termination of any such Operating Permit or the imposition of any
material restriction thereon.

(c) Operating Company, each Manager (from and after the effectiveness of the
applicable Management Agreement) and each of its or their Affiliates possesses
all Gaming Licenses which are material to the conduct of their business and the
ownership, use, occupation and operation of each of the Properties. Further,
Borrower hereby represents and warrants as follows:

(i) Each Gaming License (with respect to each Manager, from and after the
effectiveness of the applicable Management Agreement) is in full force and
effect (except for such Gaming Licenses as are not necessary or advisable for
the conduct of Borrower’s, Manager’s or Operating Company’s business); Operating
Company and each of its Affiliates, respective directors, members, managers,
officers, key personnel and Persons holding a five percent (5%) or greater
equity or economic interest directly or indirectly in Operating Company is in
compliance in all material respects with all such Gaming Licenses (to the extent
required by Legal Requirements), each Manager (from and after the effectiveness
of the applicable Management Agreement) and each of its Affiliates, respective
directors, members, managers, officers, key personnel and Persons holding a five
percent (5%) or greater equity or economic interest directly or indirectly in
any Manager is in compliance in all material respects with all such Gaming
Licenses (to the extent required by Legal Requirements), and no event
(including, without limitation, any material violation of any Legal
Requirements) has occurred which would be reasonably likely to lead to the
revocation or termination of any such Gaming Licenses or the imposition of any
restriction thereon;

(ii) Borrower has no reason to believe that Manager, Borrower or Operating
Company will not be able to maintain in effect all Gaming Licenses necessary for
the lawful conduct of their business or operations wherever now conducted and as
planned to be conducted, including the ownership and operation of the Casino
Components, pursuant to all applicable Legal Requirements;

(iii) All Gaming Licenses are in full force and effect and have not been amended
or otherwise modified, rescinded, revoked or assigned in any manner that would
reasonably be expected to have an Individual Material Adverse Effect;

(iv) None of Borrower, Manager or Operating Company is in default in any
material respect under, or in violation in any material respect of, any Gaming
License (and no event has occurred, and no condition exists, which, with the
giving of notice or passage of time or both, would constitute a default
thereunder or violation thereof that has caused or would reasonably be expected
to cause the loss of any Gaming License) (unless, in the case of any Gaming
License, such Gaming License is no longer necessary or advisable for the conduct
of Borrower’s, Manager’s or Operating Company’s business);

 

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(v) None of Borrower, Manager nor Operating Company has received any notice of
any violation of Legal Requirements which has caused or would reasonably be
expected to cause any Gaming License to be suspended, forfeited, modified in any
manner that would have an Individual Material Adverse Effect, not renewed,
rescinded or revoked (unless, in the case of any Gaming License, such Gaming
License is no longer necessary or advisable for the conduct of Borrower’s,
Manager’s or Operating Company’s business);

(vi) No condition exists or event has occurred which would reasonably be
expected to result in the suspension, revocation, impairment, forfeiture,
rescission or non-renewal of any Gaming License (unless, in the case of any
Gaming License, such Gaming License is no longer necessary or advisable for the
conduct of Borrower’s, Manager’s or Operating Company’s business); and

(vii) The continuation, validity and effectiveness of all Gaming Licenses will
not be adversely affected by the transactions contemplated by this Agreement.

(d) There is no proceeding, investigation, or disciplinary action (including,
without limitation, before any Gaming Authority, under any Gaming Law or under
any Gaming License or other Operating Permit) pending or, to Borrower’s
knowledge, threatened against any of Borrower, Manager, Operating Company or, to
Borrower’s knowledge, any of their respective directors, members, managers,
officers, key personnel or Persons holding a five percent (5%) or greater direct
or indirect equity or economic interest in Borrower, Manager or Operating
Company and that could reasonably be expected to have an Individual Material
Adverse Effect.

(e) There is no proceeding (including, without limitation, before any Gaming
Authority, under any Gaming Law or under any Gaming License or other Operating
Permit) pending or, to Borrower’s knowledge, threatened either (a) in connection
with, or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge, any of the Loan Documents or any of the transactions
contemplated therein, or (b) that could reasonably be expected to have an
Individual Material Adverse Effect.

(f) Neither the execution, delivery or performance of any of the Loan Documents
(nor the sale or any participations in the Loan, or the creation or sale of any
of the Mezzanine Loans) will (i) require the consent of any Gaming Authority not
heretofore obtained or (ii) allow or result in the imposition of any material
penalty under, or the revocation or termination of, any Gaming License or any
material impairment of the rights of the holder of any Gaming License.

 

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4.1.23. Flood Zone. None of the Improvements on any Individual Property are
located in an area as identified by the Federal Emergency Management Agency as
an area having special flood hazards or, if so located, the flood insurance
required pursuant to Section 6.1(a)(i) is in full force and effect with respect
to each such Individual Property.

4.1.24. Physical Condition. Except as disclosed in the engineering reports
obtained by Lender in connection with the Properties, to Borrower’s knowledge,
each Individual Property, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; there exists no structural or other material defects
or damages in any Individual Property, whether latent or otherwise, and Borrower
has not received notice from any insurance company or bonding company of any
defects or inadequacies in any Individual Property, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.

4.1.25. Boundaries. To Borrower’s knowledge, all of the improvements which were
included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property (other than as the same may have been modified in connection with the
conveyances of O’Shea’s and the RDE Parcels contemplated by Section 2.5.3 and
2.5.4 of this Agreement). No improvements on adjoining properties encroach upon
any Individual Property, and no easements or other encumbrances upon an
Individual Property encroach upon any of the improvements, so as to affect the
value or marketability of the applicable Individual Property (except those
which, in each case, are insured against by the Title Insurance Policy).

4.1.26. Leases. (a) The Operating Leases (as amended on the date hereof, and
together with any certificates and notifications entered into in connection
therewith) and the Operating Lease Guaranty provided to Lender on the Original
Closing Date (or, with respect to those Operating Leases relating to Swap
Properties, on the Swap Closing Date) are true, correct, accurate and complete
copies of such documents as in effect on the date hereof and constitute the
entire agreement between the parties thereto with respect to the subject matter
therein and there are no written agreements modifying, amending, supplementing
or restating such documents. Except as set forth on Schedule X, the Properties
are not subject to any space Leases other than the Operating Lease and space
Leases providing for occupancy of less than one hundred (100) square feet. Each
Operating Lease is a “true lease” for all purposes of the Bankruptcy Code
(including Section 365(d) and 502(b)(6) thereof) and applicable Legal
Requirements, and no Operating Lease constitutes a financing or conveys any
interest in the Properties other than the leasehold interest therein demised
thereby. Borrower is the owner and lessor of landlord’s interest in the
Operating Lease and the Operating Lease Guaranty. Currently, no Person has any
possessory interest in any Individual Property or right to occupy the same
except under and pursuant to the provisions of the Operating Lease, any other
space Leases listed on Schedule X or permitted hereunder and, with respect to a
right to occupancy only (and not a possessory interest), hotel guests. Each
Operating Lease and Operating Lease Guaranty is in full force and effect and
there are no material events of default thereunder by any party thereto and
there are no conditions that, with the passage of time or the giving of notice,
or both, would constitute such a default thereunder. No Rent under any Operating
Lease has been paid more than one (1) month

 

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in advance of its due date and no Rents or charges under the Operating Lease
have been waived, released or otherwise discharged or compromised. There has
been no prior sale, transfer or assignment, hypothecation or pledge of any
Operating Lease, Operating Lease Guaranty or of the Rents except pursuant to the
Mortgage and Assignment of Leases. No Operating Company has assigned the
Operating Lease or sublet all or any portion of any Individual Property except
pursuant to the Operating Lease and the terms hereof.

(a) The Properties are not subject to any space Leases other than the Leases
described in Schedule X attached hereto and space Leases permitted hereunder.
Operating Company is the owner and lessor of landlord’s interest in all such
space Leases. No Person has any possessory interest in any Individual Property
except under and pursuant to the provisions of the space Leases, and no Person
has any right to occupy any portion of any Individual Property except under and
pursuant to the provisions of the space Leases and hotel guests. The current
space Leases are in full force and effect and, except as shown in Schedule X
attached hereto, to Borrower’s knowledge, there are no material defaults
thereunder by either party and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults thereunder. No
Rent has been paid more than one (1) month in advance of its due date. Except as
shown in Schedule X attached hereto, all work to be performed by Borrower (or
Operating Company) under each space Lease has been performed as and to the
extent required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower (or Operating Company)
to any tenant has already been received by such tenant. There has been no prior
sale, transfer or assignment, hypothecation or pledge of any space Lease or of
the Rents received therein which is still in effect. To Borrower’s knowledge,
except as shown on Schedule X, no tenant listed on Schedule X has assigned its
space Lease or sublet all or any portion of the premises demised thereby, no
such tenant holds its leased premises under assignment or sublease, nor does
anyone except such tenant and its employees occupy such leased premises. No
tenant under any space Lease has a right or option pursuant to such Lease or
otherwise to purchase all or any part of the leased premises or the building of
which the leased premises are a part. No tenant under any space Lease has any
right or option for additional space in the Improvements except pursuant to such
tenant’s space Lease.

4.1.27. Trade Name; Other Intellectual Property. (a) Each Borrower, Manager and
Operating Company owns and possesses or licenses (as the case may be) all
Intellectual Property that Borrower, Manager and Operating Company consider
necessary for the conduct of their respective businesses as now conducted
without, individually or in the aggregate, any infringement upon rights of other
Persons, in each case except as could not reasonably be expected to materially
and adversely (i) affect the value of any of the Properties, (ii) impair the use
and operation of any of the Properties or (iii) impair any Borrower’s, any
Manager’s or any Operating Company’s ability to pay their respective obligations
(under the Loan Documents or each Operating Lease) in a timely manner.

(b) Each IP License and the Shared Services Agreement are in full force and
effect and there are no defaults thereunder by any party thereto and no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. The Property-Specific Trademarks that have been
assigned to each Borrower pursuant to the Trademark Assignment with each such
Borrower are all Trademarks that are used specifically at or specifically with
respect to the operation of the Properties and not otherwise used at or with
respect to the operation of other properties owned or operated, directly or
indirectly, by Holdings or any other Person.

 

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4.1.28. Principal Place of Business; State of Organization. (a) Borrower’s
principal place of business as of the date hereof is the address set forth in
Schedule I. Each Borrower is organized under the laws of the State of Delaware.

(b) Operating Company’s principal place of business as of the date hereof is the
address set forth in Schedule I. Each Operating Company is organized under the
laws of the state of Nevada (or, in the case of Harrah’s Atlantic City Operating
Company, LLC, New Jersey).

(c) Manager’s principal place of business as of the date hereof is the address
set forth in Schedule I. Manager is organized under the laws of the state of
Nevada (or, in the case of HAC CMBS Manager, LLC, New Jersey).

4.1.29. Filing and Recording Taxes. All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements currently in effect in connection
with the transfer of the Properties to Borrower have been paid. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgages, have been paid, and, under current Legal
Requirements, each of the Mortgages is enforceable in accordance with their
respective terms by Collateral Agent (or any subsequent holder thereof), subject
to principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’ obligations.

4.1.30. Special Purpose Entity/Separateness. (a) Borrower hereby (i) represents
and warrants that, from the Original Closing Date until the date hereof, each
Borrower and each SPE Party (other than Paris Individual Borrower and Laughlin
Individual Borrower) has been a Special Purpose Entity (as such term was defined
in the Original Loan Agreement), and (ii) represents, warrants and covenants
that from the date hereof until the Debt is paid in full each Borrower and each
SPE Party (other than Paris Individual Borrower and Laughlin Individual
Borrower) is, shall be and shall continue to be a Special Purpose Entity.
Borrower hereby (1) represents and warrants that, from the Swap Closing Date
until the date hereof, each of Paris Individual Borrower and Laughlin Individual
Borrower has been a Special Purpose Entity (as such term was defined in the
Original Loan Agreement), and (2) represents, warrants and covenants that from
the date hereof until the Debt is paid in full each of Paris Individual Borrower
and Laughlin Individual Borrower is, shall be and shall continue to be a Special
Purpose Entity. Each of Original Tahoe Borrower and Original Showboat Borrower
was a Special Purpose Entity (as such term was defined in the Original Loan
Agreement) for the period from the Original Closing Date to and including the
Swap Closing Date.

 

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(b) The representations, warranties and covenants set forth in Section 4.1.30
shall survive for so long as any amount remains payable to any Lender under this
Agreement or any other Loan Document.

(c) All of the assumptions made in the Insolvency Opinion, including, but not
limited to, any exhibits attached thereto, are true and correct and any
assumptions made in any subsequent non-consolidation opinion or update required
to be delivered in connection with the Loan Documents (an “Additional Insolvency
Opinion”), including, but not limited to, any exhibits attached thereto, will
have been and shall be true and correct. Borrower has complied and will comply
with, and Borrower shall cause each SPE Party, Manager and Operating Company to
comply with, all of the assumptions made with respect to the SPE Parties,
Manager and Operating Company in the Insolvency Opinion. The SPE Parties will
have complied and will comply with all of the assumptions made with respect to
the SPE Parties in any Additional Insolvency Opinion. Each entity with respect
to which an assumption shall be made in any Additional Insolvency Opinion will
have complied and will comply with all of the assumptions made with respect to
it in any Additional Insolvency Opinion.

(d) All of the assumptions made in the True Lease Opinion, including, but not
limited to, any exhibits attached thereto, are true and correct and any
assumptions made in any subsequent true lease opinion or update required to be
delivered in connection with the Loan Documents (an “Additional True Lease
Opinion”), including, but not limited to, any exhibits attached thereto, will
have been and shall be true and correct. Each SPE Party has complied and will
comply with, and Borrower shall cause Manager and Operating Company to comply
with, all of the assumptions made with respect to such SPE Parties and Operating
Company in the True Lease Opinion. Each SPE Party will have complied and will
comply with all of the assumptions made with respect to such SPE Parties in any
Additional True Lease Opinion. Each entity with respect to which an assumption
shall be made in any Additional True Lease Opinion will have complied and will
comply with all of the assumptions made with respect to it in any Additional
True Lease Opinion.

4.1.31. Operating Leases; Operating Lease Guaranty. The Operating Leases and the
Operating Lease Guaranty are in full force and effect and there is no default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or the giving of notice would constitute a default thereunder.

4.1.32. Illegal Activity. No portion of any Individual Property has been or will
be purchased with proceeds of any illegal activity.

4.1.33. Reserved.

4.1.34. Investment Company Act. Borrower is not an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended.

4.1.35. Embargoed Person. At all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, Manager, Holdings,
Operating Company and

 

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Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including, but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that the investment in any Loan Party or Operating
Company, as applicable (whether directly or indirectly), is prohibited by law or
the Loan is in violation of law (“Embargoed Person”); (b) no Embargoed Person
has any interest of any nature whatsoever in any Loan Party, Manager, Holdings
or Operating Company, as applicable, with the result that the investment in any
Loan Party, Holdings or Operating Company, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and
(c) none of the funds of any Loan Party, Manager, Holdings or Operating Company,
as applicable, have been derived from any unlawful activity with the result that
the investment in Loan Party, Manager, Holdings or Operating Company, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law.

4.1.36. Intentionally Omitted.

4.1.37. Taxes including Gaming Taxes and Fees. Borrower and each of its
Affiliates (including Manager), and Operating Company and each of its
Affiliates, have filed or caused to be filed all Federal, state, local and
foreign tax returns (including, without limitation, all reports relating to
gaming taxes and fees to the Gaming Authorities) which are required to be filed
by them, on or prior to the Original Closing Date or the date hereof, as
applicable, other than tax returns in respect of taxes that (i) are not
franchise, capital or income taxes, (ii) in the aggregate are not material and
(iii) would not, if unpaid, result in the imposition of any material Lien on any
property or assets of Borrower (or any of its Affiliates, including Manager) or
Operating Company (or any of its Affiliates). All such filed tax returns were,
to Borrower’s knowledge, true, correct and complete when filed. Borrower and its
Affiliates (including Manager), and Operating Company and its Affiliates, have
paid or caused to be paid all taxes shown to be due and payable on such filed
returns or on any assessments received by them, other than any taxes or
assessments the validity of which Borrower or such Affiliate (or Operating
Company and its Affiliates, as applicable) is contesting in good faith by
appropriate proceedings, and with respect to which Borrower or such Affiliates
(or Operating Company and its Affiliates, as applicable) shall have set aside
adequate reserves. Neither Borrower nor any of its Affiliates, including Manager
(nor Operating Company or any of its Affiliates, as applicable) has as of the
date hereof requested or been granted any extension of time to file any Federal,
state, local or foreign tax return. Neither Borrower nor Operating Company is
party to (or has any obligation under) any tax sharing agreement.

4.1.38. Loan Proceeds; Payment of Interest. Borrower used the Loan proceeds in
accordance with and for the purposes specified in the Original Loan Agreement
(and for no other purpose). Borrower has made all payments of interest that
accrued and were payable under the Original Loan Agreement as and when due.

4.1.39. REA. Each REA is in full force and effect and neither Borrower nor, to
Borrower’s actual knowledge, any other party to the REA, is in default in any
material respect thereunder, and to the best of Borrower’s actual knowledge,
there are no conditions which, with the passage of time or the giving of notice,
or both, would constitute a material default thereunder. To Borrower’s actual
knowledge, no REA has been modified, amended or supplemented except as disclosed
in any Title Insurance Policy.

 

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4.1.40. Operation of Properties. (a) The operation, management and use of each
Individual Property by Borrower, Manager and Operating Company is in compliance
in all material respects with applicable Legal Requirements, including all
applicable Gaming Laws, and all other federal, state, or local governmental
authorities including, without limitation, those requirements relating to such
Individual Property’s physical structure and environment, except to the extent
that non-compliance would not reasonably be expected to have an Individual
Material Adverse Effect.

(b) The licenses, permits, and regulatory agreements, approvals and
registrations relating to each Individual Property, including the Gaming
Licenses, (i) may not be, and have not been, transferred to any location other
than any Individual Property; have not been pledged as collateral security for
any other loan or indebtedness; and are held free from restrictions or known
conflicts that would materially impair the use or operation of any Individual
Property as intended, (b) are in full force and effect and in good standing and
(c) are not provisional, conditional or probationary in any manner.

(c) None of Borrower, Manager, Holdings, Guarantor or Operating Company is
currently the subject of any proceeding by any Governmental Authority, and no
notice of any violation has been received from a Governmental Authority that, in
either case, would reasonably be expected to have an Individual Material Adverse
Effect or an Aggregate Material Adverse Effect.

(d) None of Borrower, Manager or Operating Company has received a statement of
charges or deficiencies and no penalty enforcement actions have been undertaken
against any of them relating to any Individual Property by any Governmental
Authority during the last three (3) calendar years which caused or could cause
an Individual Material Adverse Effect or an Aggregate Material Adverse Effect.

(e) Each Operating Lease and Operating Lease Guaranty is in full force and
effect and no party to either agreement has defaulted thereunder in any material
respect.

(f) None of Borrower or Operating Company has pledged its receivables relating
to any of the Properties as collateral security for any other loan or
indebtedness.

4.1.41. Management Agreement. Each Management Agreement that has become
effective is in full force and effect and there is no material event of default
thereunder by any party thereto and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute such a
default thereunder. No management or other fees have been paid in advance of
their due date under the Management Agreement. There has been no prior sale,
transfer or assignment, hypothecation or pledge of any Management Agreement.

Section 4.2. Survival of Representations. Borrower agrees that all of the
representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to any Lender under this Agreement or any of
the other Loan Documents by Borrower.

 

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All representations, warranties, covenants and agreements made in this Agreement
or in the other Loan Documents by Borrower shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

V. BORROWER COVENANTS

Section 5.1. Affirmative Covenants. From the Original Closing Date (or, with
respect to each Swap Property, from the Swap Closing Date) and until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Liens of all Mortgages encumbering the Properties
(and all related obligations) in accordance with the terms of this Agreement and
the other Loan Documents, Borrower hereby covenants and agrees with Lender that:

5.1.1. Existence; Compliance with Legal Requirements. Borrower shall, and shall
cause Operating Company to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect their existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to Borrower, Operating Company and the Properties, including, without
limitation, Prescribed Laws. There shall never be committed by Borrower and
Borrower shall not permit any other Person in occupancy of or involved with the
operation or use of the Properties, including Operating Company, to commit any
act or omission affording the federal government or any state or local
government the right of forfeiture against any Individual Property or any part
thereof or any monies paid in performance of Borrower’s obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to commit, permit
or suffer to exist any act or omission affording such right of forfeiture.
Borrower shall at all times maintain, preserve and protect all franchises and
trade names and preserve all the remainder of its property used or useful in the
conduct of its business and shall keep the Properties in good working order and
repair. Borrower shall keep the Properties insured at all times as (and in the
amounts) provided elsewhere in this Agreement. Borrower shall operate any
Individual Property that is the subject of the O&M Agreement in accordance with
the terms and provisions thereof in all material respects. After prior notice to
Lender, Borrower, at its own expense, may contest by appropriate legal
proceeding promptly initiated and conducted in good faith and with due
diligence, the validity of any Legal Requirement, the applicability of any Legal
Requirement to Borrower or any Individual Property or any alleged violation of
any Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any applicable material instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all Legal Requirements;
(iii) no Individual Property nor any material part thereof or interest therein
will be in imminent danger of being sold, forfeited, terminated, cancelled or
lost; (iv) Borrower shall promptly upon receipt of a final, non-appealable
determination thereof comply with any such Legal Requirement determined to be
valid or applicable or cure any violation of any such Legal Requirement;
(v) such proceeding shall suspend the enforcement of the contested Legal
Requirement against Borrower and any Individual Property; and (vi) Borrower
shall furnish such security as may be required in the proceeding, or as may be
reasonably requested by Lender, to insure compliance with such Legal
Requirement, together with all interest and penalties payable in connection
therewith. Lender may apply any such security, as necessary to cause compliance

 

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with such Legal Requirement at any time when, in the reasonable judgment of
Lender, the validity, applicability or violation of such Legal Requirement is
finally established or any Individual Property (or any part thereof or interest
therein) shall be in imminent danger of being sold, forfeited, terminated,
cancelled or lost.

5.1.2. Taxes and Other Charges. Borrower shall pay or cause to be paid all Taxes
and Other Charges now or hereafter levied or assessed or imposed against the
Properties or any part thereof as the same become due and payable; provided,
however, Borrower’s obligation to directly pay or cause to be paid Taxes shall
be suspended for so long as Borrower complies with the terms and provisions of
Section 7.2 hereof. Borrower will deliver to Lender receipts for payment or
other evidence satisfactory to Lender that the Taxes and Other Charges have been
so paid or are not then delinquent no later than the date on which the Taxes
and/or Other Charges would otherwise be delinquent if not paid; provided,
however, Borrower is not required to furnish such receipts for payment of Taxes
in the event that such Taxes have been paid by Lender pursuant to Section 7.2
hereof. Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien or charge whatsoever which may be or become a Lien or charge
against the Properties other than Permitted Encumbrances, and shall promptly pay
or cause to be paid for all utility services provided to the Properties. After
prior notice to Lender, Borrower, at its own expense, may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any
Taxes or Other Charges, provided that (a) no Default or Event of Default has
occurred and remains uncured; (b) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any applicable material other
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all Legal
Requirements; (c) no Individual Property nor any part thereof or interest
therein will be in imminent danger of being sold, forfeited, terminated,
cancelled or lost; (d) Borrower shall promptly upon receipt of a final,
non-appealable determination thereof pay the amount of any such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (e) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the applicable Individual Property; and
(f) Borrower shall furnish such security as may be required in the proceeding,
or as may be reasonably requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon. Lender
(or Servicer on its behalf) may pay over any such cash deposit or part thereof
held by Lender (or Servicer on its behalf) to the claimant entitled thereto at
any time when, in the judgment of Lender, the entitlement of such claimant is
established or any Individual Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost or
there shall be any danger of the Lien of any Mortgage being primed by any
related Lien.

5.1.3. Litigation. Borrower shall give prompt notice to Lender of any litigation
or governmental proceedings pending or, to Borrower’s knowledge, threatened
against Borrower, Manager, Operating Company, Holdings or Guarantor which, in
any such case, might materially adversely affect Borrower’s, Manager’s,
Operating Company’s, Holding’s or Guarantor’s condition (financial or otherwise)
or business or any Individual Property. Borrower shall not, without the prior
written consent of Lender (which may be furnished or withheld at its sole and
absolute discretion), give its consent or approval to the settlement of any
claim against Borrower, other than a fully insured third party claim, in any
amount greater than Five Million and no/100 Dollars ($5,000,000.00).

 

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5.1.4. Access to Properties. Borrower shall permit agents, representatives and
employees of Lender and any Lender, and prospective purchasers of any Note or
any interest therein, to inspect the Properties or any part thereof at
reasonable hours upon reasonable advance notice, and Borrower shall cause
Manager and Operating Company to permit such access by Lender, in each case
subject to the rights of tenants under Leases and Hotel guests.

5.1.5. Notice of Default. Borrower shall promptly advise Lender of any material
Default or Event of Default of which Borrower has knowledge.

5.1.6. Cooperate in Legal Proceedings. Borrower shall cooperate fully with
Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.

5.1.7. Perform Loan Documents. Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions of, and shall pay when due all
costs, fees and expenses to the extent required under the Loan Documents
executed and delivered by, or applicable to, Borrower.

5.1.8. Award and Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with any Individual Property, and Lender
shall be reimbursed for any actual, reasonable out-of-pocket expenses incurred
in connection therewith (including actual, reasonable out-of-pocket attorneys’
fees and disbursements, and, if reasonably required, the payment by Borrower of
the expense of an appraisal on behalf of Lender in case of Casualty or
Condemnation affecting any Individual Property or any part thereof) out of such
Insurance Proceeds.

5.1.9. Further Assurances. Borrower shall and shall cause Guarantor, Manager and
Operating Company to, at Borrower’s sole cost and expense:

(a) furnish to Lender and Collateral Agent all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument, in each case in such
party’s possession, not subject to confidentiality restrictions barring the
delivery of such materials, and which are either required to be furnished by
Borrower, Manager or Operating Company pursuant to the terms of the Loan
Documents or which are reasonably requested by Lender in connection therewith;

(b) execute and deliver to Lender and Collateral Agent such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the collateral
at any time securing or intended to secure the obligations of Borrower under the
Loan Documents, as Lender may reasonably require; and

 

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(c) do and execute all and such further lawful and reasonable acts, conveyances
and assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as Lender or Collateral
Agent shall reasonably require from time to time.

5.1.10. Supplemental Mortgage Affidavits. Borrower represents that it has paid
all state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgages. If at any time Lender or Collateral
Agent determines, based on applicable law, that Lender is not being afforded the
maximum amount of security available from any one or more of the Properties as a
direct or indirect result of applicable taxes not having been paid with respect
to any Individual Property, Borrower agrees that Borrower will execute,
acknowledge and deliver to Lender or Collateral Agent, immediately upon Lender’s
or Collateral Agent’s request, supplemental affidavits increasing the amount of
the Debt attributable to any such Individual Property (as set forth as the
Allocated Loan Amount on Schedule II annexed hereto) for which all applicable
taxes have been paid to an amount determined by Lender to be equal to the lesser
of (a) the greater of the fair market value of the applicable Individual
Property (i) as of the Original Closing Date (or, with respect to each Swap
Property, as of the Swap Closing Date) and (ii) as of the date such supplemental
affidavits are to be delivered to Lender, and (b) the amount of the Debt
attributable to any such Individual Property (as set forth as the Allocated Loan
Amount on Schedule II annexed hereto), and Borrower shall, on demand, pay any
additional taxes.

5.1.11. Financial Reporting. (a) Borrower will keep or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis acceptable to Lender), books, records and accounts reflecting
all of the financial affairs of Borrower and all items of income and expense in
connection with the operation on an individual basis of the Properties. Lender
(at Lender’s sole cost and expense) shall have the right from time to time at
all times during normal business hours upon reasonable notice to examine the
books, records and accounts of Borrower at the office of Borrower or any other
Person maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. After the occurrence and during the
continuance of an Event of Default, Borrower shall pay any costs and expenses
incurred by Lender to examine Borrower’s or to the extent permitted under the
Operating Lease, Manager’s or Operating Company’s accounting records with
respect to the Properties, as Lender shall determine to be necessary or
appropriate in the protection of Lender’s interest.

(b) Borrower will furnish to Lender annually, within no more than one hundred
twenty (120) days following the end of each Fiscal Year of Borrower, a complete
copy of the annual financial statements of the Operating Company and Borrower
(and of no other entity or Person), audited by a “Big Four” accounting firm or
other independent certified public accountant acceptable to Lender in accordance
with GAAP (or such other accounting basis acceptable to Lender) covering the
Properties on a combined basis for such Fiscal Year (and no other Persons,
Properties or assets) and containing statements of profit and loss for the
Operating Companies, Borrower and the Properties (on a combined basis) and a
balance sheet

 

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for the Operating Company, Borrower and the Properties (on a combined basis), in
each case showing no other assets than the Properties (and the interests of
Operating Company and Borrower therein). All such statements shall set forth the
financial condition and the results of operations for the Properties for such
Fiscal Year, and shall include, but not be limited to, amounts representing
Borrower’s reasonable and good faith determination of aggregate annual EBITDAM
and Excess Cash Flow from all of the Properties and capital expenditures
(allocated between maintenance and growth) at the Properties. All such
statements (other than Excess Cash Flow) shall also set forth unaudited
schedules for each Individual Property, detailing the statements of profit and
loss and a balance sheet for each Individual Property, as well as gross
revenues, gross hotel and casino revenues, EBITDAM and capital expenditures
(allocated between maintenance and growth). The annual financial statements, as
described above, shall be accompanied by (1) a comparison of the budgeted income
and expenses and the actual income and expenses for the prior Fiscal Year,
(2) an unqualified opinion of a “Big Four” accounting firm or other independent
certified public accountant reasonably acceptable to Lender, (3) room rate
reports and RevPAR calculations, and (4) an Officer’s Certificate certifying
(A) that each annual financial statement presents fairly the financial condition
and the results of operations of the Operating Companies, Borrowers and the
Properties being reported upon, (B) that such financial statements have been
prepared in accordance with GAAP (or such other accounting basis acceptable to
Lender) and (C) as of the date thereof whether there exists an event or
circumstance which constitutes a Default or Event of Default, and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same. Any audits
performed by Borrower (and any audited materials and other information provided
to Lender, as required hereunder in order for Borrower to comply with the
requirements of this subparagraph (b)) may be performed with respect to the
Properties on a “combining basis” (so that a single audit of the Properties,
rather than individual audits of each of the separate Properties, may be
performed and provided). It is understood and agreed that with respect to
monthly financial statements required by this Section 5.1.11(b), such statements
with respect to July 2010 will be those required by Section 5.1.11(b) of the
Original Loan Agreement and such statements with respect to August 2010 will be
those required by this Section 5.1.11(b).

(c) Borrower will furnish, or cause to be furnished, to Lender on or before
sixty (60) days after the end of each fiscal quarter the following items,
accompanied by an Officer’s Certificate stating that such items fairly present
the financial condition and results of the Operating Company, Borrower and the
Properties, subject to normal year-end adjustments, as applicable: (i) quarterly
and year-to-date operating statements (including Capital Expenditures) noting
such information as is necessary and sufficient to fairly represent the
financial position and results of operation of the Properties during such
quarter, and containing a comparison of budgeted income and expenses and the
actual income and expenses together with a detailed explanation of any variances
of ten percent (10%) or more between budgeted and actual amounts for such
periods, all in form reasonably satisfactory to Lender; and (ii) a calculation
reflecting the Debt Service Coverage Ratio, gross revenues, gross hotel and
casino revenues, EBITDAM, Excess Cash Flow and capital expenditures (allocated
between maintenance and growth), in each case for the immediately preceding
twelve (12) month period as of the last day of such quarter. Borrower shall
provide the statements and calculations required hereunder (other than Excess
Cash Flow) on both a “combined basis” for all Properties and on an Individual
Property-by-Individual Property basis. In addition, such

 

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Officer’s Certificate shall also state that the representations and warranties
of Borrower set forth in Section 4.1.30 are true and correct as of the date of
such certificate and that there are no trade payables outstanding for more than
ninety (90) days. In addition, Borrower shall be obligated to provide the
statements and calculations (other than Excess Cash Flow), as well as the
Officer’s Certificate described in this subparagraph (c), and the “White Books”
to Lender on a monthly basis (such requirements to be modified as appropriate to
reflect the fact that the information shall be required to be provided monthly
(e.g., monthly rent rolls, monthly and year-to-date operating statements)), a
calculation reflecting the Debt Service Coverage Ratio for the immediately
preceding twelve (12) month period as of the last day of such month, and a
calculation of the Post-Rio Leverage Ratio as of the last day of such month, if
applicable, for each month during the existence of a Rio Leverage Event, in each
case within no more than thirty (30) days following the end of each calendar
month.

(d) (i) For the partial year period commencing on the Original Closing Date, and
for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual
Budget not later than the commencement of such period or Fiscal Year in form
reasonably satisfactory to Lender and for informational purposes only (unless
(i) an Event of Default shall have occurred and be continuing and/or (ii) any
event of default as defined in any of the Mezzanine Loan Documents shall have
occurred thereunder and be continuing, in which event the Annual Budget shall be
subject to the reasonable approval of Lender). Borrower shall submit to Lender
any material variation, material amendment, material supplement or other
material modification to the Annual Budget in form reasonably satisfactory to
Lender and for informational purposes only (unless (i) an Event of Default shall
have occurred and be continuing and/or (ii) any event of default as defined in
any of the Mezzanine Loan Documents shall have occurred thereunder and be
continuing, in which event such material variations, material amendments,
material supplements or material modifications shall be subject to the
reasonable approval of Lender).

(ii) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an annual capital
spending budget (“Cap Ex Budget”) not later than the commencement of such period
or Fiscal Year in form reasonably satisfactory to Lender and for informational
purposes only (unless (i) an Event of Default shall have occurred and be
continuing and/or (ii) any event of default as defined in any of the Mezzanine
Loan Documents shall have occurred thereunder and be continuing, in which event
the Cap Ex Budget shall be subject to the reasonable approval of Lender).
Borrower shall submit to Lender any material variation, material amendment,
material supplement or other material modification to the Cap Ex Budget in form
reasonably satisfactory to Lender and for informational purposes only (unless
(i) an Event of Default shall have occurred and be continuing and/or (ii) any
event of default as defined in any of the Mezzanine Loan Documents shall have
occurred thereunder and be continuing, in which event such material variations,
material amendments, material supplements or material modifications shall be
subject to the reasonable approval of Lender).

(e) If, at the time one or more Disclosure Documents are being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more
Affiliates of Borrower collectively, or the Properties and Related Properties
collectively, will be a “Significant Obligor”, as that term is defined in
Item 1101(k) of Regulation AB (as defined

 

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below), Borrower shall furnish to Lender upon request (i) the selected financial
data or, if applicable, net operating income, required under Item 1112(b)(1) of
Regulation AB, if Lender expects that the principal amount of the Loan together
with any other loans made to an Affiliate of Borrower or secured by a Related
Property, that is included in a Securitization with the Loan (each, a “Related
Loan”) as of the cut-off date for such Securitization may, or if the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such Securitization and at any time during which the Loan and any Related Loans
are included in a Securitization does, equal or exceed ten percent (10%) (but
less than twenty percent (20%)) of the aggregate principal amount of all
mortgage loans included or expected to be included, as applicable, in the
Securitization or (ii) the financial statements required under Item 1112(b)(2)
of Regulation AB, if Lender expects that the principal amount of the Loan
together with any Related Loans as of the cut-off date for such Securitization
may, or if the principal amount of the Loan together with any Related Loans as
of the cut-off date for such Securitization and at any time during which the
Loan and any Related Loans are included in a Securitization does, equal or
exceed twenty percent (20%) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the Securitization.
Such financial data or financial statements shall be furnished to Lender
(A) within ten (10) Business Days after written notice from Lender in connection
with the preparation of Disclosure Documents for the Securitization, (B) not
later than thirty (30) days after the end of each fiscal quarter of Borrower and
(C) not later than sixty (60) days after the end of each fiscal year of
Borrower; provided, however, that Borrower shall not be obligated to furnish
financial data or financial statements pursuant to clauses (B) or (C) of this
sentence with respect to any period for which a filing pursuant to the Exchange
Act in connection with or relating to the Securitization (an “Exchange Act
Filing”) is not required. If requested by Lender, in writing, Borrower shall use
commercially reasonable efforts to furnish to Lender financial data and/or
financial statements for any tenant of any of the Properties (other than a
tenant that is a reporting company under the Exchange Act) if, in connection
with a Securitization, Lender expects there to be, with respect to such tenant
or group of affiliated tenants, a concentration within all of the mortgage loans
included or expected to be included, as applicable, in the Securitization such
that such tenant or group of affiliated tenants would constitute a Significant
Obligor. “Related Property” shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is “related”,
within the meaning of the definition of Significant Obligor, to any of the
Properties. “Regulation AB” shall mean Regulation AB under the Securities Act
and the Exchange Act, as such Regulation may be amended from time to time.

(f) All financial data and financial statements provided by Borrower and
Operating Company hereunder pursuant to Section 5.1.11(e) shall be prepared in
accordance with GAAP, and all such financial statements shall meet the
requirements of Regulation AB, Regulation S-X, Regulation S-K to the extent
applicable and any other applicable legal requirements. All financial statements
referred to in clause (ii) of Section 5.1.11(e) shall be audited by independent
accountants of Borrower reasonably acceptable to Lender in accordance with
Regulation AB, Regulation S-X, Regulation S-K to the extent applicable and all
other applicable legal requirements, shall be accompanied by the manually
executed report of the independent accountants thereon, which report shall meet
the requirements of Regulation AB, Regulation S-X, Regulation S-K to the extent
applicable and all other applicable legal requirements, and shall be further
accompanied by a manually executed written consent of the

 

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independent accountants, in form and substance reasonably acceptable to Lender,
to the inclusion of such financial statements in any Disclosure Document and any
Exchange Act Filing and to the use of the name of such independent accountants
and the reference to such independent accountants as “experts” in any Disclosure
Document and Exchange Act Filing, all of which shall be provided at the same
time as the related financial statements are required to be provided, in each
case if applicable. All financial data and financial statements (audited or
unaudited) provided by Borrower under this Section 5.1.11(f) shall be
accompanied by an Officer’s Certificate which shall state that such financial
statements meet the requirements set forth in the first sentence of this
Section 5.1.11(f) to the extent applicable.

(g) If requested by any Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements, or financial,
statistical or operating information, as any Lender shall reasonably determine
to be required pursuant to Regulation AB, Regulation S-X, Regulation S-K or any
amendment, modification or replacement thereto or other legal requirements in
connection with any Disclosure Document or any Exchange Act Filing or as shall
otherwise be reasonably requested by any Lender.

(h) In the event Lender reasonably determines, in connection with a
Securitization, that the financial data and financial statements required in
order to comply with Regulation AB, Regulation S-X, Regulation S-K or any
amendment, modification or replacement thereto or other legal requirements are
other than as provided herein, then notwithstanding the provisions of Sections
5.1.11(e) and (f), Lender may request, and Borrower shall promptly provide, such
other financial statements as Lender determines to be necessary or appropriate
for such compliance.

(i) Until such time as the Loan is paid in full, Borrower shall cause Holdings
to (i) file with the SEC as part of its reports filed under the Exchange Act (if
applicable) information with respect to the Borrower, its financial condition
and results of operations in a form substantially similar to the information
filed currently (or as may be changed due to changing law or regulation) with
respect to HOC as Exhibit 99.1 or Exhibit 99, as applicable, to Holdings’ Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, and (ii) continue to file
such information with the SEC whether or not Holdings is obligated to file any
reports under the Exchange Act. The filings described in the immediately
preceding sentence shall be made at such times as Holdings files with the SEC
its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q,
commencing with respect to the fiscal quarter ending September 30, 2010. In
addition, filings consistent with those described in the second preceding
sentence with respect to the fiscal quarter ending June 30, 2010 shall be made
promptly following such time that such filings are available for filing by
Holdings with the SEC (but in any event on or prior to September 15, 2010).

(j) Reference is made to the provisions of Section 11.7 which Borrower
understands applies to the statements, financial information, budgets and other
materials provided as described in this Section 5.1.11 and that such materials
shall be Borrower Materials thereunder. Borrower shall comply with Section 11.7
with respect to such Borrower Materials, and Lender and Servicer shall be
entitled to treat any such Borrower Materials that are not marked “PUBLIC” or
filed with the SEC as being suitable only for posting on a portion of the
Platform not designated “Public Investor”.

 

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(k) The Borrower will (directly or through Holdings) hold a customary quarterly
conference call with the Lenders and Servicer to discuss the financial results
of Holdings with the Lenders, beginning with a discussion of the fiscal quarter
ended September 30, 2010 (it being understood that such call may be the same
quarterly call hosted by Holdings to discuss its financial results with
investors generally). Each such conference call will not be later than ten
(10) business days from the date on which Holding’s financial information is
filed with the SEC. In addition, Borrower will provide to the Lenders copies of
each Form 10Q and Form 10K of Holdings filed with the SEC, commencing with the
Form 10Q filed in respect of the fiscal quarter ended September 30, 2010;
provided, that, the filing of such financial statements with the SEC shall
satisfy such obligation of the Borrower hereunder.

(l) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered (i) in paper form, and (ii) if requested by
Lender and within the capabilities of Borrower’s data systems without change or
modification thereto, in electronic form and prepared using a Microsoft Word for
Windows or WordPerfect for Windows files (which files may be prepared using a
spreadsheet program and saved as word processing files). Subject to
Section 11.8, Borrower agrees that Lender may disclose information regarding any
of the Properties, Borrower and Operating Company that is provided to Lender
pursuant to this Section in connection with any Securitization, Syndication or
Assignment, to such parties reasonably requesting such information in connection
with such Securitization, Syndication or Assignment.

5.1.12. Business and Operations. Borrower will, and will cause Manager and
Operating Company to, continue to engage in the businesses presently conducted
by it as and to the extent the same are necessary for the ownership,
maintenance, management and operation of the Properties. Borrower will and will
cause Manager and Operating Company to qualify to do business and will remain in
good standing under the laws of each jurisdiction as and to the extent the same
are required for the ownership, maintenance, management and operation of the
Properties.

5.1.13. Title to the Properties. Borrower will warrant and defend (a) the title
to each Individual Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Liens of the Mortgages and the Assignments of Leases, subject
only to Liens permitted hereunder (including Permitted Encumbrances), in each
case against the claims of all Persons whomsoever. Borrower shall reimburse
Lender for any actual out-of-pocket losses, costs, damages or expenses
(including reasonable attorneys’ fees and court costs) incurred by Lender if an
interest in any Individual Property, other than as permitted hereunder, is
claimed by another Person.

5.1.14. Costs of Enforcement. In the event (a) that any Mortgage encumbering any
Individual Property is foreclosed in whole or in part or that any such Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
any Mortgage encumbering any Individual Property in which proceeding Lender is
made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other
similar proceeding in respect of Borrower or Operating Company or an assignment
by Borrower or Operating Company for the benefit of its creditors, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all reasonable
out-of-pocket costs of collection and

 

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defense, including reasonable out-of-pocket attorneys’ fees and costs, incurred
by Lender or Borrower in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, together with all
required service or use taxes.

5.1.15. Estoppel Statement. (a) After request by Lender or Servicer, Borrower
shall within ten (10) Business Days (but, provided there exists no Default or
Event of Default, no more often than twice during the course of each Fiscal Year
of Borrower) furnish to Lender or Servicer, as applicable, a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Loan, (ii) the unpaid principal amount of the Loan, (iii) the Interest Rate
of the Loan, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and
(vi) that the Note, this Agreement, the Mortgages and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.

(b) Borrower shall exercise reasonable best efforts to deliver to Lender or
Servicer upon request, tenant estoppel certificates from each space tenant
leasing space at the Properties, and shall exercise reasonable best efforts to
deliver an estoppel certificate from each ground lessor, each in form and
substance reasonably satisfactory to Lender, provided that Borrower shall not be
required to deliver such certificates more frequently than two (2) times in any
calendar year.

(c) After request by Borrower, but not more than twice during the course of each
year, Lender (or Servicer, on behalf of Lender) shall furnish Borrower with a
statement setting forth (i) the original principal amount of the Loan, (ii) the
unpaid principal amount of the Loan, (iii) the Interest Rate of the Loan,
(iv) the date installments of interest and/or principal were last paid, and
(v) that the Loan Documents have not been modified or if modified, giving
particulars of such modification.

5.1.16. Reserved.

5.1.17. Performance by Borrower. Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrower.

5.1.18. IP Matters; Shared Services Agreement. (a) Borrower shall not amend,
modify, supplement or waive (or consent to, acquiesce in or permit any such
amendment, modification, supplement or waiver of) any right under the IP
Licenses without the prior written approval of Lender. Borrower shall not permit
(or consent to or acquiesce in) an assignment by any counterparty to any of the
IP Licenses, and Borrower shall not assign any of its interests in the IP
Licenses (or any licensed property) without, in each case, Lender’s prior
written approval. Borrower shall not permit, consent to or acquiesce in any
cancellation, termination or surrender of the IP Licenses or any of them.

(b) Borrower shall not (and Borrower shall not permit Operating Company or
Manager to) amend, modify, supplement or waive (or consent to, acquiesce in or
permit any such amendment, modification, supplement or waiver of) any right
under the Shared Services Agreement without the prior written approval of
Lender. Borrower shall not (and Borrower shall

 

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not permit Operating Company or Manager to) consent to or acquiesce in an
assignment by HOC of its rights, obligations or duties under the Shared Services
Agreement without Lender’s prior written approval. Borrower shall not (and
Borrower shall not permit Operating Company to) assign its or their rights,
obligations or duties under the Shared Services Agreement without Lender’s prior
written approval. Borrower shall not permit Manager to assign its rights or
obligations under the Shared Services Agreement without Lender’s prior written
approval (unless such assignment occurs in connection with a permitted
assignment of the Management Agreement). Borrower shall not (and Borrower shall
not permit Operating Company or Manager to) permit, consent to or acquiesce in
any cancellation, termination or surrender of the Shared Services Agreement.

5.1.19. No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual Property which may
be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Individual
Property, except as required by Legal Requirements.

5.1.20. Leasing Matters. (a) Borrower shall not (and shall cause Guarantor
(Operating Lease) not to), without the prior written consent of Lender (and, if
a Securitization shall have occurred, Borrower shall have obtained and delivered
to Lender a Rating Agency Confirmation) restate, materially modify, materially
amend or materially supplement (or permit the restatement, material
modification, amendment or supplement of) any Operating Lease or Operating Lease
Guaranty (provided, that any modification, amendment or supplement affecting any
of the economic terms of any Operating Lease or any of the terms of the
Operating Lease Guaranty shall be deemed to be material for purposes hereof),
terminate or accept the surrender (or permit the termination or surrender) of
any Operating Lease or Operating Lease Guaranty, or release or materially waive
(or permit the release or material waiver of) the Operating Company or Guarantor
(Operating Lease) from the performance or observance of any obligation or
condition under the Operating Leases or Operating Lease Guaranty. In connection
with a material modification, Lender may request, and in such event, Borrower
shall not effect such modification without, an Additional True Lease Opinion in
form and substance reasonably satisfactory to Lender issued by Borrower’s
counsel (at Borrower’s expense). Borrower shall not permit the prepayment of any
rents under the Operating Leases for more than one (1) month prior to the due
date thereof. Notwithstanding the foregoing, Lender’s consent shall not be
required in connection with any modification, amendment or waiver of any
provision of the Operating Lease as may be reasonably necessary to comply with
the requirements of this Agreement or any other Loan Document or that makes the
provisions of the Operating Lease consistent with the provisions of this
Agreement or any other Loan Document. Notwithstanding anything contained in this
Section 5.1.20(a) to the contrary, (x) Lender’s consent to any amendment,
modification or supplement of the Operating Lease (or any new Operating Lease)
or the Operating Lease Guaranty may also be conditioned on the delivery by
Borrower, upon the reasonable request of Lender, of an Additional Insolvency
Opinion and/or an Additional True Lease Opinion acceptable to Lender, and
(y) Lender’s consent to any assignment of any Operating Lease or Operating Lease
Guaranty (or of any interest therein) or any material amendment, material
modification or material supplement of any Operating Lease shall also be
conditioned on the delivery by Borrower, upon the reasonable request of Lender,
of an Additional Insolvency Opinion and an Additional True Lease Opinion
acceptable to Lender.

 

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(b) Borrower shall not permit (or consent to) an assignment by any Operating
Company of any such Operating Company’s interest(s) under any Operating Lease
and Borrower shall not assign any of its interests in the Operating Lease
Guaranty without, in each case, Lender’s prior written consent (and, if a
Securitization shall have occurred, at Lender’s request, without Borrower
providing to Lender a Rating Agency Confirmation and an Additional True Lease
Opinion). For the avoidance of doubt, the foregoing sentence shall not restrict
space leases and subleases otherwise permitted hereunder.

(c) Subject to clause (d) below, each Operating Company may enter into space
leases and renewals of space Leases. All such space Leases and all renewals of
space Leases executed after the Original Closing Date entered into by Operating
Company shall (i) provide for rental rates, rent credits and free rent periods
comparable to existing local market rates for comparable properties; (ii) be on
commercially reasonable terms; (iii) provide that such Lease is subordinate to
the Mortgage encumbering the Individual Property in question and that the lessee
will attorn to Lender and any purchaser at a foreclosure sale; (iv) not contain
any terms which would materially adversely affect Lender’s rights under the Loan
Documents; (v) not grant to the tenants thereunder any option or right to
purchase the applicable Individual Property (or any portion thereof); and
(vi) in the case of Major Leases, have initial terms less than twenty
(20) consecutive years, in each case (unless otherwise consented to by Lender
pursuant to clause (d) below).

(d) (i) Any Major Lease entered into by Operating Company with respect to an
Individual Property executed after the Original Closing Date (and any renewal of
any Major Lease with respect to an Individual Property), and any space Lease or
space Lease renewal proposed to be entered into by Operating Company after the
Original Closing Date and that does not meet the criteria set forth in Sections
5.1.20(a) and subparagraph (c) above, shall be subject to the prior written
approval of Lender, which approval shall not be unreasonably withheld,
conditioned or delayed. Borrower shall not terminate or accept the surrender of
(and shall not permit Operating Company to terminate or accept the surrender of)
a Major Lease (unless by reason of a tenant default) without the consent of
Lender.

(ii) Every submission to Lender of any proposed Major Lease (or Major Lease
renewal, amendment, modification or termination) or proposed space Lease or
space Lease renewal that does not meet the criteria set forth in Sections
5.1.20(a) and subparagraph (c) above for Lender’s approval shall be forwarded to
Lender together with a notice from Borrower (in bold typeface) that states “YOUR
FAILURE TO RESPOND TO THIS NOTICE AND REQUEST FOR APPROVAL WITHIN TEN
(10) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL CONSTITUTE YOUR DEEMED
CONSENT TO THE MATTERS DESCRIBED IN OR THAT ARE THE SUBJECT OF THIS NOTICE”. If
Lender responds to Borrower’s request by identifying missing documents or
materials that are incomplete or inaccurate (and that are the subject of the
request for approval), then Borrower shall re-submit such documents or materials
to Lender for its approval together with a second notice from Borrower that
complies with this section.

 

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(iii) If Lender fails to approve or disapprove any such proposed request or
submission attached to a first notice or request sent by Borrower (or the
matters that are the subject of the re-submitted notice or request for approval)
within ten (10) Business Days of receipt of same, Borrower shall re-submit such
instruments or materials to Lender for Lender’s approval and give Lender a
second notice (in bold typeface) that states “SECOND NOTICE — YOUR FAILURE TO
RESPOND TO THIS NOTICE AND REQUEST FOR APPROVAL WITHIN FIVE (5) BUSINESS DAYS OF
YOUR RECEIPT OF THIS NOTICE SHALL CONSTITUTE YOUR DEEMED CONSENT TO THE MATTERS
DESCRIBED IN OR THAT ARE THE SUBJECT OF THIS NOTICE”. If Lender fails to respond
to such second notice within five (5) Business Days of receipt of same, then
Lender’s consent to the proposed request or submission that is the subject of
such notice shall be deemed granted.

(e) Borrower shall and shall cause Operating Company to (i) observe and perform
the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) enforce the terms, covenants and conditions contained in
the Leases upon the part of the lessee thereunder to be observed or performed in
a commercially reasonable manner and in a manner not to impair the value of the
Individual Property involved; (iii) not collect any of the rents more than
one (1) month in advance (other than security deposits); (iv) not execute any
other assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) not alter, modify or change the terms
of the Leases in a manner inconsistent with the provisions of the Loan
Documents; and (vi) execute and deliver at the request of Lender all such
further assurances, confirmations and assignments in connection with the Leases
as Lender shall from time to time reasonably require.

(f) Upon request, Borrower shall furnish Lender with executed copies of all new
Leases or Lease renewals or amendments.

(g) Notwithstanding anything to the contrary contained herein, Borrower shall
not enter into (or permit Operating Company to enter into) a lease of all or
substantially all of any Individual Property without Lender’s prior consent.

(h) Provided the foregoing requirements have been complied with and no Event of
Default then exists, (i) Lender agrees to direct Collateral Agent to enter into
a Recognition Agreement with the tenants under Major Leases defined in clause
(a)(i) or (a)(ii) of the definition thereof, in each case on the form annexed as
Schedule XII hereto (with such changes as shall be negotiated by Collateral
Agent in good faith) and, in such event, no fee shall be charged by Lender or
Collateral Agent in connection with any such Recognition Agreement (except that
Borrower shall reimburse Collateral Agent for any reasonable, out-of-pocket fees
and expenses incurred by Collateral Agent in connection with same) and (ii) if
requested by Borrower, Lender and Collateral Agent agree to not unreasonably
withhold its or their consent to entering into (and shall enter into) a
Recognition Agreement with other tenants, excluding tenants described in any of
clauses (b) and (c) of the definition thereof (as to which Collateral Agent
shall have no obligation whatsoever to grant nondisturbance), in each case on
the form annexed as Schedule XII hereto (with such changes as shall be
negotiated by Collateral Agent in good faith) and, in such event, no fee shall
be charged by Lender or

 

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Collateral Agent in connection with any such Recognition Agreement (except that
Borrower shall reimburse Collateral Agent for any reasonable, out-of-pocket fees
and expenses incurred by Collateral Agent in connection with same).

5.1.21. Alterations. (a) Borrower shall cause all Alterations with respect to
any portion of any of the Properties to be conducted and performed with due
diligence in a good and workmanlike manner, and all materials used and work done
shall be in accordance with all applicable Legal Requirements. In addition, with
respect to the Convention Center Project, to the extent such project is pursued,
Borrower agrees to (i) diligently pursue such project to completion in a timely
manner, subject to delays arising from Force Majeure events, (ii) cause the work
to be performed in connection with such project in substantial conformance with
the plans and specifications for such project and otherwise in conformity with
this Agreement, (iii) provide Lender with reasonably detailed monthly progress
reports (and such information as Lender shall reasonably request from time to
time) regarding the status of the Convention Center Project, (iv) upon the
substantial completion of such project, provide Lender with evidence of the
substantial completion of such project, copies of final unconditional lien
waivers from the general contractors, construction managers or subcontractors
for such project (if requested by Lender) and evidence of the final payment of
all amounts due in connection with such project, and a title search for the
affected Individual Property indicating that such Individual Property is free
from all liens, claims and other encumbrances not previously approved by Lender,
and (v) upon final completion of such project, provide Lender with a final
survey acceptable to Lender showing the “as-built” location of the completed
Improvements and all easements appurtenant thereto, “as-built” plans and
specifications for Lender’s file and a certificate of occupancy to the extent
issued by the relevant Governmental Authority.

(b) Borrower shall obtain Lender’s prior consent to (i) any Material Alterations
(unless collateral or a completion guaranty is provided as set forth in
subparagraph (c) below) or (ii) any Alterations to any of the Improvements (even
if otherwise described in clause (i) above) that is reasonably likely to have an
Individual Material Adverse Effect. Lender’s consent shall not be required for
any Alterations other than the Alterations described in the preceding sentence.
Notwithstanding any provision hereof to the contrary, without Lender’s consent,
not to be unreasonably withheld or delayed, in no event shall Borrower close or
shutter, or undertake or permit any tenant or other Person to undertake, an
Alteration that, alone or together with other work then being undertaken, closes
or shutters, more than ten percent (10%) of the income-generating space in any
Individual Property at any one time. Prior to undertaking any Alteration with
respect to an Individual Property in excess of five percent (5%) of the sum of
the Allocated Loan Amount for such Individual Property as of the date hereof and
the “Allocated Loan Amounts” under (and as defined in each of) the Mezzanine
Loan Agreements for such Individual Property as of the date hereof, to afford
Lender a prior and reasonable opportunity to determine whether or not the
proposed Alteration would have an Individual Material Adverse Effect, Borrower
will deliver such plans, specifications, project schedules, logistical plans,
construction budgets (including a statement of sources and uses) and such other
information as Lender may reasonably request in respect of such Alteration for
review by Lender (and its consultants). All reasonable out-of-pocket costs and
expenses incurred by Lender in connection with reviewing said Alterations
proposal, including, without limitation, reasonable counsel fees and
disbursements and Lender’s consultants, shall be paid by Borrower. The
above-referenced submissions to Lender for

 

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confirmation or consent shall be delivered with a notice from Borrower (in bold
typeface) that states “YOUR FAILURE TO RESPOND TO THIS NOTICE AND REQUEST FOR
[CONFIRMATION][APPROVAL] WITHIN TEN (10) BUSINESS DAYS OF YOUR RECEIPT OF THIS
NOTICE SHALL CONSTITUTE YOUR DEEMED [CONFIRMATION][CONSENT] TO THE MATTERS
DESCRIBED IN OR THAT ARE THE SUBJECT OF THIS NOTICE”. If Lender responds to
Borrower’s request by identifying missing documents or materials that are
incomplete or inaccurate (and that are the subject of the request for
confirmation or approval, as the case may be), then Borrower shall re-submit
such documents or materials to Lender for its confirmation or approval, as
applicable, together with a second notice from Borrower that complies with this
Section. If Lender fails to approve or disapprove (or confirm or deny, as
applicable) any such proposed request or submission attached to a first notice
or request sent by Borrower (or the matters that are the subject of the
re-submitted notice or request for confirmation or approval) within ten
(10) Business Days of receipt of same, Borrower shall re-submit such instruments
or materials to Lender for Lender’s confirmation or approval and give Lender a
second notice (in bold typeface) that states “SECOND NOTICE — YOUR FAILURE TO
RESPOND TO THIS NOTICE AND REQUEST FOR [CONFIRMATION][APPROVAL] WITHIN TEN
(10) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL CONSTITUTE YOUR DEEMED
[CONFIRMATION][CONSENT] TO THE MATTERS DESCRIBED IN OR THAT ARE THE SUBJECT OF
THIS NOTICE”. If Lender fails to respond to such second notice within ten
(10) Business Days of receipt of same, then Lender’s confirmation or consent, as
applicable, to the proposed request or submission that is the subject of such
notice shall be deemed granted.

(c) With respect to any Material Alteration, unless otherwise consented to by
Lender, Borrower shall promptly deliver to Lender as security for the payment of
such amounts and as additional security for Borrower’s obligations under the
Loan Documents any of the following: (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and, if a Securitization has
occurred, that the applicable Rating Agencies have confirmed in writing will
not, in and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned to any Securities or any
class thereof in connection with any Securitization, (D) a completion and
performance bond or an irrevocable letter of credit (payable on sight draft
only) issued by an Eligible Institution, or (E) a completion guaranty from an
Approved Guarantor in the form attached hereto as Exhibit B (with such changes
as Lender shall approve), together with evidence reasonably satisfactory to
Lender that the Approved Guarantor has reasonable liquidity taking into account
the nature and amount of the guaranteed obligations under such completion
guaranty (it being agreed that, if the Approved Guarantor in question is
Holdings, then the amounts available for repayment of such obligations under any
revolving credit facility in effect at such time in favor of HOC will be taken
into account in determining whether Holdings has reasonable liquidity) and with,
if required by applicable Rating Agency requirements, an Additional Insolvency
Opinion. Such security, including the amount of the guaranteed obligations under
any completion guaranty delivered as aforesaid, shall be in an amount equal to
the sum of (i) the excess of the total unpaid amounts with respect to
alterations to the Improvements on the applicable Individual Property (other
than such amounts to be paid or reimbursed by tenants under the Leases) over the
Threshold Amount and (ii) the costs of collection, and, upon the occurrence and
during the continuance of an Event of Default, Lender may apply such security
from time to time at the option of Lender to pay for such alterations.

 

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5.1.22. Operation of Property; Operating Leases and Management Agreements; Fees
Paid to Manager. (a) Borrower shall cause each of the Properties to be at all
times operated and maintained (i) in all material respects, in accordance with
the Operating Leases and the Management Agreements, (ii) in accordance with all
applicable Legal Requirements, including Gaming Laws, and all Gaming Licenses
and other Operating Permits, (iii) at a standard and level that is consistent,
in the case of each Individual Property, with the standard and level of
operation of such Individual Property immediately prior to the date hereof,
(iv) in accordance with management practices of nationally recognized management
companies managing similar properties in locations comparable to those of the
related Individual Property, and (v) in a manner that does not violate the
Borrower’s representations set forth in Section 4.1.30 of this Agreement. The
Shared Services Agreement requires HOC to provide (and Borrower shall cause HOC
to provide) all services thereunder to the Casino Components, in each case in a
first-class manner and not in any manner less favorable than what is being
provided to each Individual Property immediately prior to the date hereof.

(b) No Operating Company or Manager shall amend, modify, supplement or waive any
provision of the Management Agreement (and no Borrower shall permit, consent to
or acquiesce in any such amendment, modification, supplement or waiver) in a
manner that is adverse to Lender, it being acknowledged and agreed by the
parties hereto that, without limiting the meaning of adverse, any amendment,
waiver or other modification of any provision which would have the effect of
(A) increasing management fees, required reserves or termination fees,
(B) shortening the term thereof or (C) modifying events of default, rights of
termination, standards of care and operation, management responsibilities,
intellectual property licenses or approval and supervisory rights of a Borrower
or Operating Company shall be deemed adverse to the interests of Lender in a
material respect.

(c) No Borrower or Operating Company shall permit, consent to or acquiesce in
any cancellation, termination or surrender of the Management Agreement (other
than as expressly contemplated thereunder).

(d) No Borrower or Operating Company shall enter into any management agreements
other than the Management Agreement and no Operating Company or Borrower shall
consent to the assignment of any Manager’s obligations and rights under the
applicable Management Agreement, or to a delegation by any Manager of any of its
duties under its Management Agreement to any Person without the prior written
approval of Lender in each case other than as expressly contemplated thereunder.

(e) Borrower shall cause each Operating Company and each Manager to post all
required bonds, if any, with any Gaming Authority as and in the amounts required
under all applicable Legal Requirements (and shall, if Lender makes a request
therefor, promptly provide Lender with copies of all such bonds).

 

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(f) No Borrower shall, without Lender’s prior written consent, permit (i) any
Operating Company to assign or transfer, and no Operating Company shall, without
Lender’s prior written consent, assign or transfer, or delegate any
responsibilities with respect to, any material Gaming License or Operating
Permit (other than to the applicable Manager) or (ii) any Manager to assign or
transfer, and no Manager shall, without Lender’s prior written consent, assign
or transfer, or delegate any responsibilities with respect to, any material
Gaming License or Operating Permit (other than to the applicable Operating
Company).

(g) Borrower shall cause Operating Company and Manager to make all filings
required under the Gaming Laws, or in connection with any Gaming Licenses or
Operating Permits, including in connection with the modifications of the Loan
and the Mezzanine Loan contemplated herein and the execution and delivery of the
Management Agreement, and shall deliver copies of such filings as Lender shall
reasonably request to Lender, promptly upon request. Borrower, Operating Company
or Manager will timely pay all fees, investigative fees and costs required by
the Gaming Authorities with respect to any such approvals and licenses. Borrower
will (or will cause Operating Company and Manager to) diligently and
comprehensively respond to any inquiries and requests from the Gaming
Authorities and promptly file or cause to be filed any additional information
required in connection with any required filings as soon as practicable after
receipt of requests therefor.

(h) Upon request of Lender, Borrower shall deliver to Lender (or cause Operating
Company and Manager to deliver to Lender) such evidence of compliance (by
Borrower, Operating Company, Manager and each Individual Property) with all
Legal Requirements, including Gaming Laws as shall be reasonably requested by
Lender. Borrower shall immediately deliver to Lender (and shall cause Operating
Company and Manager to deliver to Lender) any notice of material non-compliance
or material violation of any Legal Requirement, or of any material inquiry or
investigation commenced by the Gaming Authorities in connection with any of the
Properties. Borrower shall immediately notify Lender if it, Operating Company or
Manager believe that any material license, including any Gaming License, is
being or could be revoked or suspended, or that any action is pending, being
considered or being, or could be, taken to revoke or suspend Borrower’s,
Operating Company’s or Manager’s material licenses, including the Gaming
Licenses, or to fine, penalize or impose remedies upon Borrower, Operating
Company or Manager, or that any action is pending, being considered, or being,
or could be, taken to discontinue, suspend, deny, decrease or recoup any
payments due, made or coming due to Borrower, Operating Company or Manager, in
each case if same might reasonably be expected to have an Individual Material
Adverse Effect. Borrower shall immediately deliver to Lender any notice received
by Borrower, Operating Company or Manager alleging or relating to the material
non-compliance by Borrower, Operating Company or Manager with any Legal
Requirements, including Gaming Laws.

(i) In the event that any of the Operating Leases expire or are terminated
(without limiting any obligation of Borrower to obtain Lender’s consent to any
termination or modification of any of the Operating Leases in accordance with
the terms and provisions of this Agreement), Borrower shall promptly enter into
a replacement Operating Lease (in form and substance satisfactory to Lender)
with Operating Company or another operating company reasonably satisfactory to
Lender and, as a condition to the effectiveness of such replacement Operating
Lease, Borrower will cause Guarantor (Operating Lease) to execute and deliver an
operating lease guaranty in the same form and substance as the Operating Lease
Guaranty. In

 

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the event that any of the Management Agreements expire or are terminated
(without limiting any obligation of Borrower to obtain Lender’s consent to any
termination or modification of any of the Management Agreements in accordance
with the terms and provisions of this Agreement), Operating Company shall
promptly enter into a replacement Management Agreement (in the same form, and
containing the same substance, as the Management Agreement or otherwise
satisfactory to Lender) with Manager or another Person wholly-owned and
Controlled by Holdings (and experienced in the management and operation of
properties such as the Individual Property(ies) in question) or another manager
satisfactory to Lender.

(j) Each Borrower shall: (i) promptly perform and/or observe, in all material
respects, all of the covenants and agreements required to be performed and
observed by it under the applicable Operating Lease and applicable Management
Agreement and do all things necessary to preserve and to keep unimpaired its
material rights thereunder; (ii) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditures plan, notice, report
and estimate received by it under such Operating Lease and such Management
Agreement; and (iii) enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed by
such Operating Company under such Operating Lease, by each Guarantor (Operating
Lease) under each such Operating Lease Guaranty, and by each Manager under the
applicable Management Agreement, in a commercially reasonable manner.

(k) Borrower shall cause each Operating Company to: (i) promptly perform and/or
observe, in all material respects, all of the covenants and agreements required
to be performed and observed by it under the applicable Operating Lease and
applicable Management Agreement and do all things necessary to preserve and to
keep unimpaired its material rights thereunder; (ii) promptly deliver to
Borrower a copy of each financial statement, business plan, capital expenditures
plan, notice, report and estimate received by it under such Operating Lease and
each such Management Agreement; and (iii) enforce the performance and observance
of all of the material covenants and agreements required to be performed and/or
observed by each Manager under the applicable Management Agreement, in a
commercially reasonable manner.

(l) Borrower shall cause the Hotel Components to be at all times open for
business as a hotel and the Casino Components to be open for business as a
casino, except to the extent necessary to undertake any alterations or repairs
(subject to the provisions of this Agreement with respect to the performance of
any such alterations or repairs).

(m) If any Borrower shall be in material default under any Operating Lease or if
any Operating Company shall be in default under any Management Agreement, then,
subject to the terms of such Operating Lease or Management Agreement, Borrower
shall (subject to any applicable Legal Requirements) grant Lender the right (but
not the obligation), and Lender shall have the right (but not the obligation),
to cause the default or defaults under such Operating Lease or Management
Agreement to be remedied and otherwise exercise any and all rights of Borrower
under such Operating Lease or of Borrower or Operating Company under such
Management Agreement, as may be necessary to prevent or cure any default
provided such actions are necessary to protect Lender’s interest under the Loan
Documents, and Lender shall have the right to enter all or any portion of the
affected Individual Property at

 

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such times and in such manner as Lender deems necessary, to prevent or to cure
any such default. The actions or payments of Lender to cure any default by
Borrower under any Operating Lease or of Borrower or Operating Company under any
Management Agreement shall not remove or waive, as between Borrower and Lender,
any default that may occur or occurred under this Agreement by virtue of such
default by Borrower under such Operating Lease or by Borrower or Operating
Company under such Management Agreement. All out-of-pocket sums reasonably
expended by Lender to cure any such default shall be paid by Borrower to Lender,
upon demand, with interest on such sum at the rate set forth in this Agreement
from the date such sum is expended to and including the date the reimbursement
payment is made to Lender. All such indebtedness shall be deemed to be secured
by the Mortgage.

(n) Borrower shall notify Lender promptly in writing of (i) the occurrence, to
Borrower’s knowledge, of any material default by any party to any Operating
Lease, any Operating Lease Guaranty or any Management Agreement, (ii) the
occurrence, to Borrower’s knowledge, of any event that, with the passage of time
or service of notice, or both, would constitute a material default by any party
under any Operating Lease, any Operating Lease Guaranty or any Management
Agreement, and (iii) the receipt by Borrower or its Affiliate of any notice
(written or otherwise) from any party under any Operating Lease, any Operating
Lease Guaranty or any Management Agreement noting or claiming the occurrence of
any material default by Borrower under such Operating Lease, such Operating
Lease Guaranty or any such Management Agreement.

(o) Borrower shall (subject to any applicable Legal Requirements) promptly
execute, acknowledge and deliver to Lender such instruments as may reasonably be
required to permit Lender to cure any material default under any Operating Lease
or any Management Agreement or to permit Lender to take such other action
required to enable Lender to cure or remedy the matter in default and preserve
the value of the security interest of Lender under the Loan Documents with
respect to each of the Properties. Upon the occurrence and during the
continuance of an Event of Default, Borrower irrevocably appoints Lender as its
true and lawful attorney-in-fact to do, in its name or otherwise, any and all
acts and to execute any and all documents that are necessary to preserve any
rights of Borrower under or with respect to any Operating Lease or any rights of
Borrower or Operating Company under any Management Agreement, including, without
limitation, the right to effectuate any extension or renewal of any Operating
Lease or any Management Agreement, or to preserve any rights of Borrower
whatsoever in respect of any part of any Operating Lease or any rights of
Borrower or Operating Company whatsoever in respect of any part of any
Management Agreement (and the above powers granted to Lender are coupled with an
interest and shall be irrevocable). Notwithstanding the foregoing appointment,
Lender assumes no duty or obligation, and shall have no duty or obligation, to
take or refrain from taking any actions and/or to preserve any of the rights of
any Borrower or Operating Company with respect to the Operating Leases and
Management Agreements.

(p) With respect to any Operating Lease, any Operating Lease Guaranty or any
Management Agreement, Borrower shall, from time to time, upon ten (10) Business
Days’ prior written request from Lender, execute, acknowledge and deliver to
Lender, a statement containing the following: (A) a statement that such
Operating Lease, such Operating Lease

 

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Guaranty or such Management Agreement is unmodified and in full force and effect
or, if there have been modifications, that the Operating Lease, the Operating
Lease Guaranty or the Management Agreement is in full force and effect as
modified and setting forth such modifications, (B) a statement that no Borrower
is in default under any Operating Lease beyond any applicable grace, cure or
notice period or, if any such default shall exist thereunder, a description of
such default and the steps being taken to cure such default and that no
Operating Company is in default under any Operating Lease beyond any applicable
grace, cure or notice period or, if any such default shall exist thereunder, a
description of such default and the steps being taken to cure such default,
(C) a statement that, to Borrower’s knowledge, the other party thereto is not in
default thereunder beyond any applicable grace, cure or notice period or, if any
such default shall exist thereunder, a description of such default and the steps
being taken to cure such default and (D) such other information with respect to
the Operating Leases, the Operating Lease Guarantees or the Management
Agreements as Lender shall reasonably request.

(q) With respect to any Operating Lease or Management Agreement, Borrower shall,
from time to time, upon ten (10) Business Days of Lender’s prior written request
from Lender, provide Lender with a statement from each Operating Company or
Manager (as applicable) containing the following: (A) a statement that such
Operating Lease or Management Agreement (as applicable) is unmodified and in
full force and effect or, if there have been modifications, that the Operating
Lease or Management Agreement (as applicable) is in full force and effect as
modified and setting forth such modifications, (B) a statement that the
Operating Company or Manager (as applicable) is not in default thereunder beyond
any applicable grace, cure or notice period or, if any such default shall exist
thereunder, a description of such default and the steps being taken to cure such
default, (C) a statement that, to Operating Company’s knowledge or Manager’s
knowledge, as the case may be, the Borrower is not in default thereunder beyond
any applicable grace, cure or notice period or, if any such default shall exist
thereunder, a description of such default and the steps being taken to cure such
default and (D) such other information with respect to any Operating Company,
any Operating Lease, any Operating Lease Guaranty, any Manager or any Management
Agreement as Lender shall reasonably request.

(r) With respect to any Operating Lease Guaranty, Borrower shall, from time to
time, upon ten (10) Business Days of Lender’s prior written request from Lender,
provide Lender with a statement from Guarantor (Operating Lease) containing the
following: (A) a statement that such Operating Lease Guaranty is unmodified and
in full force and effect or, if there have been modifications, that the
Operating Lease Guaranty is in full force and effect as modified and setting
forth such modifications; (B) a statement that Guarantor (Operating Lease) is
not in default thereunder beyond any applicable grace, cure or notice period or,
if any such default shall exist thereunder, a description of such default and
the steps being taken to cure such default and (C) such other information with
respect to Guarantor (Operating Lease) and/or Operating Lease Guaranty as Lender
shall reasonably request.

(s) (i) Each Operating Lease and any and all rights and interests (whether
choate or inchoate and including, without limitation, all mechanic’s and
materialmen’s liens under applicable law) owed, claimed or held, by any
Operating Company thereunder or otherwise are and shall be in all respects
subordinate and inferior to the liens and security

 

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interests created, or to be created, for the benefit of Lender, and securing the
repayment of the Note and the performance of the obligations under the Loan
Agreement and the other Loan Documents.

(ii) Upon the occurrence of an Event of Default under the Loan Documents,
Operating Company shall, at the request of Lender, continue to perform all of
Operating Company’s obligations under the terms of the Operating Leases.
Further, upon and after foreclosure, deed in lieu of foreclosure or other
similar transfer of any of the Properties to Lender, its designee or nominee,
Operating Company shall not exercise any right to terminate the Operating Lease
other than due to any default or breach by Lender, its designee or nominee first
occurring thereafter pursuant to the terms of the Operating Lease and, at the
request of Lender, shall continue to operate and manage or cause to be managed
any one or more of the Properties and maintain all applicable Gaming Licenses
with respect thereto, either in accordance with the terms of the Operating Lease
or pursuant to a replacement operating lease in form and substance reasonably
acceptable to Lender provided that (1) to the extent such continued operation is
conducted pursuant to the Operating Lease, Operating Company shall be obligated
to pay the rental rate specified therein, and (2) all other terms and
arrangements shall be usual and customary for similar properties in similar
locations as such Individual Property and, to the extent required under
applicable Gaming Laws, subject to the prior review and/or approval of the
Gaming Authorities.

(iii) Notwithstanding the foregoing or any provision hereof or of any of the
Loan Documents to the contrary, at any time after foreclosure, deed in lieu of
foreclosure or other similar transfer of any Individual Property to Lender, its
designee or nominee, at the option of Lender exercised by written notice to any
Operating Company, Lender, its designee or nominee shall have the right to
terminate any Operating Lease with an Operating Company (and, upon any
termination of an Operating Lease, the applicable Management Agreement shall
automatically terminate), without penalty or termination fee (except that such
Operating Company and Manager shall be entitled to receive any unpaid amounts
that relate to the period prior to such termination) and, in connection with the
foregoing, such Operating Company shall transfer its responsibility for the
management of the applicable Individual Property to another operator selected by
Lender.

(t) Upon the occurrence and during the continuance of an Event of Default under
the Loan Documents, Lender shall have the sole and absolute right to terminate
the Management Agreements pursuant to the terms thereof, in which event Manager
shall transfer pursuant to the terms of the Management Agreement its
responsibility for the management of the applicable Individual Property to
another manager selected by Lender. In the event Lender elects to keep Manager
following the occurrence of an Event of Default, Manager shall continue to
perform all of Manager’s obligations under the terms of the Management
Agreements and Manager shall not, and shall not be entitled to, exercise any
right to terminate the Management Agreements other than pursuant to the terms
thereof.

(u) The Borrower and Lender understand and agree that the fees paid to each
Manager under each Management Agreement (including all management base fees and
incentive fees, but other than reimbursables payable thereunder) shall be paid
on a monthly basis on each Payment Date after the effectiveness (in each case)
of each such Management

 

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Agreement (it being understood that, prior to the effectiveness of a Management
Agreement, the amounts that would have been paid to the Manager under such
Management Agreement (as described herein) will be retained by Operating Company
and will not be paid or payable to such Manager), in an aggregate amount equal
to the sum of (1) two percent (2%) of Revenue for all of the Properties in
respect of each fiscal month and (2) five percent (5%) of EBITDAM in respect of
such fiscal month; provided, however, that:

(i) to the extent EBITDAM is less than $500,000,000.00 (the “Performance
Threshold”) on a trailing twelve (12) month basis at the end of any fiscal
month, no management fee shall be payable for (and each Manager under each
Management Agreement shall waive any right to receive a management fee in
respect of, and each Operating Company shall waive any right to retain such
management fee prior to the effectiveness of any Management Agreement in respect
of) such fiscal month; provided, however, that (i) the aforesaid $500,000,000.00
amount shall be reduced, following the sale of any Individual Property other
than the Rio Las Vegas, by an amount equal to the product of $500,000,000.00
multiplied by the number (expressed as a percentage) equal to the Allocated Loan
Amount (as of the date hereof) of the Individual Property sold divided by the
sum of the Allocated Loan Amounts (as of the date hereof) for all of the
Properties subject to the Lien of the Mortgage on the date hereof and (ii) if
the Rio Las Vegas is sold pursuant to and in accordance with the terms of this
Agreement, then the amount of the Performance Threshold (for purposes of
determining whether a management fee is payable as described in the immediately
preceding clause) shall be permanently reduced in an amount equal to (A) the
principal amount of the Loans and the Mezzanine Loans reduced with the Net Sales
Proceeds from such sale in accordance with this Agreement and the Note Sales
Agreement, divided by (B) the Pre-Rio Leverage Ratio. The reduction of the
Performance Threshold will be calculated promptly following the use of 100% of
the Net Sales Proceeds to reduce the Loans and the Mezzanine Loans in accordance
with this Agreement and the Note Sales Agreement;

(ii) notwithstanding the manner in which the management fee is computed (in
accordance with the first sentence of this paragraph (u)) and the provisions of
the immediately preceding subparagraph (i), unless a Rio Leverage Event has
occurred and is continuing, for each of the first full twenty-four (24) calendar
months occurring after the date hereof, the monthly management fee payable under
all of the Management Agreements (in the aggregate) in respect of each such
month (taken together with all amounts retained by Operating Company and not
paid or payable to a Manager by virtue of one or more Management Agreements not
being effective, in any such month) shall be no less than $3,125,000.00 (which
amount shall be reduced, following the sale of any Individual Property other
than the Rio Las Vegas, by an amount equal to the product of $3,125,000.00
multiplied by the number (expressed as a percentage) equal to the Allocated Loan
Amount (as of the date hereof) of the Individual Property sold during such
twenty-four (24) month period divided by the sum of the Allocated Loan Amounts
(as of the date hereof) for all of the Properties subject to the Lien of the
Mortgage on the date hereof); provided, however, that, for the period from the
Closing Date to and including the first anniversary of the Closing Date and for
the period from the first anniversary of the Closing Date to and including the
second anniversary of the Closing Date, no fees shall be paid under any
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(12) month period following the date on which, during the applicable twelve
(12) month period, the fees that have been paid under all of the Management
Agreements (including those retained by Operating Companies, in the aggregate)
are in an aggregate amount equal to $37,500,000.00 unless and until the date
(during such twelve (12) month period) on which the sum of (1) two percent
(2%) of Revenue for all of the Properties in respect of such twelve (12) month
period and (2) five percent (5%) of EBITDAM for all of the Properties in respect
of such twelve (12) month period equals or exceeds $37,500,000.00 (which amount
in this proviso shall be reduced, following the sale of any Individual Property
other than the Rio Las Vegas, by an amount equal to the product of
$37,500,000.00 multiplied by the number (expressed as a percentage) equal to the
Allocated Loan Amount (as of the date hereof) of the Individual Property sold
during such twenty-four (24) month period divided by the sum of the Allocated
Loan Amounts (as of the date hereof) for all of the Properties subject to the
Lien of the Mortgage on the date hereof); and

(iii) notwithstanding the manner in which the management fee is computed (in
accordance with the first sentence of this paragraph (u)) and the provisions of
the immediately preceding subparagraphs (i) and (ii), if a Rio Leverage Event
has occurred and is continuing, then for each month following a sale of the Rio
Las Vegas while the Rio Leverage Event is in effect, the maximum aggregate
monthly management fee for all of the Properties permitted to be paid to Manager
(taken together with all amounts retained by Operating Company and not paid or
payable to a Manager by virtue of one or more Management Agreements not being
effective, in any such month), shall not exceed $3,125,000.00 (which amount
shall be reduced, following the sale of any Individual Property other than the
Rio Las Vegas, by an amount equal to the product of $3,125,000.00 multiplied by
the number (expressed as a percentage) equal to the Allocated Loan Amount (as of
the date hereof) of the Individual Property(ies) sold divided by the sum of the
Allocated Loan Amounts (as of the date hereof) for all of the Properties subject
to the Lien of the Mortgage on the date hereof).

It is understood that, prior to the effectiveness of the Management Agreement,
amounts retained by Operating Company and not paid or payable to Manager
pursuant to this Section 5.1.22(u) will be retained by Operating Company free
and clear of any restrictions under this Agreement and the other Loan Documents
(except as and to the extent specifically provided in Section 2.6.2). In
addition, Borrower understands and agrees that if a Rio Leverage Event has
occurred and is continuing, for each month during the term of the Loan following
a sale of the Rio Las Vegas while the Rio Leverage Event is in effect, then on
each monthly Payment Date when the management fee is paid for such month (or,
prior to the effectiveness of a Management Agreement, would be paid), Borrower
shall deposit the positive difference, if any, between (1) the amount of the
management fees (in the aggregate) that would have been paid to Manager pursuant
to the Management Agreement as if no Rio Leverage Event was in effect (or, prior
to the effectiveness of the Management Agreement, retained by Operating Company
and not paid or payable to Manager) (in each case consistent with the first
sentence of this paragraph (u) and the provisions of Section 5.1.22(u)(i) and
(ii) above) and (2) the amount of the management fees (in the aggregate) that
are actually paid to Manager pursuant to the Management Agreement for such month
or, prior to the effectiveness of the Management Agreement, retained by
Operating Company (in each case consistent with the provisions of
Section 5.1.22(u)(iii) above) (such monthly amounts, collectively, the “Subject
Fees”) into the Blocked Account, which shall be applied subject to and in
accordance with the terms of this Agreement.

 

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Section 5.2. Negative Covenants. From the Original Closing Date until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Liens of all Mortgages in accordance with the
terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following (without, in each case, the prior written consent of Lender):

5.2.1. Operation of Property. (a) Borrower shall not, without Lender’s prior
consent: (i) surrender, terminate or cancel (or permit to be surrendered,
terminated or canceled) any of the Operating Leases (other than in connection
with a sale and release of an Individual Property permitted hereunder), or
exercise any remedies under any of the Operating Leases; (ii) reduce or consent
to the reduction of (or permit the reduction or the consent to the reduction) of
the term of any of the Operating Leases or any Operating Lease Guaranty;
(iii) decrease or consent to any decrease (or permit to be decreased or the
consent to the decrease) of the amount of any rent or other charges payable
under any of the Operating Leases; (iv) Transfer, convey, assign, sell,
mortgage, encumber, pledge, hypothecate, grant a security interest in, grant an
option or options with respect to, or otherwise dispose of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise,
whether or not for consideration) the Properties or any collateral for the Loan
(or permit Operating Company to do so), in each case without the prior written
consent of Lender or except as expressly permitted in Section 5.1.20 or
Section 5.2.10, or (v) otherwise modify, change, supplement, alter or amend, or
waive or release (or permit to be modified, changed, supplemented, altered,
amended, waived or released) any of the rights and remedies of Borrower or any
Operating Company under any of the Operating Leases in any material respect or
any Operating Lease Guaranty (provided that Lender shall not unreasonably
withhold its consent to any modification, change, supplement, alteration,
amendment, waiver or release of the Operating Lease as may be reasonably
necessary to comply with the requirements of this Agreement or any other Loan
Document).

(b) During the continuance of an Event of Default, Borrower shall not exercise
any rights, make any decisions, grant any approvals or otherwise take any action
under any Operating Lease, Operating Lease Guaranty or any Management Agreement
without, in each instance, the prior written consent of Lender, which consent
may be withheld in Lender’s sole discretion.

5.2.2. Liens/Indebtedness. (a) Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of any Individual Property or permit any
such action to be taken, except:

(i) Permitted Encumbrances;

(ii) Liens created by or permitted pursuant to the Loan Documents; and

(iii) Liens for Taxes or Other Charges not yet due.

 

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(b) No Borrower shall incur any Indebtedness other than the Loan and Permitted
Indebtedness. No Borrower shall permit any Operating Company to incur
Indebtedness in excess of or other than Permitted Indebtedness (Operating
Company).

(c) No Borrower or Operating Company shall enter into any Swap Agreements.

5.2.3. Dissolution. Borrower shall not, and shall not permit Operating Company
to, (a) engage in any dissolution, liquidation or consolidation or merger with
or into any other business entity, (b) engage in any business activity not
related to (i) in the case of Borrower, the ownership and operation of the
Properties and (ii) in the case of Operating Company, the leasing and operation
of the Properties, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify (in any material respect), amend (in any material
respect), waive or terminate its organizational documents or its qualification
and good standing in any jurisdiction or (e) cause Holdings to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result
of which Holdings would be dissolved, wound up or liquidated in whole or in
part, or (ii) amend (in any material respect), modify (in any material respect),
waive or terminate the certificate of incorporation or bylaws of the Holdings,
in each case, without obtaining the prior consent of Lender.

5.2.4. Change in Business. Borrower shall not enter into any line of business
other than the ownership and operation of the Properties and activities
reasonably ancillary thereto, or make any material change in the scope or nature
of its business objectives, purposes or operations, or undertake or participate
in activities other than the continuance of its present business.

5.2.5. Debt Cancellation. Borrower shall not, and shall not permit Operating
Company to, cancel or otherwise forgive or release any claim or debt (other than
termination of Leases in accordance herewith) owed to Borrower by any Person,
except for adequate consideration and in the ordinary course of Borrower’s
business.

5.2.6. Zoning. Borrower shall not, and shall not permit Operating Company to,
initiate or consent to any zoning reclassification of any portion of any
Individual Property or seek any variance under any existing zoning ordinance or
use or permit the use of any portion of any Individual Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Lender.

5.2.7. Intentionally Omitted.

5.2.8. Principal Place of Business and Organization. Borrower shall not, nor
shall Borrower permit Operating Company to, change the place of its organization
as set forth in Section 4.1.28 without the consent of Lender, which consent
shall not be unreasonably withheld. Upon Lender’s request, Borrower shall (and
shall cause Operating Company to) execute and deliver additional financing
statements, security agreements and other instruments which may be necessary to
effectively evidence or perfect Collateral Agent’s security interest in any of
the Properties as a result of such change of place of organization.

 

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5.2.9. ERISA. (a) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.

(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not an
“employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32)
of ERISA; (ii) Borrower is not subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans;
and (iii) one or more of the following circumstances is true:

(i) Equity interests in Borrower are publicly offered securities, within the
meaning of 29 C.F.R. § 2510.3-101(b)(2);

(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower is held by “benefit plan investors” within the meaning of
29 C.F.R. § 2510.3-101(f)(2); or

(iii) Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R. § 2510.3-101(c) or (e).

5.2.10. Transfers. (a) Without the prior consent of Lender and except to the
extent otherwise set forth in this Section 5.2.10 or in connection with Leases
contemplated by Section 5.1.20, releases or conveyances contemplated by
Section 2.5 or in respect of Ordinary Course Dispositions, Borrower shall not,
and shall not permit any other Person holding any direct or indirect legal,
economic, beneficial or other ownership interest in Borrower or one or more of
the Properties to, (1) Transfer all or any part of one or more of the
Properties, (2) permit any Transfer (directly or indirectly) of any direct or
indirect interest in Borrower, or (3) permit any Transfer (directly or
indirectly) of any direct or indirect interest in Operating Company or any
transfer or assignment or subletting (of all or substantially of any Individual
Property) by any Operating Company under any Operating Lease.

(b) A Transfer of (but not a mortgage, pledge, hypothecation, encumbrance or
grant of a security interest in) an indirect beneficial interest in Borrower
consisting of ownership interests in or at any level above the level of Ninth
Mezzanine Borrower shall be permitted without Lender’s consent (but subject to
the last sentence of Section 5.2.10(d)), provided that (i) immediately prior to
such Transfer, no Event of Default shall have occurred and be continuing,
(ii) Borrower is at all times Controlled and at least fifty percent (50%) owned
(directly or indirectly) by Qualified Transferees, (iii) subsequent to such
Transfer, Borrower will continue to be a Special Purpose Entity, (iv) if
(1) such Transfer causes the Transferee to own, in the aggregate with the
ownership interests of its Affiliates, more than a forty nine percent
(49%) interest in Borrower (and the Transferee (together with the ownership

 

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interests of its Affiliates) did not, prior to such Transfer, own more than a
forty nine percent (49%) interest in Borrower), or (2) such Transfer, together
with all other Transfers by Borrower, whether in a single Transfer or in a
series of Transfers and whether or not effected simultaneously, results in a
Transfer of more than forty nine percent (49%) of the aggregate interests in
Borrower, then, if required by applicable Rating Agency requirements, an
acceptable non-consolidation opinion is delivered to the holder of the Loan and
to each of the Rating Agencies concerning, as applicable, Borrower, the new
Transferee and/or their respective owners, and (v) subsequent to such Transfer,
the beneficial ownership of Borrower and Operating Company will be substantially
identical. For purposes hereof, Control shall not be deemed absent solely
because other parties have veto rights with respect to major decisions. Further,
a Change in Control shall be deemed a Transfer hereunder and, unless clauses
(ii) through (v) of this Section 5.2.10(b) shall be satisfied, the same shall be
an Event of Default hereunder (and for the sake of clarity, nothing else
contained in this Section 5.2.10 or this Agreement shall be deemed to limit or
qualify the above terms of this sentence).

(c) A Transfer of (but not a mortgage, pledge, hypothecation, encumbrance or
grant of a security interest in) a direct or indirect beneficial interest in
Operating Company shall be permitted without Lender’s consent (but subject to
the last sentence of Section 5.2.10(d)), provided that (i) immediately prior to
such Transfer, no Event of Default shall have occurred and be continuing,
(ii) Operating Company is at all times Controlled and at least fifty percent
(50%) owned (directly or indirectly) by Qualified Transferees, and
(iii) subsequent to such Transfer, the beneficial ownership of Borrower and
Operating Company will be substantially identical. For purposes hereof, Control
shall not be deemed absent solely because other parties have veto rights with
respect to major decisions.

(d) In the event that a permitted Transfer of more than a forty nine percent
(49%) interest in Borrower is made pursuant to this Section 5.2.10, at
Borrower’s request, Lender shall release Guarantor from (i) the obligations and
liabilities under any Guaranty for obligations and liabilities that occurred
subsequent to such Transfer, provided that a replacement guarantor(s) reasonably
satisfactory to Lender shall have executed and delivered to Lender replacement
guarantees in form and substance substantially similar to the applicable
Guaranty, pursuant to which such replacement guarantor(s) expressly assumes all
of Guarantor’s obligations under the applicable Guaranty for obligations and
liabilities arising from and after the date of such Transfer, and (ii) the
obligations and liabilities under any Guaranty for obligations and liabilities
that occurred either prior or subsequent to such Transfer, provided that a
replacement guarantor(s) reasonably satisfactory to Lender shall have executed
and delivered to Lender replacement guarantees in form and substance
substantially similar to the applicable Guaranty, pursuant to which such
replacement guarantor(s) expressly assumes all of Guarantor’s obligations under
the applicable Guaranty, including those which occurred prior to the Transfer.
Notwithstanding the foregoing or anything else that may be construed to the
contrary, in no event may Borrower effect a Transfer, or permit or suffer any
Transfer, that would result in any loss or impairment of any Gaming License or
in any similar event that would have an Individual Property Material Adverse
Effect or Aggregate Property Material Adverse Effect.

 

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(e) Notwithstanding the foregoing or anything herein to the contrary, but
subject to the final sentence of Section 5.2.10(d), nothing contained in this
Agreement or the other Loan Documents shall in any way restrict or prohibit, nor
shall any notice to Lender or consent of Lender or Rating Agency Confirmation be
required in connection with the Transfer or issuance in the ordinary course of
any securities in any Person whose securities are publicly traded on a national
exchange (except to the extent that the same would cause a Change in Control) or
with an initial public offering of securities issued by Holdings or of
subsidiary of Holdings (other than the Borrower and any Mezzanine Borrower
(provided that, in the case of an issuance by a subsidiary, such issuance would
not cause a Change of Control)).

(f) Assumptions of the Loan shall be permitted, provided that the following
conditions are satisfied and/or occur to Lender’s satisfaction:

(i) an assumption of this Agreement, the Note, the Mortgages and the other Loan
Documents as so modified by the proposed transferee, subject to the provisions
of Section 9.2 hereof;

(ii) payment of all of reasonable out-of-pocket costs and expenses incurred in
connection with such Transfer including, without limitation, the cost of any
legal fees and expenses, Rating Agency fees and expenses or required legal
opinions;

(iii) the payment of a non-refundable assumption fee equal to Lender’s Share of
One Million and No/100 Dollars ($1,000,000) per transaction (effecting an
assumption of the Loan) or series of related transactions (effected to implement
an assumption of the Loan);

(iv) the delivery of an Additional Insolvency Opinion reflecting the proposed
transfer satisfactory in form and substance to Lender; and the delivery of an
Additional True Lease Opinion in form and substance satisfactory to Lender;

(v) the proposed Transferee being Controlled and at least 50% owned, directly or
indirectly, by one or more Qualified Transferees;

(vi) the Operating Company being Controlled and at least 50% owned, directly or
indirectly, by one or more Qualified Transferees, having sufficient experience
(or having a manager that has sufficient experience) in the operation and
management of properties similar to the Properties, and such Operating Company
not having materially less than the same level of experience in the operation of
properties similar to the Properties as the current Operating Company under the
Operating Lease and, in each case, Lender shall be provided with reasonable
evidence thereof (and Lender reserves the right to approve the Transferee(s)
without approving the substitution of the Operating Company) and the operating
tenant shall be either the Operating Company or, if permitted by applicable
Legal Requirements, another operator acceptable to Lender; provided that so long
as the Operating Lease is in force and effect and the current Operating Company
shall continue to be the tenant thereunder and owned and Controlled by the same
Person(s) that currently own and Control the Operating Company, the condition
with respect to the Operating Company set forth in this subclause (vi) shall be
deemed to have been met in all respects;

 

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(vii) the delivery of evidence reasonably satisfactory to Lender that the single
purpose nature and bankruptcy remoteness of Borrower, its shareholders, partners
or members, as the case may be, following such transfers are in accordance with
the then current standards of Lender and the Rating Agencies; and the
Transferee(s)’ continued compliance with the representations and covenants set
forth in Section 4.1.30 and Section 5.2.9 hereof;

(viii) Borrower’s delivery to Lender of evidence reasonably satisfactory to
Lender of any required approval or consent of any Governmental Authority,
including the Gaming Authorities, that has direct or indirect authority or
oversight over Borrower, the Properties, Manager, Operating Company or the
operations conducted at the Properties to the change in ownership and/or
operator of the Properties (or any part thereof);

(ix) prior to any release of the Guarantor, a substitute guarantor reasonably
acceptable to Lender shall have assumed all of the obligations of the Guarantor
under the Guaranty (FF&E), the Guaranty (Recourse Carveouts), the Operating
Lease Guaranty, any completion guaranty provided under Section 5.1.21 and the
Environmental Indemnity or executed replacement guaranties and an environmental
indemnity reasonably satisfactory to Lender;

(x) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the Transferee similar to the interests in Borrower owned by
the First Mezzanine Borrower (1) shall assume the First Mezzanine Loan and all
the agreements of First Mezzanine Borrower under the First Mezzanine Loan
Documents (and without limiting the foregoing, all of the ownership interests in
the New Mortgage Borrower, all payments thereon and all proceeds thereof shall
be pledged to First Mezzanine Lender on terms no less favorable than the pledge
of the Collateral under the applicable Pledge Agreement), (2) shall each be a
bankruptcy-remote single purpose entity, and (3) shall otherwise have a legal,
financial and ownership structure that is (a) substantially the same as the
First Mezzanine Borrower or (b) at least as favorable to the First Mezzanine
Lender, as determined by the First Mezzanine Lender in its reasonable
discretion, as the legal, financial and ownership structure of First Mezzanine
Borrower;

(xi) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in First Mezzanine
Borrower owned by the Second Mezzanine Borrower (1) shall assume the Second
Mezzanine Loan (if still outstanding) and all the agreements of Second Mezzanine
Borrower under the Second Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership interests in First Mezzanine Borrower, all
payments thereon and all proceeds thereof shall be pledged to Second Mezzanine
Lender on terms no less favorable than the pledge of the Collateral under the
applicable Pledge Agreement), (2) shall each be a bankruptcy-remote single
purpose entity, and (3) shall otherwise have a legal, financial and ownership
structure that is (a) substantially the same as the Second Mezzanine Borrower or
(b) at least as favorable to the Second Mezzanine Lender, as determined by the
Second Mezzanine Lender in its reasonable discretion, as the legal, financial
and ownership structure of Second Mezzanine Borrower;

 

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(xii) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Second Mezzanine
Borrower owned by the Third Mezzanine Borrower (1) shall assume the Third
Mezzanine Loan (if still outstanding) and all the agreements of Third Mezzanine
Borrower under the Third Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership interests in Second Mezzanine Borrower, all
payments thereon and all proceeds thereof shall be pledged to Third Mezzanine
Lender on terms no less favorable than the pledge of the Collateral under the
applicable Pledge Agreement), (2) shall each be a bankruptcy-remote single
purpose entity, and (3) shall otherwise have a legal, financial and ownership
structure that is (a) substantially the same as the Third Mezzanine Borrower or
(b) at least as favorable to the Third Mezzanine Lender, as determined by the
Third Mezzanine Lender in its reasonable discretion, as the legal, financial and
ownership structure of Third Mezzanine Borrower;

(xiii) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Third Mezzanine
Borrower owned by the Fourth Mezzanine Borrower (1) shall assume the Fourth
Mezzanine Loan (if still outstanding) and all the agreements of Fourth Mezzanine
Borrower under the Fourth Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership interests in Third Mezzanine Borrower, all
payments thereon and all proceeds thereof shall be pledged to Fourth Mezzanine
Lender on terms no less favorable than the pledge of the Collateral under the
applicable Pledge Agreement), (2) shall each be a bankruptcy-remote single
purpose entity, and (3) shall otherwise have a legal, financial and ownership
structure that is (a) substantially the same as the Fourth Mezzanine Borrower or
(b) at least as favorable to the Fourth Mezzanine Lender, as determined by the
Fourth Mezzanine Lender in its reasonable discretion, as the legal, financial
and ownership structure of Fourth Mezzanine Borrower;

(xiv) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Fourth Mezzanine
Borrower owned by the Fifth Mezzanine Borrower (1) shall assume the Fifth
Mezzanine Loan (if still outstanding) and all the agreements of Fifth Mezzanine
Borrower under the Fifth Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership interests in Fourth Mezzanine Borrower, all
payments thereon and all proceeds thereof shall be pledged to Fifth Mezzanine
Lender on terms no less favorable than the pledge of the Collateral under the
applicable Pledge Agreement), (2) shall each be a bankruptcy-remote single
purpose entity, and (3) shall otherwise have a legal, financial and ownership
structure that is (a) substantially the same as the Fifth Mezzanine Borrower or
(b) at least as favorable to the Fifth Mezzanine Lender, as determined by the
Fifth Mezzanine Lender in its reasonable discretion, as the legal, financial and
ownership structure of Fifth Mezzanine Borrower;

(xv) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Fifth Mezzanine
Borrower owned by the Sixth Mezzanine Borrower (1) shall assume the Sixth
Mezzanine Loan (if still outstanding) and all the agreements of Sixth Mezzanine
Borrower under the Sixth Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership

 

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interests in Fifth Mezzanine Borrower, all payments thereon and all proceeds
thereof shall be pledged to Sixth Mezzanine Lender on terms no less favorable
than the pledge of the Collateral under the applicable Pledge Agreement),
(2) shall each be a bankruptcy-remote single purpose entity, and (3) shall
otherwise have a legal, financial and ownership structure that is
(a) substantially the same as the Sixth Mezzanine Borrower or (b) at least as
favorable to the Sixth Mezzanine Lender, as determined by the Sixth Mezzanine
Lender in its reasonable discretion, as the legal, financial and ownership
structure of Sixth Mezzanine Borrower;

(xvi) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Sixth Mezzanine
Borrower owned by the Seventh Mezzanine Borrower (1) shall assume the Seventh
Mezzanine Loan (if still outstanding) and all the agreements of Seventh
Mezzanine Borrower under the Seventh Mezzanine Loan Documents (and without
limiting the foregoing, all of the ownership interests in Sixth Mezzanine
Borrower, all payments thereon and all proceeds thereof shall be pledged to
Seventh Mezzanine Lender on terms no less favorable than the pledge of the
Collateral under the applicable Pledge Agreement), (2) shall each be a
bankruptcy-remote single purpose entity, and (3) shall otherwise have a legal,
financial and ownership structure that is (a) substantially the same as the
Seventh Mezzanine Borrower or (b) at least as favorable to the Seventh Mezzanine
Lender, as determined by the Seventh Mezzanine Lender in its reasonable
discretion, as the legal, financial and ownership structure of Seventh Mezzanine
Borrower;

(xvii) receipt of evidence satisfactory to Lender that all of the entities which
own interests in the transferee similar to the interests in Seventh Mezzanine
Borrower owned by the Eighth Mezzanine Borrower (1) shall assume the Eighth
Mezzanine Loan (if still outstanding) and all the agreements of Eighth Mezzanine
Borrower under the Eighth Mezzanine Loan Documents (and without limiting the
foregoing, all of the ownership interests in Seventh Mezzanine Borrower, all
payments thereon and all proceeds thereof shall be pledged to Eighth Mezzanine
Lender on terms no less favorable than the pledge of the Collateral under the
applicable Pledge Agreement), (2) shall each be a bankruptcy-remote single
purpose entity, and (3) shall otherwise have a legal, financial and ownership
structure that is (a) substantially the same as the Eighth Mezzanine Borrower or
(b) at least as favorable to the Eighth Mezzanine Lender, as determined by the
Eighth Mezzanine Lender in its reasonable discretion, as the legal, financial
and ownership structure of Eighth Mezzanine Borrower;

(xviii) receipt of evidence satisfactory to Lender that all of the entities
which own interests in the transferee similar to the interests in Eighth
Mezzanine Borrower owned by the Ninth Mezzanine Borrower (1) shall assume the
Ninth Mezzanine Loan (if still outstanding) and all the agreements of Ninth
Mezzanine Borrower under the Ninth Mezzanine Loan Documents (and without
limiting the foregoing, all of the ownership interests in Eighth Mezzanine
Borrower, all payments thereon and all proceeds thereof shall be pledged to
Ninth Mezzanine Lender on terms no less favorable than the pledge of the
Collateral under the applicable Pledge Agreement), (2) shall each be a
bankruptcy-remote single purpose entity, and (3) shall otherwise have a legal,
financial and ownership structure that is (a) substantially the same as the
Ninth Mezzanine Borrower or

 

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(b) at least as favorable to the Ninth Mezzanine Lender, as determined by the
Ninth Mezzanine Lender in its reasonable discretion, as the legal, financial and
ownership structure of Ninth Mezzanine Borrower;

(xix) a written consent to the transfer from each Mezzanine Lender or receipt by
Lender of other evidence satisfactory to Lender that all conditions imposed
under the terms of each Mezzanine Loan shall have been complied with by the
borrower thereunder or otherwise waived by the applicable Mezzanine Lender; and

(xx) subsequent to such assumption of the Loan, the beneficial ownership of
Borrower and Operating Company will be substantially identical.

(g) Restrictions on Transfers set forth herein or in the Mortgage shall not
apply to (i) the pledge by First Mezzanine Borrower of the ownership interests
in Borrower as security for the First Mezzanine Loan pursuant to the First
Mezzanine Loan Agreement, (ii) the pledge by Second Mezzanine Borrower of the
ownership interests in First Mezzanine Borrower as security for the Second
Mezzanine Loan pursuant to the Second Mezzanine Loan Agreement, (iii) the pledge
by Third Mezzanine Borrower of the ownership interests in Second Mezzanine
Borrower as security for the Third Mezzanine Loan pursuant to the Third
Mezzanine Loan Agreement, (iv) the pledge by Fourth Mezzanine Borrower of the
ownership interests in Third Mezzanine Borrower as security for the Fourth
Mezzanine Loan pursuant to the Fourth Mezzanine Loan Agreement, (v) the pledge
by Fifth Mezzanine Borrower of the ownership interests in Fourth Mezzanine
Borrower as security for the Fifth Mezzanine Loan pursuant to the Fifth
Mezzanine Loan Agreement, (vi) the pledge by Sixth Mezzanine Borrower of the
ownership interests in Fifth Mezzanine Borrower as security for the Sixth
Mezzanine Loan pursuant to the Sixth Mezzanine Loan Agreement, (vii) the pledge
by Seventh Mezzanine Borrower of the ownership interests in Sixth Mezzanine
Borrower as security for the Seventh Mezzanine Loan pursuant to the Seventh
Mezzanine Loan Agreement, (viii) the pledge by Eighth Mezzanine Borrower of the
ownership interests in Seventh Mezzanine Borrower as security for the Eighth
Mezzanine Loan pursuant to the Eighth Mezzanine Loan Agreement, (ix) the pledge
by Ninth Mezzanine Borrower of the ownership interests in Eighth Mezzanine
Borrower as security for the Ninth Mezzanine Loan pursuant to the Ninth
Mezzanine Loan Agreement, or (x) the Transfer or pledge of any direct or
indirect interest in Holdings, provided that no Change in Control shall occur.

(h) Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Transfer without Lender’s consent. This
provision shall apply to every Transfer regardless of whether voluntary or not,
or whether or not Lender has consented to any previous Transfer.

 

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Notwithstanding the foregoing, Transfers in connection with the dispositions of
assets described in clauses (i) and (iii) through (v) below (collectively,
“Ordinary Course Dispositions”) shall be permitted by any Person other than
Borrower or any Mezzanine Borrower (and, in the case of Transfers described in
clause (ii) below, shall be permitted by any Person including Borrower and
Mezzanine Borrowers):

(i) (i) the purchase and sale of inventory, in each case in the ordinary course
of business, (ii) the acquisition or lease (pursuant to an operating lease) of
any other asset in the ordinary course of business or, with respect to operating
leases (other than Operating Leases), otherwise for fair market value on market
terms (as determined in good faith by the Operating Company), (iii) the sale of
surplus, obsolete, damaged or worn out equipment or other property in the
ordinary course of business, or (iv) the sale or disposition of Permitted
Investments in the ordinary course of business;

(ii) dividends and distributions of cash and cash equivalents not otherwise
restricted hereunder;

(iii) the sale of defaulted receivables without recourse in the ordinary course
of business and not as part of an accounts receivables financing transaction;

(iv) leases, licenses, or subleases or sublicenses of any real or personal
property made in the ordinary course of business and in compliance with
Section 5.1.20; and

(v) sales, leases or other dispositions of inventory determined by management to
be no longer useful or necessary in the operation of the business.

Section 5.3. General. For avoidance of doubt, all requirements contained in this
Article V with respect to the Operating Company shall mean that it shall be a
Default or Event of Default hereunder if Operating Company fails to perform in
the specified manner, but Lender acknowledges that Operating Company is not a
party to this Agreement and that Borrower does not control Operating Company.

VI. INSURANCE; CASUALTY; CONDEMNATION

Section 6.1. Insurance. (a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Properties providing at least the
following coverages:

(i) comprehensive all risk insurance on the Improvements and the Insured
Personal Property, contingent liability from Operation of Building Laws,
Demolition Costs and Increased Cost of Construction Endorsements, in each case
(A) in an amount equal to one hundred percent (100%) of the “Full Replacement
Cost,” which for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation, but the amount shall in no event be
less than the outstanding principal balance of the Loan; (B) containing an
agreed amount endorsement with respect to the Improvements and Insured Personal
Property waiving all co-insurance provisions; (C) providing for no deductible in
excess of Five Million and No/100 Dollars ($5,000,000.00) per occurrence in
respect of physical damage plus two days in respect of Business Interruption
combined, except in respect of terrorism coverage, where the deductible may be
up to $10,000,000 per occurrence, in respect of earthquake coverage, where the
deductible may be up to $50,000,000 per occurrence for all insured locations in
Nevada and $25,000,000

 

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per occurrence for all other insured locations, named storm coverage (including
flood as a result of named storm), where the deductible may be up to $50,000,000
per occurrence for all insured locations in New Jersey and $10,000,000 per
occurrence for all other insured locations; or, if greater, in respect of
terrorism, earthquake, named storm (including flood as a result of named storm)
insurance, 5% of the total insured value per insured location per occurrence for
all such insurance coverage; and (D) containing an “Ordinance or Law Coverage”
or “Enforcement” endorsement in amounts as reasonably required by Lender if any
of the Improvements or the use of the Individual Property shall at any time
constitute legal non-conforming structures or uses. In addition, Borrower shall
obtain: (w) terrorism insurance in amounts equal to the lesser of (1) the
outstanding aggregate principal balance of the Loan and the Mezzanine Loans or
(2) $1,500,000,000, to the extent available for a premium not in excess of the
Terrorism Premium Limit, (x) if any portion of the Improvements is currently or
at any time in the future located in a federally designated “special flood
hazard area”, flood hazard insurance in an amount equal to the lesser of (1) the
outstanding aggregate principal balance of the Loan and the Mezzanine Loans or
(2) $250,000,000.00 per occurrence and in the aggregate; (y) earthquake
insurance in amounts equal to the lesser of (1) the outstanding aggregate
principal balance of the Loan and the Mezzanine Loans or (2) $250,000,000 per
occurrence and in the aggregate or such other reasonable amount as Lender shall
require and in form and substance satisfactory to Lender in the event the
Individual Property is located in an area with a high degree of seismic
activity; and (z) coastal windstorm insurance in form and substance satisfactory
to Lender in the event the Individual Property is located in any coastal region,
in an amount equal to the lesser of (1) the outstanding aggregate principal
balance of the Loan and the Mezzanine Loans or (2) $750,000,000.00 per
occurrence on a blanket policy basis for all of the insured locations or
(3) such other reasonable amount as Lender shall require; it being understood
and agreed that coverage is being provided under a blanket policy and on a per
occurrence limitation for all insured locations as defined under the policy
which includes those collateralized under this agreement, as well as other
locations and exposures. In addition to the foregoing, with respect to the flood
and coastal windstorm coverages required pursuant to the above, Borrower shall
cause the execution and delivery, by each current and future owner of any
property located in the Atlantic City, New Jersey area insured under the policy
insuring one or more of the Properties and each current and future creditor
(other than any Initial Lender) which has a security interest in, or any other
loss payee of, the proceeds of any such policy, of the Windstorm Insurance
Intercreditor Agreement requiring application of any proceeds from such
coverages to the repayment and/or restoration of the Properties (in accordance
herewith) subject to the Lien of the Mortgages at the time in question prior to
any other application and shall use commercially reasonable efforts to cause
each of the insurance companies providing such coverage to make such payment
directly to Lender for application as aforesaid. Except as specifically provided
in subclauses (w), (x), (y) and (z) of the preceding sentence, the insurance
required pursuant to such subclauses (w), (x), (y) and (z) hereof shall
otherwise be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i);

 

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(ii) commercial general liability insurance (including liquor law liability)
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Individual Property, such insurance (A) to be on
the so-called “occurrence” form with a combined limit of not less than Two
Million and No/100 Dollars ($2,000,000) in the aggregate and One Million and
No/100 Dollars ($1,000,000) per occurrence (and, if on a blanket policy,
containing an “Aggregate Per Location” endorsement); (B) to continue at not less
than the aforesaid limit until required to be changed by Lender in writing by
reason of changed economic conditions making such protection inadequate; (C) to
cover at least the following hazards: (1) premises and operations; (2) products
and completed operations on an “if any” basis; (3) independent contractors;
(4) blanket contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 8 of the Mortgages to
the extent the same is available; and (D) with deductions and self-insured
retentions reasonably acceptable to Lender.

(iii) business income insurance on an actual loss sustained basis for the period
of restoration (A) with loss payable to Lender; (B) covering all risks required
to be covered by the insurance provided for in subsection (i) above;
(C) containing an extended period of indemnity endorsement which provides that
after the physical loss to the Improvements and Insured Personal Property has
been repaired, the continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss, or the expiration
of twelve (12) months from the date that the applicable Individual Property is
repaired or replaced and full operations are resumed, whichever first occurs,
and notwithstanding that the policy may expire prior to the end of such period;
and (D) in an amount equal to one hundred percent (100%) of the projected
Revenue from each Individual Property for a period of 24 months (in addition to
the 12 month extended period of indemnity referred to in clause (C) above) from
the date of such Casualty (assuming such Casualty had not occurred) and
notwithstanding that the policy may expire at the end of such period. The amount
of such business income insurance shall be determined prior to the Closing Date
and at least once each year thereafter based on Borrower’s reasonable estimate
of the Revenue from each Individual Property for the succeeding twenty-four
(24) month period (in addition to the 12 month extended period of indemnity
referred to in clause (C) above). All proceeds payable to Lender pursuant to
this subsection shall be held by Lender and shall be applied at Lender’s sole
discretion to (I) the obligations secured by the Loan Documents from time to
time due and payable hereunder and under the Note or (II) operating expenses of
the applicable Individual Property approved by Lender in its sole discretion;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured by the Loan Documents
on the respective dates of payment provided for in the Note and the other Loan
Documents except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;

(iv) at all times during which structural construction, repairs or alterations
are being made with respect to the Improvements, and only if the property and
liability coverage forms do not otherwise apply, (A) owner’s contingent or
protective liability insurance covering claims not covered by or under the terms
or provisions of the above mentioned commercial general liability insurance
policy; and (B) the insurance provided for in subsection (i) above written in a
so-called builder’s risk completed value form, including coverage for 100% of
the total construction costs (1) on a non- reporting basis,

 

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(2) against all risks insured against pursuant to subsection (i) above,
(3) including permission to occupy the Individual Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions;

(v) if an Individual Property includes commercial property, worker’s
compensation insurance, employers’ liability and employment practices liability
with respect to any employees of Borrower, as required by any Governmental
Authority or Legal Requirement and in amounts reasonably required by Lender,
comprehensive boiler and machinery insurance, if applicable, in amounts as shall
be reasonably required by Lender on terms consistent with the commercial
property insurance policy required under subsection (i) above;

(vi) umbrella liability insurance in an amount not less than Two Hundred Million
and No/100 Dollars ($200,000,000.00) per occurrence on terms consistent with the
commercial general liability insurance policy required under
subsection (ii) above;

(vii) motor vehicle liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence,
including umbrella coverage, of Fifty Million and No/100 Dollars
($50,000,000.00);

(viii) if an Individual Property is or becomes a legal “non-conforming” use,
ordinance or law coverage and insurance coverage to compensate for the cost of
demolition or rebuilding of the undamaged portion of the Individual Property
along with any reduced value and the increased cost of construction in amounts
as reasonably requested by Lender;

(ix) the commercial property and business income insurance required under
Sections 6.1(a)(i) and (iii) above shall cover perils of terrorism and acts of
terrorism (both Certified and Non-Certified) and Borrower shall maintain
commercial property and business income insurance for loss resulting from perils
and acts of terrorism on terms (including amounts) consistent with those
required under Sections 6.1(a)(i) and (iii) above at all times during the term
of the Loan; provided, however, that Borrower shall not be obligated to spend,
for all insured locations per annum, more than the Terrorism Premium Limit to
maintain the aforesaid insurance and, in the event that the cost of such
insurance premiums (for each Individual Property, to obtain and maintain the
aforesaid insurance) exceeds the Terrorism Premium Limit, in each case for each
Individual Property, on a per annum basis, then Borrower shall obtain and
maintain such insurance covering perils of terrorism and acts of terrorism in
such maximum amounts as may be obtained for such Individual Property (covering
the risks described in this paragraph (x)) upon payment of the Terrorism Premium
Limit, in each case for each such Individual Property;

(x) crime coverage in an amount not less than Twenty-Five Million and No/100
Dollars to ($25,000,000) protect against employee dishonesty and related
incidents; and

 

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(xi) upon sixty (60) days’ notice, such other reasonable insurance and in such
reasonable amounts as Lender from time to time may reasonably request against
such other insurable hazards which at the time are commonly insured against for
property similar to the Individual Property located in or around the region in
which the Individual Property is located.

(b) All insurance provided for in Section 6.1(a) shall be obtained under valid
and enforceable policies (collectively, the “Policies” or in the singular, the
“Policy”), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by (i) financially sound and responsible insurance companies authorized
to do business in the State and having a claims paying ability rating of “A-” or
better by S&P and, if rated by Moody’s, a claims paying ability rating of “A2”
or better (and the equivalent thereof); provided, however, that if the insurance
required to be provided pursuant to this Section 6.1 shall be obtained from a
syndicate of insurers, then at least Seventy Five percent (75%) of the coverage
(if there are four (4) or fewer members of the syndicate) or at least sixty
percent (60%) of the coverage (if there are five (5) or more members of the
syndicate) is provided by insurers having such ratings (but in no event shall
the rating of any insurer in such syndicate be less than “BBB” by S&P; provided
that any insurer in the syndicate as of the Original Closing Date that is not
rated by S&P can remain in the syndicate on the following conditions: (x) such
insurer does not insure more than, or change its “first” or other level-of-loss
position from, that in effect as of the Original Closing Date (or, with respect
to Glacier Reinsurance AG only, as of the date hereof) and (y) such insurer
maintains an A.M. Best rating of at least A-/X (except that the rating of
Glacier Reinsurance AG may be A-/IX). The Policies described in Section 6.1(a)
(other than those strictly limited to liability protection) shall designate
Lender as mortgagee and loss payee. Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, certificates
of insurance evidencing the Policies accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the “Insurance Premiums”),
shall be delivered by Borrower to Lender.

(c) Notwithstanding anything to the contrary contained in the immediately
preceding paragraph (b), any insurance required to be maintained by Borrower
under Section 6.1(a)(x) hereof covering perils and acts of terrorism may be
provided by a captive insurance company (a “Captive Insurance Company”) with the
prior reasonable written consent of Lender and subject to Lender’s review and
approval of Policies and other documentation reasonably requested by Lender and
the satisfaction of such other conditions as Lender may reasonably require
provided that (and for so long as) (i) except with respect to any deductible
permitted under Section 6.1(a)(x), those covered losses which are not reinsured
by the federal government under TRIA and payable directly to the insured shall
be reinsured by an insurance company having a claims paying ability rating of
“A-” or better with S&P, (ii) all re-insurance agreements between such Captive
Insurance Company and all such re-insurance companies providing the referenced
re-insurance shall be reasonably acceptable to Lender, and Borrower shall cause
such re-insurance agreements to provide for direct access to such re-insurers
through a direct access cut-through endorsement by all named insureds, loss
payees and mortgagees, (iii) such Captive Insurance Company shall not be subject
to a bankruptcy or similar insolvency proceeding, (iv) such Captive Insurance
Company shall be licensed in the States of Nevada, New Jersey and California (to
the extent any portion of the improvements

 

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are located in California), to the extent required, and qualified to issue the
terrorism insurance policy described in Section 6.1(a)(x) and similar terrorism
insurance policies in accordance with all Legal Requirements, (v) such Captive
Insurance Company shall qualify for the reinsurance and other benefits afforded
insurance companies under TRIA as evidenced by a letter or written confirmation
provided by the United States Department of the Treasury (it is understood that
a written request for such letter has been sent and Borrower shall use its
reasonable best efforts to obtain promptly a positive response thereto and, in
the event Borrower is unable to obtain such letter from the Department of the
Treasury, Borrower shall obtain a comfort letter addressed to Lender, reasonably
acceptable to Lender, from a reputable insurance consultant reasonably
acceptable to Lender, it being acknowledged that either Willis Insurance or
Beecher Carlson would be acceptable to Lender, confirming that such Captive
Insurance Company qualifies for reinsurance and other benefits afforded
insurance companies under TRIA), (vi) no Governmental Authority shall have
issued any statement, opinion, finding or decree that any insurance company
which is similar to such Captive Insurance Company (i.e., an insurance company
owned and/or Controlled by a Person insured under an applicable insurance
policy) does not qualify for such benefits and TRIA shall be in full force and
effect, (vii) Lender shall have received each of the following, each of which
shall be reasonably acceptable to Lender: (1) the organizational documents of
such Captive Insurance Company; (2) any regulatory agreements of such Captive
Insurance Company; (3) the application for licensing in the States of Nevada,
California and New Jersey for such Captive Insurance Company; (4) the form of
the Policy to be used by such Captive Insurance Company to provide the insurance
coverage described herein; (5) a description of the structure and amount of
reserves and capitalization of such Captive Insurance Company; (viii) the
Insurance Premiums payable to such Captive Insurance Company have been
determined and recommended by an independent firm reasonably acceptable to
Lender; (ix) the organizational documents of such Captive Insurance Company
shall not be materially amended without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed; and
(x) except as otherwise expressly set forth in this paragraph (c), all such
insurance provided by such Captive Insurance Company shall otherwise comply with
all other terms and conditions of Section 6.1. Lender hereby accepts and
approves Romulus Risk and Insurance Company, Inc. as a Captive Insurance Company
in accordance with the program that is in effect as of the Original Closing Date
(Borrower hereby confirming that the program currently administered by Romulus
Risk and Insurance Company, Inc., and that is in effect on the date hereof, is
unchanged from the program that was in effect on the Original Closing Date). If,
in connection with any claim under the Policies, Lender shall suffer a loss as a
result of (A) Captive Insurance Company’s fraud, willful misconduct, gross
negligence, illegal action or the failure of Captive Insurance Company to pay
any Borrower claim up to the Captive Insurance Company’s policy limits, or
(B) the refusal or failure of any issuer of the re-insurance agreements and/or
the United States of America to pay such issuer’s proportional share of any such
claim based on any claim or set of facts relating to the organizational
structure, licensing, documentation, contracts and agreements or solvency
relating to the Captive Insurance Company or for any actual or alleged action or
inaction of the Captive Insurance Company (any such loss being referred to as a
“Captive Insurance Loss”), then Borrower shall pay (without premium or penalty)
to Lender within ninety (90) days after receipt of notice of a potential
shortfall from Lender an amount equal to the Captive Insurance Loss. Captive
Insurance Company’s failure to comply with the requirements set forth in this
subsection (c) shall be deemed prima facie evidence of a Captive Insurance Loss.

 

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(d) Any blanket insurance Policy (other than a blanket insurance policy for
windstorm) shall specifically allocate to the Individual Property the amount of
coverage from time to time required hereunder or shall otherwise provide the
same protection as would a separate Policy. Furthermore it is agreed that the
insurance coverage required under Section 6.1(a) may be effected under a blanket
policy or policies covering the Properties and other property and assets not
constituting a part of the collateralized properties;

(e) All Policies provided for or contemplated by Section 6.1(a), except for the
Policy referenced in Section 6.1(a)(v), shall name Operating Company and
Borrower as the insured and Lender as the additional insured, as its interests
may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

(f) All Policies provided for in Section 6.1 shall contain clauses or
endorsements to the effect that:

(i) no act or negligence of Borrower, or anyone acting for Borrower, or of any
tenant or other occupant, or failure to comply with the provisions of any
Policy, which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;

(ii) the Policies shall not be materially changed (other than to increase the
coverage provided thereby) or canceled without at least thirty (30) days’ notice
to Lender and any other party named therein as an additional insured;

(iii) the issuers thereof shall give notice to Lender if the Policies have not
been renewed fifteen (15) days prior to its expiration; and

(iv) Lender shall not be liable for any Insurance Premiums thereon or subject to
any assessments thereunder.

(g) If at any time Lender is not in receipt of written evidence that all
Policies are in full force and effect when and as required hereunder, Lender
shall have the right, without notice to Borrower, to take such action as Lender
deems necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate (but limited to the coverages and amounts required
hereunder). All premiums incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Borrower to
Lender upon demand and, until paid, shall be secured by the Mortgages and shall
bear interest at the Default Rate.

 

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(h) All of the coverages required by this Section 6.1 have been in place as of
the Original Closing Date (or, with respect to the Swap Properties, as of the
Swap Closing Date).

Section 6.2. Casualty. If the Individual Property shall be materially damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the completion of the Restoration of the
Individual Property as nearly as possible to the condition the Individual
Property was in immediately prior to such Casualty, with such alterations as may
be reasonably approved by Lender and otherwise in accordance with Section 6.4.
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to make proof of
loss if not made promptly by Borrower. In addition, Lender may participate in
any settlement discussions with any insurance companies with respect to any
Casualty in which the Net Proceeds or the costs of completing the Restoration
are equal to or greater than, in the case of each Casualty, an amount equal to
five percent (5%) of the sum of the Allocated Loan Amount for the affected
Individual Property as of the date hereof and the “Allocated Loan Amounts” under
(and as defined in each of) the Mezzanine Loan Agreements for the affected
Individual Property as of the date hereof, and Borrower shall deliver to Lender
all instruments required by Lender to permit such participation.

Section 6.3. Condemnation. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of any
Individual Property and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any Individual Property or any portion thereof is taken by a condemning
authority, Borrower shall promptly commence and diligently prosecute the
Restoration of the applicable Individual Property and otherwise comply with the
provisions of Section 6.4. If any Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.

 

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Section 6.4. Restoration. The following provisions shall apply in connection
with the Restoration of any Individual Property:

(a) If the Net Proceeds from an Individual Property, or the costs of completing
the Restoration of such Individual Property, are less than an amount equal to
five percent (5%) of the sum of the Allocated Loan Amount for such Individual
Property as of the date hereof and the “Allocated Loan Amounts” under (and as
defined in each of) the Mezzanine Loan Agreements for such Individual Property
as of the date hereof, the Net Proceeds will be disbursed by Lender to Borrower
upon receipt, provided that all of the conditions set forth in
Section 6.4(b)(i) are met and Borrower delivers to Lender a written undertaking
to expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.

(b) If the Net Proceeds from an Individual Property, or the costs of completing
the Restoration of such Individual Property, are equal to or greater than an
amount equal to five percent (5%) of the sum of the Allocated Loan Amount for
such Individual Property as of the date hereof and the “Allocated Loan Amounts”
under (and as defined in each of) the Mezzanine Loan Agreements for such
Individual Property as of the date hereof, the Net Proceeds will be held by
Lender and Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 6.4. The term “Net Proceeds” for
purposes of this Section 6.4 shall mean: (i) the net amount of all insurance
proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv), (vi), (ix) and
(x) as a result of such damage or destruction, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of the
Award, after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same (“Condemnation
Proceeds”), together with (in each case) interest accruing thereon, whichever
the case may be.

(i) The Net Proceeds shall be made available to Borrower for Restoration upon
the approval of Lender in its sole discretion that the following conditions are
met:

(A) no Event of Default shall have occurred and be continuing;

(B) (1) in the event the Net Proceeds are Insurance Proceeds, less than forty
percent (40%) of the total floor area of the Improvements on the Individual
Property has been damaged, destroyed or rendered unusable as a result of such
Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less
than fifteen percent (15%) of the land constituting the Individual Property is
taken, and such land is located along the perimeter or periphery of the
Individual Property, and no material portion of the Improvements is located on
such land;

(C) Intentionally Omitted;

(D) Borrower shall commence the Restoration as soon as reasonably practicable
(but in no event later than sixty (60) days after such Casualty or Condemnation)
and shall diligently pursue the same to satisfactory completion;

(E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Individual Property as a result of the occurrence
of any such Casualty or Condemnation, whichever the case may be, will be covered
out of (1) the Net Proceeds, (2) the insurance coverage referred to in
Section 6.1(a)(iii), if applicable, or (3) by other funds of Borrower;

 

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(F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) three (3) months prior to the Maturity Date,
(2) the earliest date required for such completion under the terms of any
Leases, (3) such time as may be required under applicable Legal Requirements or
(4) the expiration of the insurance coverage referred to in Section 6.1(a)(iii);

(G) the Individual Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable Legal Requirements;

(H) the Restoration shall be done and completed by Borrower in an expeditious
and diligent fashion and in compliance with all applicable Legal Requirements
and in compliance with all requirements set forth in the Mezzanine Loan
Agreements;

(I) such Casualty or Condemnation, as applicable, does not result in the
permanent loss of access to the Individual Property or the related Improvements;

(J) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be reasonably
acceptable to Lender; and

(K) the Net Proceeds together with any cash or cash equivalent deposited by
Borrower with Lender are sufficient in Lender’s discretion to cover the cost of
the Restoration.

(ii) The Net Proceeds shall be held by Lender in an interest-bearing account
and, until disbursed in accordance with the provisions of this Section 6.4(b),
shall constitute additional security for the Debt and other obligations under
the Loan Documents (with all interest on such Net Proceeds being for the benefit
of Borrower). The Net Proceeds shall be disbursed by Lender to, or as directed
by, Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all materials installed and
work and labor theretofore performed (except to the extent that they are to be
paid for out of the requested disbursement) in connection with the Restoration
have been paid for in full (to the extent payment is due and payable), and
(B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s
liens or notices of intention to file same, or any other liens or encumbrances
of any nature whatsoever on the Individual Property which have not either been
fully bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy.

 

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(iii) (A) All plans and specifications required in connection with the
Restoration shall be subject to prior reasonable review and acceptance in all
respects by Lender and by an independent consulting engineer selected by Lender
(the “Casualty Consultant”). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration. The identity of the contractors, subcontractors
and materialmen engaged in the Restoration, as well as the contracts under which
they have been engaged, shall be subject to prior reasonable review and
acceptance by Lender and the Casualty Consultant. All reasonable out-of-pocket
costs and expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable counsel
fees and disbursements and the Casualty Consultant’s fees, shall be paid by
Borrower.

(B) Every submission to Lender of any plans and specifications, information
regarding the identity of contractors, subcontractors and materialmen engaged in
the Restoration as well as the contracts under which they have been engaged,
that are submitted to Lender for Lender’s approval, shall be forwarded to Lender
together with a notice from Borrower (in bold typeface) that states “YOUR
FAILURE TO RESPOND TO THIS NOTICE AND REQUEST FOR APPROVAL WITHIN TEN
(10) BUSINESS DAYS OF YOUR RECEIPT OF THIS NOTICE SHALL CONSTITUTE YOUR DEEMED
CONSENT TO THE MATTERS DESCRIBED IN OR THAT ARE THE SUBJECT OF THIS NOTICE”. If
Lender responds to Borrower’s request by identifying missing documents or
materials that are incomplete or inaccurate (and that are the subject of the
request for approval), then Borrower shall re-submit such documents or materials
to Lender for its approval together with a second notice from Borrower that
complies with this section.

(C) If Lender fails to approve or disapprove any such proposed request or
submission attached to a first notice or request sent by Borrower (or the
matters that are the subject of the re-submitted notice or request for approval)
within ten (10) Business Days of receipt of same, Borrower shall re-submit such
instruments or materials to Lender for Lender’s approval and give Lender a
second notice (in bold typeface) that states “SECOND NOTICE — YOUR FAILURE TO
RESPOND TO THIS NOTICE AND REQUEST FOR APPROVAL WITHIN TEN (10) BUSINESS DAYS OF
YOUR RECEIPT OF THIS NOTICE SHALL CONSTITUTE YOUR DEEMED CONSENT TO THE MATTERS
DESCRIBED IN OR THAT ARE THE SUBJECT OF THIS NOTICE”. If Lender fails to respond
to such second notice within ten (10) Business Days from the receipt of same,
then Lender’s consent to the proposed request or submission that is the subject
of such notice shall be deemed granted.

(iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage”
shall mean an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until fifty percent (50%) of the Restoration has been completed (and
five percent (5%) thereafter)). The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above

 

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in this Section 6.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for the
re-occupancy and use of the Individual Property have been obtained from all
appropriate governmental and quasi-governmental authorities, and Lender receives
evidence satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage; provided,
however, that Lender will release the portion of the Casualty Retainage being
held with respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
issuing the Title Insurance Policy, and Lender receives an endorsement to the
Title Insurance Policy insuring the continued priority of the lien of the
related Mortgage and evidence of payment of any premium payable for such
endorsement. If required by Lender, the release of any such portion of the
Casualty Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.

(v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month or at any time an Event of Default
shall have occurred and be continuing.

(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the reasonable opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 6.4(b) shall constitute additional security for the Debt and other
obligations under the Loan Documents.

(vii) The excess, if any, of the Net Proceeds and the remaining balance, if any,
of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing.

 

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(c) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 6.4(b)(vii) may be retained and applied by Lender in accordance with
Section 2.4.3 hereof toward the payment of the Debt whether or not then due and
payable in such order, priority and proportions as Lender in its sole discretion
shall deem proper (but pro-rata among any components of the Debt), or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall approve, in its discretion.

(d) In the event of foreclosure of the Mortgage with respect to the Individual
Property, or other transfer of title to the Individual Property in
extinguishment in whole or in part of the Debt all right, title and interest of
Borrower in and to the Policies that are not blanket Policies then in force
concerning the Individual Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.

Notwithstanding the foregoing, the Collateral Agent, for the benefit of Lender
(rather than the Lender directly), shall be the secured party, the loss payee
and the additional insured under all insurance policies required under this
Article VI and any reference to “Lender” in this Article VI in which “Lender” is
acting as the secured party, the loss payee or the additional insured shall,
unless the context shall clearly require otherwise, be deemed to be referring to
Collateral Agent, in its capacity as collateral agent for the Lender.

VII. RESERVE FUNDS

Section 7.1. Cap Reserve Fund. (a) On the Closing Date, Borrower has deposited
with Lender (or Servicer on behalf of Lender) the sum of Five Million and no/100
Dollars ($5,000,000.00) to be held as collateral for the Loan. Amounts deposited
by Borrower as described in this Section 7.1 shall hereinafter be referred to as
the “Cap Reserve Fund” and the account in which such amounts are held shall
hereinafter be referred to as the “Cap Reserve Account”.

(b) Borrower shall deposit into the Cap Reserve Fund such amounts as are paid to
Borrower by Counterparty in connection with the terminations and extensions of
the scheduled termination date described in Section 2.2.7, and such additional
monies shall constitute a part of the Cap Reserve Fund.

(c) Provided no Event of Default shall have occurred and be continuing, Lender
shall make available (or direct Servicer to make available), and Borrower shall
be permitted to use, all or a portion of the Cap Reserve Fund for any extension
of any Interest Rate Cap Agreement or any purchase of any Replacement Interest
Rate Cap Agreements by the Borrower or any interest rate cap agreement or
purchase of any replacement interest rate cap agreement by any Mezzanine
Borrower in each case as described in the final paragraph of Section 2.2.7.

(d) if at any time that the scheduled termination date of the Interest Rate Cap
Agreement is extended to the Second Extended Maturity Date, any amounts
constituting the Cap Reserve Fund on deposit in the Cap Reserve Account shall be
released to Borrower, provided that no Event of Default shall have occurred and
be continuing (and no “Event of Default” under and as defined in each Mezzanine
Loan Agreement shall have occurred and be continuing).

 

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Section 7.2. Tax and Insurance Escrow Fund. (a) On each Payment Date during the
term, Borrower shall pay to Lender (or Servicer on behalf of Lender) an amount
equal to (i) one-twelfth of the Taxes that Lender estimates will be payable
during the next ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Taxes at least thirty (30) days prior to their
respective due dates, and (ii) one-twelfth of the Insurance Premiums that Lender
estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (the amounts deposited with Lender or
Servicer pursuant to this sentence, collectively, the “Tax and Insurance Escrow
Fund”). Lender shall apply (or direct Servicer to apply) the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Section 5.1.2 hereof and under the Mortgages. In making any
payment relating to the Tax and Insurance Escrow Fund, Lender or Servicer may do
so according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums), without inquiry into the accuracy of such bill, statement
or estimate or into the validity of any tax, assessment, sale, forfeiture, tax
lien or title or claim thereof. If the amount of the Tax and Insurance Escrow
Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to
Section 5.1.2 hereof, provided no Event of Default shall have occurred and be
continuing, then Lender shall return (or direct Servicer to return) any excess
to Borrower (or to Operating Company, if so directed by Borrower). In allocating
such excess, Lender or Servicer may deal with the Person shown on the records of
Lender or Servicer to be the owner of the Properties. If at any time Lender
reasonably determines that the Tax and Insurance Escrow Fund is not or will not
be sufficient to pay Taxes and Insurance Premiums by the dates set forth in
(i) and (ii) above, Lender shall notify Borrower of such determination and
Borrower shall increase its monthly payments to Lender (or Servicer) by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to the due date of the Taxes and/or thirty (30) days
prior to expiration of the Policies, as the case may be.

(b) Notwithstanding the foregoing, Borrower shall not be required to make any
deposits into the Tax and Insurance Escrow Fund on account of Insurance Premiums
if (and for so long as) Borrower shall maintain a blanket insurance policy in
respect of the Properties that is in accordance with the provisions of
Section 6.1(a) and otherwise satisfactory to Lender in all material respects.

(c) Any Tax and Insurance Escrow Funds remaining after the Debt has been paid in
full shall be remitted (i) first, to the First Mezzanine Lender or (ii) if the
First Mezzanine Loan is not then outstanding but the Second Mezzanine Loan is
outstanding, then to the Second Mezzanine Lender in accordance with the First
Mezzanine Loan Agreement or (iii) if the First Mezzanine Loan and the Second
Mezzanine Loan are not then outstanding but the Third Mezzanine Loan is
outstanding, then to the Third Mezzanine Lender in accordance with the Second
Mezzanine Loan Agreement or (iv) if the First Mezzanine Loan, the Second
Mezzanine Loan and the Third Mezzanine Loan are no longer outstanding, then to
the Fourth

 

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Mezzanine Lender in accordance with the Third Mezzanine Loan Agreement or (v) if
the First Mezzanine Loan, the Second Mezzanine Loan, the Third Mezzanine Loan
and the Fourth Mezzanine Loan are no longer outstanding, then to the Fifth
Mezzanine Lender in accordance with the Fourth Mezzanine Loan Agreement or
(vi) if the First Mezzanine Loan, the Second Mezzanine Loan, the Third Mezzanine
Loan, the Fourth Mezzanine Loan and the Fifth Mezzanine Loan are no longer
outstanding, then to the Sixth Mezzanine Lender in accordance with the Fifth
Mezzanine Loan Agreement or (vii) if the First Mezzanine Loan, the Second
Mezzanine Loan, the Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth
Mezzanine Loan and the Sixth Mezzanine Loan are no longer outstanding, then to
the Seventh Mezzanine Lender in accordance with the Sixth Mezzanine Loan
Agreement or (viii) if the First Mezzanine Loan, the Second Mezzanine Loan, the
Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth Mezzanine Loan, the
Sixth Mezzanine Loan and the Seventh Mezzanine Loan are no longer outstanding,
then to the Eighth Mezzanine Lender in accordance with the Seventh Mezzanine
Loan Agreement or (ix) if the First Mezzanine Loan, the Second Mezzanine Loan,
the Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth Mezzanine Loan,
the Sixth Mezzanine Loan, the Seventh Mezzanine Loan and the Eighth Mezzanine
Loan are no longer outstanding, then to the Ninth Mezzanine Lender in accordance
with the Eighth Mezzanine Loan Agreement or (x) if the First Mezzanine Loan, the
Second Mezzanine Loan, the Third Mezzanine Loan, the Fourth Mezzanine Loan, the
Fifth Mezzanine Loan, the Sixth Mezzanine Loan, the Seventh Mezzanine Loan, the
Eighth Mezzanine Loan and the Ninth Mezzanine Loan are no longer outstanding
then to Borrower or, at Borrower’s election, shall be credited against the Debt
simultaneously with the satisfaction of the balance of the Loan.

Section 7.3. FF&E Reserve Account.

7.3.1. FF&E Reserve Fund. (a) Borrower shall pay to Lender (or Servicer on
behalf of Lender) on each Payment Date an amount equal to (1) (i) with respect
to each Payment Date during the First Period, one-twelfth of three percent
(3%) of the amount of all Revenues for the trailing twelve (12) month period
preceding each such Payment Date, (ii) with respect to each Payment Date during
the Second Period, one-twelfth of four percent (4%) of the amount of all
Revenues for the trailing twelve (12) month period preceding each such Payment
Date and (iii) with respect to each Payment Date during the Third Period and
thereafter, one-twelfth of five percent (5%) of the amount of all Revenues for
the trailing twelve (12) month period preceding each such Payment Date less
(2) in each case any amount spent (other than from the FF&E Reserve Fund) during
the previous calendar month (as applicable) by Borrower (or by Operating Company
or Manager on behalf of Borrower) in accordance with the Operating Lease or the
Management Agreement on account of FF&E or Routine Capital Improvements. It is
specifically understood and agreed that amounts expended on account of FF&E and
on account of any Routine Capital Improvements from the FF&E Reserve Fund shall
not be included in any deductions required pursuant to subclause (2) of the
preceding sentence and, in addition, that any FF&E that is purchased and any
Routine Capital Improvements that are paid for using funds from the FF&E Reserve
Fund may not be subsequently financed by Borrower or Operating Company.
Notwithstanding anything to the contrary contained herein, in no event shall
Borrower be required to maintain in the FF&E Reserve Account an amount in excess
of the aggregate amount of all FF&E deposits required to be made in the trailing
twelve (12) month period (as determined, for purposes of this sentence,
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the preceding sentence, as reduced pursuant to withdrawals thereunder to pay the
Loan pursuant to Section 7.3.2(a)). In addition, notwithstanding anything to the
contrary contained herein, for purposes of determining the amount of any
required FF&E Reserve Fund deposits (and for purposes of calculating such
amount, monthly, based on the formula set forth in the first sentence of this
Section 7.3.1), Revenues shall include Revenue from the Hotel Component and the
Casino Component but shall not include non-Hotel or Casino related Revenues
(e.g., Rents from retail tenants).

(b) Amounts deposited by Borrower as described in this Section 7.3.1 shall
hereinafter be referred to as the “FF&E Reserve Fund” and the account in which
such amounts are held shall hereinafter be referred to as the “FF&E Reserve
Account”.

7.3.2. Disbursements from FF&E Reserve Account. (a) Borrower may at any time
(and at the direction of Lender, Borrower shall direct Lender to) draw amounts
from the FF&E Reserve Account that are in excess of the increased funding above
three percent (3%) of Revenues for the preceding trailing twelve (12) month
period that are made pursuant to Section 7.3.1(a) above to prepay the Loan (and,
notwithstanding any provision of this Agreement to the contrary, (i) any such
prepayments shall be permitted hereunder and (ii) the Borrower shall not be
obligated to re-deposit such amounts so withdrawn from the FF&E Reserve
Account).

(b) Except as described in Section 7.3.2(a) above, all disbursements from the
FF&E Reserve Account shall be made solely for the purpose of reimbursing
Borrower (or Operating Company or Manager in the case of FF&E bought or Routine
Capital Improvements made in the name of Borrower in accordance with the
Operating Lease or the Management Agreement, and as directed by Borrower) for,
or for paying for, (i) the costs and expenses of repairing, replacing and/or
upgrading FF&E owned by Borrower at the Properties and (ii) Routine Capital
Improvements undertaken by Borrower. Provided no Event of Default shall have
occurred and be continuing, within ten (10) days following request by Borrower,
disbursements shall be made from the FF&E Reserve Fund no more frequently than
once in any thirty (30) day period, in amounts no less than $10,000 per
disbursement (or a lesser amount if the total amount in the FF&E Reserve Account
is less than $10,000, in which case only one disbursement of the amount
remaining in the account shall be made), and upon delivery by Borrower (or
Operating Company) of Lender’s standard form of draw request accompanied by
copies of invoices for the amounts requested and, if required by Lender for
requests in excess of $50,000 for a single item, receipts and releases from all
parties furnishing materials and/or services in connection with the requested
payment.

(c) Disbursements may be made from the FF&E Reserve Account as described in
subparagraph (b) above, at Borrower’s election, directly to third parties (as
directed by Borrower).

(d) In no event shall funds in the FF&E Reserve Account be utilized to pay or
reimburse any Person for any Capital Expenditures (other than Capital
Expenditures constituting FF&E or Routine Capital Improvements).

 

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7.3.3. Balance in the FF&E Reserve Account. (a) The insufficiency of any balance
in the FF&E Reserve Account shall not relieve Borrower from its obligation to
fulfill all preservation and maintenance covenants in the Loan Documents.

(b) Any FF&E Reserve Funds remaining after the Debt has been paid in full shall
be remitted (i) first, to the First Mezzanine Lender or (ii) if the First
Mezzanine Loan is not then outstanding but the Second Mezzanine Loan is
outstanding, then to the Second Mezzanine Lender in accordance with the First
Mezzanine Loan Agreement or (iii) if the First Mezzanine Loan and the Second
Mezzanine Loan are not then outstanding but the Third Mezzanine Loan is
outstanding, then to the Third Mezzanine Lender in accordance with the Second
Mezzanine Loan Agreement or (iv) if the First Mezzanine Loan, the Second
Mezzanine Loan and the Third Mezzanine Loan are no longer outstanding, then to
the Fourth Mezzanine Lender in accordance with the Third Mezzanine Loan
Agreement or (v) if the First Mezzanine Loan, the Second Mezzanine Loan, the
Third Mezzanine Loan and the Fourth Mezzanine Loan are no longer outstanding,
then to the Fifth Mezzanine Lender in accordance with the Fourth Mezzanine Loan
Agreement or (vi) if the First Mezzanine Loan, the Second Mezzanine Loan, the
Third Mezzanine Loan, the Fourth Mezzanine Loan and the Fifth Mezzanine Loan are
no longer outstanding, then to the Sixth Mezzanine Lender in accordance with the
Fifth Mezzanine Loan Agreement or (vii) if the First Mezzanine Loan, the Second
Mezzanine Loan, the Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth
Mezzanine Loan and the Sixth Mezzanine Loan are no longer outstanding, then to
the Seventh Mezzanine Lender in accordance with the Sixth Mezzanine Loan
Agreement or (viii) if the First Mezzanine Loan, the Second Mezzanine Loan, the
Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth Mezzanine Loan, the
Sixth Mezzanine Loan and the Seventh Mezzanine Loan are no longer outstanding,
then to the Eighth Mezzanine Lender in accordance with the Seventh Mezzanine
Loan Agreement or (ix) if the First Mezzanine Loan, the Second Mezzanine Loan,
the Third Mezzanine Loan, the Fourth Mezzanine Loan, the Fifth Mezzanine Loan,
the Sixth Mezzanine Loan, the Seventh Mezzanine Loan and the Eighth Mezzanine
Loan are no longer outstanding, then to the Ninth Mezzanine Lender in accordance
with the Eighth Mezzanine Loan Agreement or (x) if the First Mezzanine Loan, the
Second Mezzanine Loan, the Third Mezzanine Loan, the Fourth Mezzanine Loan, the
Fifth Mezzanine Loan, the Sixth Mezzanine Loan, the Seventh Mezzanine Loan, the
Eighth Mezzanine Loan and the Ninth Mezzanine Loan are no longer outstanding
then to Borrower.

Section 7.4. Intentionally Omitted.

Section 7.5. Intentionally Omitted.

Section 7.6. Reserve Funds, Generally. (a) Borrower grants to Collateral Agent
(for the benefit of Lender) a first-priority perfected security interest in any
and all of its interest, if any, in each of the Reserve Account and all Reserve
Funds and any and all monies now or hereafter deposited in each Reserve Account
as additional security for payment of the Debt. Borrower will take all actions
necessary to maintain such security interest as a first priority security
interest, including, without limitation, executing, delivering and maintaining
one or more account control agreements that comply with Article 9 of the Uniform
Commercial Code as in effect from time to time in any applicable jurisdictions
and filing UCC-1 Financing Statements and continuations thereof upon Lender’s
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in accordance herewith, the Reserve Funds shall constitute additional security
for the Debt. Upon the occurrence and during the continuance of an Event of
Default, Lender or Servicer may, in addition to any and all other rights and
remedies available to Lender, apply any sums then present in any Reserve Account
(including any Reserve Funds) to the payment of the Debt in any order in its
sole discretion. The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by or on behalf of Lender.

(b) Borrower shall not further pledge, assign or grant any security interest in
any Reserve Account or Reserve Fund or the monies deposited therein or permit
any lien or encumbrance to attach thereto, or any levy to be made thereon, or
any UCC-1 Financing Statements, except those naming Lender or Collateral Agent
as the secured party, to be filed with respect thereto.

(c) The Reserve Funds shall be held by Lender (or Servicer on its behalf) and
may be invested at Borrower’s election and direction in Permitted Investments.
All interest or other earnings on funds held in a Reserve Account shall be added
to and become a part of the applicable Reserve Fund and shall be disbursed in
the same manner as other monies deposited in such Reserve Account. Borrower
shall have the right to direct Lender (or Servicer on its behalf) to invest sums
on deposit in the Eligible Account in Permitted Investments provided (a) such
investments are permitted by applicable federal, state and local rules,
regulations and laws, (b) the maturity date of the Permitted Investment is not
later than the date on which the applicable Reserve Funds are required for
payment of an obligation for which such Reserve Fund was created, and (c) no
Event of Default shall have occurred and be continuing. Borrower shall be
responsible for payment of any federal, state or local income or other tax
applicable to the interest or income earned on the Reserve Funds. No other
investments of the sums on deposit in the Reserve Funds shall be permitted
except as set forth in this Section 7.6. Borrower shall bear all reasonable
costs associated with the investment of the sums in the account in Permitted
Investments. Such costs shall be deducted from the income or earnings on such
investment, if any, and to the extent such income or earnings shall not be
sufficient to pay such costs, such costs shall be paid by Borrower promptly on
demand by Lender. Lender shall have no liability for the rate of return earned
or losses incurred on the investment of the sums in Permitted Investments.

(d) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys fees and expenses) arising from or in any way connected with the
Reserve Accounts, the Reserve Funds or the performance of the obligations for
which the Reserve Accounts or the Reserve Funds were established. Borrower shall
assign to Lender all rights and claims Borrower may have against all Persons
supplying labor, materials or other services which are to be paid from the
Reserve Funds; provided, however, that Lender may not pursue any such right or
claim unless an Event of Default has occurred and remains uncured.

 

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VIII. DEFAULTS

Section 8.1. Event of Default. (a) Each of the following events shall constitute
an event of default hereunder (an “Event of Default”):

(i) if (A) any portion of the Debt is not paid in full on the Maturity Date,
(B) the Debt Service is not paid in full on or before the related Payment Date,
(C) any required deposits to the Cash Management Account or the Blocked Account
are not paid in full on or before the date due, or (D) any other portion of the
Debt is not paid within five (5) days of when due;

(ii) if any of the Taxes or Other Charges are not paid (with respect to each or
any Individual Property) prior to Delinquency;

(iii) if the Policies (with respect to each or any Individual Property) are not
kept in full force and effect, or if certified copies of the Policies (for each
Individual Property) are not delivered to Lender upon request (or certificates
thereof, if a Policy shall be renewed and certified copies of the Policy are not
immediately available upon such renewal (each Borrower agreeing in such instance
to provide copies of the Policies to Lender promptly thereafter));

(iv) if any Borrower Transfers or otherwise encumbers any portion of the
Properties, or there shall otherwise occur a Transfer without Lender’s prior
consent in each case, if the same is in violation of the provisions of this
Agreement or Article 6 of the Mortgage;

(v) if any representation or warranty made by any Borrower or any other Loan
Party herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document or other material
or written information furnished to Lender shall have been false or misleading
in any material respect as of the date the representation or warranty was made
(and, with respect to any such breach which is not the subject of any other
subsection of this Section 8.1 and which is capable of being cured, such
Borrower fails to remedy such condition within ten (10) days following notice to
Borrower from Lender, in the case of any such breach which can be cured by the
payment of a sum of money, or within thirty (30) days following notice from
Lender in the case of any other such breach);

(vi) if any Borrower shall make an assignment for the benefit of creditors; or
if a receiver, liquidator or trustee shall be appointed for any Borrower, or if
any Borrower shall be adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy
law, or any similar federal or state law, shall be filed by or against,
consented to, or acquiesced in by, Borrower, or if any proceeding for the
dissolution or liquidation of any Borrower shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by any Borrower, upon the same not being
discharged, stayed or dismissed within ninety (90) days;

 

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(vii) if any Operating Company, any Manager, Principal, Holdings or any
Guarantor shall make an assignment for the benefit of creditors; or if a
receiver, liquidator or trustee shall be appointed for any such Operating
Company, any such Manager, Principal, Holdings or any such Guarantor, or if any
Operating Company, any Manager, Principal, Holdings or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, any Operating Company, any Manager, Principal, Holdings or any Guarantor,
or if any proceeding for the dissolution or liquidation of any Operating
Company, any Manager, Principal, Holdings or any Guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by any such Operating Company, any such
Manager, Principal, Holdings or any such Guarantor, upon the same not being
discharged, stayed or dismissed within ninety (90) days;

(viii) if any Borrower attempts to assign its rights under this Agreement or any
of the other Loan Documents or any interest herein or therein in contravention
of the Loan Documents;

(ix) if any Borrower breaches any of its respective negative covenants contained
in Section 5.2 or any covenant contained in Section 4.1.30 or Section 5.1.11
hereof (and, with respect to any such breach of any covenant set forth in
Section 5.1.11 which is not the subject of any other subsection of this
Section 8.1, such Borrower fails to remedy such condition within ten (10) days
after notice to Borrower from Lender, in the case of any such Default under
Section 5.1.11 which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other such Default
under Section 5.1.11);

(x) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if any Borrower
shall be in default under such term, covenant or condition after the giving of
such notice or the expiration of such grace period;

(xi) if any of the assumptions contained in the Insolvency Opinion delivered in
connection with the Loan, or in the Additional Insolvency Opinion delivered
subsequent to the closing of the Loan, is or shall become untrue in any material
respect; or if any of the assumptions contained in the True Lease Opinion in
connection with the Loan, or in the Additional True Lease Opinion delivered
subsequent to the closing of the Loan, is or shall become untrue in any material
respect;

(xii) if any Borrower, any Operating Company or any Guarantor (Operating Lease)
is in default of any of its material obligations under any Operating Lease (or
under another lease and/or management agreement in substitution for such
Operating Lease in accordance herewith) or under any such Operating Lease
Guaranty (or under another operating lease guaranty in substitution for such
Operating Lease Guaranty in accordance herewith) beyond any applicable notice
and cure periods contained therein; or if any Operating Lease (or such other
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Lease Guaranty (or such other operating lease guaranty) shall be surrendered or
any Operating Lease or any Operating Lease Guaranty shall be terminated or
canceled for any reason or under any circumstances whatsoever, except with the
consent of Lender; or if any of the terms, covenants or conditions of any
Operating Lease (or such other lease and/or management agreement) or any
Operating Lease Guaranty (or such other operating lease guaranty) shall in any
manner be modified, changed, supplemented, altered, restated or amended without
the consent of Lender except as may otherwise expressly permitted in this
Agreement;

(xiii) if HOC, any Borrower or any IP Licensor is in default of any of its
material obligations under any of any IP Licenses beyond any applicable notice
and cure periods contained therein; or if any of the IP Licenses shall be
surrendered, terminated or canceled for any reason or under any circumstances
whatsoever, except with the prior written consent of Lender; or if any of the
terms, covenants or conditions of any IP Licenses shall in any material respect
be modified, changed, supplemented, altered, restated or amended without the
prior written consent of Lender;

(xiv) if any Affiliate of any Borrower that is or becomes a party to the
Windstorm Insurance Intercreditor Agreement is in default of any of its material
obligations under the Windstorm Insurance Intercreditor Agreement beyond any
applicable notice and cure periods contained therein; or if the Windstorm
Insurance Intercreditor Agreement shall be surrendered, terminated or canceled
for any reason or under any circumstances whatsoever, except with the consent of
Lender; or if any of the terms, covenants or conditions of the Windstorm
Insurance Intercreditor Agreement shall in any manner be modified, changed,
supplemented, altered, restated or amended without the consent of Lender;

(xv) if any Borrower fails to comply with the covenants as to Prescribed Laws
set forth in Section 5.1.1 hereof;

(xvi) if a material default has occurred and continues beyond any applicable
cure period under any Management Agreement and if such default permits the
Manager, the Operating Company or the Borrower party thereto to terminate or
cancel the Management Agreement in question;

(xvii) any Gaming License shall be refused, suspended, revoked, modified in a
materially adverse manner or canceled or allowed to lapse or any proceeding is
commenced by any Governmental Authority for the purpose of suspending, revoking
or canceling any Gaming License in any materially adverse respect, or any
Governmental Authority shall have appointed a conservator, supervisor or trustee
to or for any of the Casino Components and, in each case of the foregoing, such
action could reasonably be expected to (A) have an Individual Material Adverse
Effect, (B) materially and adversely affect the continued operation of the
Casino Components in the usual course of business and in substantially the same
manner and to at least the same standard as was maintained prior to such action,
or (C) result in any material decrease in the then expected cash flow and
revenues to be derived from the Casino Components;

 

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(xviii) if any Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in subsections
(i) to (xvii) above, for ten (10) days after notice to Borrower from Lender, in
the case of any Default which can be cured by the payment of a sum of money, or
for thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that such Borrower shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for such Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed one hundred twenty
(120) days; or

(xix) if there shall be a default under any of the other Loan Documents beyond
any applicable cure periods contained in such documents, whether as to any
Borrower or any Individual Property, or if any other such event shall occur or
condition shall exist, if the effect of such event or condition is to accelerate
the maturity of any portion of the Debt or to permit Lender to accelerate the
maturity of all or any portion of the Debt.

(b) Upon the occurrence of an Event of Default (other than an Event of Default
described in clause (vi) or (vii) above) and at any time thereafter, in addition
to any other rights or remedies available to it pursuant to this Agreement and
the other Loan Documents or at law or in equity, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and in and to all or any Individual Property, including,
without limitation, declaring the Debt to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against Borrower and any or all of the Properties, including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clause (vi) or (vii) above, the Debt and
all other obligations of Borrower hereunder and under the other Loan Documents
shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

Section 8.2. Remedies. (a) Upon the occurrence of an Event of Default, but in
compliance with applicable Gaming Laws, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower under
this Agreement or any of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Debt shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to all or any Individual
Property. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
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of the foregoing, Borrower agrees that if an Event of Default is continuing
(i) Lender is not subject to any “one action” or “election of remedies” law or
rule, and (ii) all liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of
its remedies against the Properties and each Mortgage has been foreclosed, sold
and/or otherwise realized upon in satisfaction of the Debt or the Debt has been
paid in full.

(b) With respect to Borrower and the Properties, nothing contained herein or in
any other Loan Document shall be construed as requiring Lender to resort to any
Individual Property for the satisfaction of any of the Debt in preference or
priority to any other Individual Property, and Lender may seek satisfaction out
of all of the Properties or any part thereof, in its absolute discretion in
respect of the Debt. In addition, Lender shall have the right from time to time
to partially foreclose the Mortgages in any manner and for any amounts secured
by the Mortgages then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event any Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose one or more of the Mortgages to recover such delinquent payments, or
(ii) in the event Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Lender may foreclose one or more of the Mortgages
to recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Mortgages to secure payment of sums secured by the Mortgages and
not previously recovered.

Upon the occurrence and during the continuance of an Event of Default, Lender
shall have the right from time to time to sever the Note and the other Loan
Documents into one or more separate notes, mortgages and other security
documents (the “Severed Loan Documents”) in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies provided hereunder. Borrower shall execute and deliver to
Lender from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to effect
the severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect the aforesaid severance, Borrower ratifying all that its said attorney
shall do by virtue thereof; provided, however, Lender shall not make or execute
any such documents under such power until three (3) days after notice has been
given to Borrower by Lender of Lender’s intent to exercise its rights under such
power. Borrower shall be obligated to pay any costs or expenses incurred in
connection with the preparation, execution, recording or filing of the Severed
Loan Documents. The Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents and
any such representations and warranties contained in the Severed Loan Documents
will be given by Borrower only as of the Closing Date. The Severed Loan
Documents shall (a) not increase the aggregate stated principal amount of the
Loan, (b) provide that the weighted average spread of the Loan on the date of
such severance shall equal the weighted average spread which was applicable to
the Loan immediately prior to such severance (Borrower acknowledging that such
Severed Loan Document may, in connection with the application of principal to
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Severed Loan Documents, subsequently cause the weighted average spread of such
new notes or modified notes to change), (c) not adversely affect the overall
economics to Borrower of the Loan, taken as a whole, or (d) expose Borrower to
any additional costs or increased risk of any liability (beyond that or greater
than that existing in the Loan Documents in effect on the date hereof).

(c) Remedies Cumulative; Waivers. The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.

Section 8.3. Administration of Bankruptcy Claims. Borrower and Lender agree
that, with respect to each Operating Lease with respect to the Properties, each
Borrower hereby transfers to Lender, in the event of any proceeding involving
any Operating Company under the Bankruptcy Code or any similar proceeding, all
of such Borrower’s rights to (a) file any proof of such claims, (b) cast any
votes relating to any claims of such Borrower against such Operating Company, as
the case may be, in such proceedings, (c) collect and receive any dividends
payable with respect to such claims, (d) take any action or commence any
proceeding to collect such claims, (e) file any motion for relief from the stay
imposed under Section 362(a) of the Bankruptcy Code or any similar statute,
(f) file any motion to compel such Operating Company to assume or reject the
applicable Leases under the Bankruptcy Code or any similar statute, or (g) take
any other actions to collect or protect such claims. Borrower agrees that Lender
shall be the sole party permitted to participate in the administration of the
estate of Operating Company under any proceeding under the Bankruptcy Code or
any similar statute with respect any such claims.

Section 8.4. Costs of Collection. In the event that after an Event of Default
and during the continuance thereof: (a) the Note or any of the Loan Documents is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding; (b) an attorney is retained to
represent Lender in any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors’ rights and involving a claim under the Note or
any of the Loan Documents or (c) an attorney is retained to protect or enforce
the lien or any of the terms of this Agreement, the Mortgage or any of the Loan
Documents, then, in any such instance, Borrower shall pay to Lender all
reasonable attorneys’ fees, costs and expenses actually incurred in connection
therewith, including costs of appeal, together with interest on any judgment
obtained by Lender at the Default Rate.

 

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IX. SPECIAL PROVISIONS

Section 9.1. Servicer. (a) Lender shall service the Loan and administer the
Property through a servicer (the “Servicer”) pursuant to a servicing agreement,
and Lender hereby irrevocably delegates all authority hereunder and under the
other Loan Documents in connection with the Loan and its servicing and
administration of the Loan and the Property to Servicer (or to a replacement
servicer appointed by Lender pursuant to the terms of the Co-Lender Agreement).
Lender has initially retained Bank of America, N.A., in its capacity as the
initial Servicer, to service the Loan and administer the Property, and Lender
shall notify Borrower in writing of any change to the identity of the Servicer
that may be appointed by Lender pursuant to the terms of the Co-Lender
Agreement. Borrower acknowledges that, in the event of a Securitization, the
term “Servicer” may include a master servicer, primary servicer and/or special
servicer, as their duties may appear in the applicable securitization servicing
agreement. In furtherance and not in limitation of the foregoing,
notwithstanding anything herein or in any of the other Loan Documents to the
contrary (and excepting only in those instances in this Agreement which refer to
a Collateral Agent):

(i) all consents and approvals of Lender hereunder and under the other Loan
Documents of any kind shall be made by Servicer (with the consent of Lender in
accordance with and to the extent required in the Co-Lender Agreement, with the
consent of the Mezzanine Lender in accordance with and to the extent required in
the Intercreditor Agreement, and with the consent of the Specified Mezzanine
Lender in such capacity, solely to the extent required under Section 3.3(c) of
the Note Sales Agreement), and all determinations by Lender hereunder and under
the other Loan Documents of any kind (whether such determination is styled as or
requires that such determination be satisfactory, acceptable, reasonable or
otherwise) shall be made by Servicer (with the consent of Lender in accordance
with and to the extent required in the Co-Lender Agreement and with the consent
of the Mezzanine Lender in accordance with and to the extent required in the
Intercreditor Agreement);

(ii) the taking of all actions and the exercise of all discretion by Lender
hereunder and under the other Loan Documents of any kind (including without
limitation all requests for information, notices, opinions, certificates,
instruments, deliverables or other materials of any kind, all requests for any
Consolidated Entity or its Affiliates to take any action, the exercise of all
rights and remedies hereunder and under the other Loan Documents, including
elections with respect to terminations of or other actions under any
Organizational Documents, Operating Leases, Management Agreement, Shared
Services Agreements, Loan Documents, actions in respect of or in connection with
cash management, casualty events, insurance and actions pursuant to the
Co-Lender Agreement and the Intercreditor Agreement) shall be taken or exercised
by Servicer (with the consent of or at the direction of Lender in accordance
with and to the extent required by the Co-Lender Agreement, with the consent of
the Mezzanine Lender in accordance with and to the extent required in the
Intercreditor Agreement, and with the consent of the Specified Mezzanine Lender
in such capacity, solely to the extent required under Section 3.3(c) of the Note
Sales Agreement);

(iii) all payments of any kind (including without limitation payments of
principal, interest, late charges and payments into reserves or otherwise) that
are described herein as being made (or required in this Agreement or under any
of the other Loan Documents to be

 

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made) to Lender shall be made to Servicer (for application by the Servicer (as
applicable) in accordance with the servicing agreement, the Co-Lender Agreement
and the Intercreditor Agreement) other than, in each case, payments to any
Lender in respect of an Optional Note Purchase pursuant to the Note Sales
Agreement;

(iv) all deliveries of any kind (including without limitation notices, requests,
certificates, Officer’s Certificates or other materials (including financial
statements and information required by Section 5.1.11) required or desired to be
sent to Lender shall be sent to the Servicer; and

(v) all requests described in this Agreement as being made by Lender may be made
by Servicer or Collateral Agent on behalf of Lender.

(b) Notwithstanding anything herein or in any of the other Loan Documents to the
contrary, and excepting only in those instances in this Agreement which refer to
a Collateral Agent, Borrower is hereby directed to (1) take all instructions in
respect of actions or the exercise of discretion contemplated by clause
(ii) above from Servicer (and disregard any such from Lender), (2) to make all
payments contemplated by clause (iii) above to Servicer (and not to Lender) and
(3) to make all deliveries contemplated by clause (iv) above to Servicer (and
not to Lender). Borrower shall be entitled to rely on any consents, approvals or
determinations contemplated by clause (i) above by or from Servicer and/or
notices or instructions contemplated by clause (ii) above from Servicer and/or
requests from Servicer as if such consents, approvals, determinations, notices,
instructions and/or request had been from or by Lender, notwithstanding any
provision of this Agreement or of any Loan Document to the contrary.

For the avoidance of doubt, the term “Lender” as used in this Article IX
includes each Lender individually and the Lender collectively, and each
Noteholder individually and the Noteholders collectively. In addition, any
reference herein or in any other Loan Document to any consent, approval,
delivery, payment or other matter contemplated by the foregoing clauses
(i) through (iv) to be obtained by or provided to any Mezzanine Lender shall
mean the consent, approval, delivery, payment or other such matter to or of the
applicable servicer acting on behalf of the applicable Mezzanine Lender pursuant
to the corresponding provisions of this Article IX under the applicable
Mezzanine Loan Documents.

(c) Lender shall be responsible for the payment of the monthly servicing fee due
to Servicer in connection with its servicing of the Loan and the Notes (on a pro
rata basis) (and Lender may pay the monthly servicing fee out of any amounts
paid by Borrower to Servicer on behalf of Lender hereunder), and, unless
otherwise specifically set forth herein, Borrower shall be responsible for the
payment of all fees and other reasonable out-of-pocket expenses incurred by
Servicer resulting from any Borrower requests (for approvals, consents, waivers,
amendments, modifications or otherwise) to Servicer, or resulting from any
action taken by Lender or Servicer hereunder subsequent to an Event of Default
(including, without limitation, liquidation fees, workout fees, special
servicing fees and interest payable on advances made by the Servicer with
respect to delinquent debt service payments or expenses of curing Borrowers’
defaults under the Loan Documents).

 

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(d) Notwithstanding anything to the contrary contained in this Agreement
(including without limitation and for purposes of clarification only, Sections
2.5.1, 2.5.2, 2.5.3 and 2.5.4 of this Agreement), with respect to any request
hereunder for which the Servicer is required to analyze, review and/or evaluate
releases, easements, leases, construction and/or similar items and/or request
(including without limitation and for purposes of clarification only, this
review to include such required review as set forth under Sections 2.5.1, 2.5.2,
2.5.3 and 2.5.4 of this Agreement), the Servicer shall be permitted to charge a
reasonable fee to the Borrower in connection therewith (with the aggregate of
such fees hereunder and any fees under the corresponding provisions of any
Mezzanine Loan Agreement not to exceed a maximum amount of $175,000 during the
term of this Agreement).

Section 9.2. Exculpation. (a) Subject to the qualifications below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Note, this Agreement, the Mortgages or the other
Loan Documents by any action or proceeding wherein a money judgment shall be
sought against Borrower, except that Lender may bring a foreclosure action, an
action for specific performance or any other appropriate action or proceeding to
enable Lender to enforce and realize upon its interest under the Note, this
Agreement, the Mortgages and the other Loan Documents, or in the Properties, the
Rents, or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower’s interest in the Properties, in the Rents and in any other
collateral given to Lender, and each Lender, by accepting the Note, this
Agreement, the Mortgages and the other Loan Documents, agrees that it shall not
sue for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding under, or by reason of, or in connection with, the Note,
this Agreement, the Mortgages or the other Loan Documents. The provisions of
this Section 9.2 shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under any of the Mortgages; (c) affect
the validity or enforceability of or any Guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the
right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of any of the Assignments of Leases; (f) constitute a prohibition
against Lender to seek a deficiency judgment against Borrower in order to fully
realize the security granted by each of the Mortgages or to commence any other
appropriate action or proceeding in order for Lender to exercise its remedies
against all of the Properties; or (g) constitute a waiver of the right of Lender
to enforce the liability and obligation of Borrower, by money judgment or
otherwise, to the extent of any actual loss, damage, cost, expense, liability,
claim or other obligation incurred by or on behalf of Lender (including
attorneys’ fees and costs reasonably incurred) arising out of or in connection
with the following:

(i) fraud or intentional misrepresentation by any Borrower, any Manager, any
Operating Company or any Guarantor in connection with the execution and delivery
of the Loan Documents and/or the Loan;

 

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(ii) the misappropriation, conversion or misapplication in contravention of the
Loan Documents by any Borrower, any Manager, any Operating Company or any
Guarantor of any funds of any Borrower, any Manager or any Operating Company,
including, without limitation, (A) any Revenues, (B) any Insurance Proceeds paid
by reason of any Casualty, (C) any Awards received in connection with a
Condemnation, or (D) any Rents or security deposits (or any item of Revenue,
from whatever source) following an Event of Default;

(iii) the misappropriation, conversion or misapplication by any Borrower, any
Manager, any Operating Company or any Guarantor of any security deposits or
Rents paid more than one (1) month in advance;

(iv) any act of actual intentional physical waste by any Borrower, any Manager,
any Operating Company or any Guarantor;

(v) the breach of any representation, warranty, covenant or indemnification
provision in the Environmental Indemnity or in the Mortgages concerning
environmental laws, hazardous substances and asbestos and any indemnification of
Lender, Servicer or Collateral Agent with respect thereto in either document;

(vi) if any Borrower or any Operating Company fails to obtain Lender’s prior
consent to any voluntary intentional Transfer as required by this Agreement or
the Mortgages;

(vii) any security deposits, advance deposits or any other deposits collected
with respect to any of the Properties which are not delivered to Lender upon a
foreclosure of any of the Properties or action in lieu thereof, except to the
extent any such security deposits were applied in accordance with the terms and
conditions of any of the Leases prior to the occurrence of the Event of Default
that gave rise to such foreclosure or action in lieu thereof;

(viii) in the event of: (A) any Borrower, any Operating Company or any Guarantor
filing a voluntary petition under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law; (B) the filing of an involuntary petition
against any Borrower, any Operating Company or any Guarantor under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by
any Person in which such Borrower, such Operating Company or such Guarantor or
any of their respective Affiliates, agents or employees colludes with or such
other Person, or such Borrower, such Operating Company or such Guarantor
soliciting or causing to be solicited petitioning creditors for any involuntary
petition against such Borrower, such Operating Company or such Guarantor from
any Person; (C) any Borrower, any Operating Company or any Guarantor filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against it by any other Person, other than Lender, under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(D) any Borrower, any Operating Company or any Guarantor consenting to or
acquiescing in or joining in an application for the appointment of a custodian,
receiver, trustee, or examiner for such Borrower, such Operating Company or such
Guarantor or any of the Properties or any portion thereof, other than at the
request of Lender; or (E) any Borrower, any Operating Company or any Guarantor
making an assignment for the benefit of creditors (other than Lender), or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due;

 

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(ix) if any Borrower fails to maintain its status as a Special Purpose Entity or
breaches any material representation or warranty set forth in Section 4.1.30 of
this Agreement; and

(x) if any Borrower or any Operating Company fails to obtain Lender’s prior
consent to any voluntary Indebtedness (other than Permitted Indebtedness or
Permitted Indebtedness (Operating Company), as applicable) or voluntary Lien
(other than Permitted Encumbrances) encumbering any of the Properties as
required by this Agreement or the Mortgages.

Notwithstanding anything to the contrary under this Agreement, neither any
present or future Affiliate of any Borrower (other than Guarantor, to the extent
provided under the Guaranty) nor any present or future shareholder, officer,
director, employee, trustee, beneficiary, advisor, partner, member, principal,
participant or agent of or in any Borrower or of or in any person or entity that
is or becomes an Affiliate of any Borrower shall have any personal liability,
directly or indirectly, under or in connection with the Loan Documents. Neither
the negative capital account of any Affiliate of any Borrower in such Borrower,
or in any other Affiliate of such Borrower, nor any obligation of any Affiliate
of any Borrower in such Borrower to restore a negative capital account or to
contribute or loan capital to such Borrower or to any other Affiliate of such
Borrower shall at any time be deemed to be the property or an asset of such
Borrower (or any other Affiliate of such Borrower) and neither Lender nor its
successors or assigns shall have any right to collect, enforce or proceed
against any such negative capital account or obligation to restore, contribute
or loan capital.

(b) Notwithstanding anything to the contrary in this Agreement, the Note or any
of the Loan Documents, Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code to file a claim for the full amount of the Indebtedness or
to require that all collateral shall continue to secure all of the Indebtedness
owing to Lender in accordance with the Loan Documents.

Section 9.3. Assignments. The Noteholders shall have the right, subject to this
Section 9.3 and the applicable provisions of the Co-Lender Agreement and the
Intercreditor Agreement, to assign, sell, negotiate, pledge or hypothecate all
or any portion of their rights and obligations under their respective Notes
(such assignments, sales, negotiations, pledges and/or hypothecations,
collectively, an “Assignment”). No Noteholder shall assign, sell, negotiate,
pledge, hypothecate or otherwise transfer all or any portion of its rights in
and to a Note to any other Person (an “Assignee”) (a) other than in compliance
with Section 9.6, the Co-Lender Agreement and the Intercreditor Agreement, and
(b) unless such transaction shall be an assignment of a constant (and not
varying), ratable percentage of such Noteholder’s interest in the Loan;
provided, however, any Noteholder shall have the right at any time without the
consent of or notice to any other Noteholder or other Person (but only if in
compliance with the Co-Lender Agreement and Intercreditor Agreement) to grant a
security interest in all or any portion of such Noteholder’s interest in the
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reserve bank or similar authority of any other country to secure any obligation
of such Noteholder to such bank or similar authority (a “Central Bank Pledge”).
Effective on any such assignment and assumption by the Assignee and on
compliance with Section 9.6 hereof, the assigning Noteholder shall have no
further liability hereunder with respect to the interest of such Noteholder that
was the subject of such transfer and such Assignee shall be a Noteholder with
respect to such interest, and Borrower shall have the same rights as to such
Noteholder with respect to such interest from and after the date of such
assignment as if such Noteholder were an original Noteholder hereunder. Except
for a Central Bank Pledge or financing transaction under a repurchase agreement,
a Noteholder making any such assignment shall notify Borrower of same,
specifying the Assignee thereof and the amount of the assignment and shall
provide such other detail as Borrower may reasonably request to substantiate
compliance with the foregoing.

Section 9.4. Participation. Each Noteholder may, without the consent of the
Borrower, in compliance with applicable law, sell participations to one or more
banks or other entities (a “Participant”), in all or a portion of such
Noteholder’s rights and obligations under this Agreement (including all or a
portion of the Note owing to it); provided that (A) such Noteholder’s
obligations under this Agreement, the Intercreditor Agreement and the Co-Lender
Agreement shall remain unchanged, (B) such Participant complies with the
applicable provisions of the Co-Lender Agreement and Intercreditor Agreement,
(C) such Noteholder shall remain solely responsible to the other parties hereto
for the performance of such obligations and (D) the Borrower and the other
Noteholders shall continue to deal solely and directly with such Noteholder in
connection with such Noteholder’s rights and obligations under this Agreement.
The Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.2.3 and 2.2.4 (subject to requirements and limitations therein) to
the same extent as if it were a Noteholder and had acquired its interest by
assignment pursuant to Sections 9.3 and 9.6. Each Noteholder (or servicer or
designee on its behalf) that sells a participation shall, acting solely for this
purpose as an agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
this Agreement (the “Participant Register”). The entries in the Participant
Register shall be conclusive absent manifest error, and such Noteholder shall
treat each person whose name is recorded in the Participant Register as the
owner of such Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement notwithstanding any notice to the contrary.

Section 9.5. Borrower’s Facilitation of Transfer. In order to facilitate
permitted Assignments and other transfers to Assignees and sales to
Participants, Borrower shall execute and deliver to Lender and shall cause
Guarantor to execute and deliver to Lender such further documents, instruments
or agreements as Lender may reasonably require, including supplemental or
severed notes substantially in the form of the existing notes against surrender
of the prior notes. Such supplemental or severed notes shall provide that they
evidence a portion of the existing indebtedness hereunder and under the Notes
and not any new or additional indebtedness of the Borrower. The term “Note” as
used in this Agreement and in all the other Loan Documents shall include all
such supplemental or severed notes related to such Note but shall exclude any
Note it replaces. The provisions of Section 2.1.5 shall apply to any such
supplemental or severed notes (such provisions being incorporated herein by this
reference). Notwithstanding the foregoing, such documents, instruments or
agreements shall not (a) increase the obligations or liabilities of any such
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excess of the obligations or liabilities intended to be provided herein or in
the other Loan Documents or (b) decrease such Person’s rights hereunder or under
the other Loan Documents to less than what they were prior to the execution of
such documents, instruments or agreements.

Section 9.6. Notice; Registration Requirement. No sale or Assignment of any part
of a Lender’s interest in and to the Loan and its Note, other than as
contemplated by Section 9.4 hereof, shall be effective or permitted hereunder
unless and until (a) an assignment and acceptance agreement substantially in the
form of Exhibit C is executed and delivered by the parties to such sale (an
“Assignment and Acceptance”) shall have been delivered to Servicer, (b) Servicer
shall have registered such Assignee’s name and address in the Register which
Servicer maintains for the recordation of the names, addresses and interests of
Noteholders, and (c) if such Assignee is not already a Noteholder hereunder,
such Assignee shall deliver any tax forms required hereunder. The entries in the
Register shall be conclusive, absent manifest error. This Section 9.6 shall not
apply to any Central Bank Pledge.

Section 9.7. Registry. Borrower hereby designates Lender to serve as Borrower’s
agent, and Lender hereby designates Servicer to serve as its agent, solely for
purposes of this Section 9.7, to maintain at one of its offices a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of each Assignee, and the principal amount of the Loan
(or portions thereof) owing to, each Lender pursuant to the terms hereof and the
Note Sales Agreement from time to time (the “Register”). Failure to make any
such recordation, or any error in such recordation shall not affect Borrower’s
obligations in respect of the Loan. With respect to any Noteholder, the transfer
of the rights to the principal of, and interest on, its interest in the Loan and
a Note shall not be effective until such transfer is recorded on the Register
maintained by Servicer with respect to ownership of such Loan and a Note and
prior to such recordation all amounts owing to the transferor with respect to
such Note shall remain owing to the transferor. The registration of a transfer
of all or part of the Loan and a Note shall be recorded by Servicer on the
Register only upon the acceptance by Servicer of a properly executed and
delivered Assignment and Acceptance by the assignor and assignee. Such Register
shall be available for inspection by Borrower from time to time. At the
assigning Noteholder’s option, concurrently with the delivery of an Assignment
and Acceptance pursuant to which an interest of such Noteholder in the Loan and
Note was assigned to such Assignee, the assigning Noteholder shall surrender to
Borrower its Note, if any, evidencing the portion of the Loan corresponding to
the interest so transferred and Borrower shall deliver to Noteholder one or more
new promissory notes in the same aggregate principal amount issued to the
assigning Noteholder and/or the Assignee.

Section 9.8. Cooperation in Syndication. (a) Borrower agrees, upon the request
of one or more Initial Lenders, to use commercially reasonable efforts to assist
each such Initial Lender in connection with one secondary syndication (per
Initial Lender) of the Loan or of all or any portion of such Initial Lender’s
Note (a “Syndication”). Such assistance with such an Assisted Syndication shall
include, with respect to each Initial Lender’s Assisted Syndication, using
commercially reasonable efforts to (i) facilitate direct contact between senior
management, advisors and Affiliates of Borrower and the proposed Assignees
and/or Participants, (ii) assist in the preparation of such Disclosure Documents
as shall be used in connection with each Assisted Syndication, and providing
information with respect to Borrower, Holdings, Manager, the Operating Company,
Guarantor and the Properties contemplated hereby, including all financial

 

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information and projections (the “Projections”), as each Initial Lender may
reasonably request in connection with each Assisted Syndication, (iii) host with
each Initial Lender together with its prospective Assignees and/or Participants,
or attend one or more meetings with prospective Assignees and/or Participants,
(iv) attend periodic update calls with each Initial Lender engaged in an
Assisted Syndication and its prospective Assignees and/or Participants, and
(v) provide such other general assistance as reasonably requested by any Initial
Lender in each Assisted Syndication and marketing of the Debt (Borrower agreeing
to use commercially reasonable efforts to cause its senior management, advisors
and Affiliates to cooperate as aforesaid and as shall be reasonably requested by
each such Initial Lender).

(b) If reasonably required in connection with any Assisted Syndication, Borrower
hereby agrees to use commercially reasonable efforts to:

(i) deliver updated financial and operating statements and other information
reasonably required by each Initial Lender to facilitate each such Initial
Lender’s Assisted Syndication;

(ii) upon the reasonable request of an Initial Lender engaging in an Assisted
Syndication, use reasonable efforts to deliver reliance letters reasonably
satisfactory to such Initial Lender(s) with respect to the environmental
assessments and reports delivered to the Lender prior to the Original Closing
Date (or, with respect to each Swap Property, prior to the Swap Closing Date),
which will run to the requesting Initial Lender(s) and its or their successors
and assigns; and

(iii) if the Initial Lender elects, in its sole discretion, prior to or upon a
Syndication, to exercise its rights under Section 2.1.5, Borrower agrees to
cooperate with the Initial Lender engaged in the Assisted Syndication in
connection with the foregoing and to execute the required modifications and
amendments to the Notes, this Agreement and the Loan Documents and to use
reasonable efforts to provide opinions necessary to effectuate the same.

(c) Each Initial Lender engaged in an Assisted Syndication and Borrower each
shall pay their respective costs and expenses incurred in connection with the
foregoing, including, without limitation, legal fees in connection with any of
the foregoing matters, except that all costs and expenses of Borrower associated
with (1) any restructuring of the Loan requested by a Lender under clause
(iii) above and (2) any actions requested by a Lender under clause (ii) above,
shall in each case be paid solely by such Initial Lender.

Section 9.9. Sale of Notes and Securitization. Borrower acknowledges and agrees
that each Lender may sell all or any portion of its Note and its interest in the
Loan Documents, or issue one or more participations therein, or consummate one
or more private or public securitizations of rated or unrated single- or
multi-class securities (the “Securities”) secured by or evidencing ownership
interests in all or any portion of its Note and its interest in the Loan
Documents or a pool of assets that include its Note and interest in the Loan
Documents (such sales, participations and/or securitizations, collectively, a
“Securitization”). Borrower agrees, upon the request of one or more Initial
Lenders, to use commercially reasonable efforts to assist such Initial Lender in
connection with one Assisted Securitization (per Initial Lender) with respect to
each such Initial Lender and, in connection therewith, shall use commercially

 

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reasonable efforts to provide information not in the possession of each such
requesting Initial Lender or which may be reasonably required by each such
requesting Initial Lender in order to satisfy the market standards to which such
Initial Lender customarily adheres or which may be reasonably required by
prospective purchasers, investors and/or the Rating Agencies in connection with
any such Assisted Securitization, or which are required to comply with any
applicable securities laws (provided that, notwithstanding anything to the
contrary herein, nothing contained in this Section 9.9 shall contravene or
diminish Borrower’s obligation to provide all information and other items
otherwise required to be provided under any other provision of this Agreement),
including, without limitation, to:

(a) provide additional and/or updated Provided Information, together with
appropriate verification and/or consents related to the Provided Information
through letters of auditors or opinions of counsel of independent attorneys
reasonably acceptable to the requesting Initial Lender and, if applicable, the
Rating Agencies;

(b) cooperate in good faith in the preparation of descriptive materials for
presentations to any or all of the Rating Agencies, and work with, and if
requested, supervise, third-party service providers engaged by Borrower,
Holdings and their respective affiliates to obtain, collect, and deliver
information requested or required by the requesting Initial Lender or, if
applicable, the Rating Agencies;

(c) deliver, if required or requested by any Rating Agency, (i) updated opinions
of counsel as to non-consolidation, due execution and enforceability with
respect to the Properties, Borrower, Holdings and their respective Affiliates
and the Loan Documents, and (ii) revised organizational documents for Borrower,
which counsel opinions and organizational documents shall be reasonably
satisfactory to the requesting Initial Lender and the Rating Agencies;

(d) if required by any Rating Agency, use commercially reasonable efforts to
deliver such additional tenant estoppel letters, subordination agreements or
other agreements from parties to agreements that affect any of the Properties,
which estoppel letters, subordination agreements or other agreements shall be
reasonably satisfactory to the requesting Initial Lender and the Rating
Agencies;

(e) execute such amendments to the Loan Documents as may be requested by the
requesting Initial Lender and/or the Rating Agencies to effect the Assisted
Securitization and/or deliver one or more new component notes to replace the
original note or modify the original note to reflect multiple components of the
Note such that the pricing and marketability of the Securities and the size of
each class of Securities and the rating assigned to each such class by the
Rating Agencies shall provide the most favorable rating levels and achieve the
optimum rating levels for the Note in question, provided that (i) the aggregate
stated principal amount of the notes, following such amendments or delivery of
new or component notes, shall equal the aggregate stated principal amount of the
Note immediately prior thereto, (ii) the interest rate spread of the Note on the
date of such amendment or delivery of new or component notes shall not be
modified, (iii) subject to the provisions of, and the prepayments as described
in, the Note Sales Agreement, all payments of principal in respect of the Note
and the Loan (other than payments of principal on account of the Specified
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be applied ratably to all Notes and new notes or modified notes (including in
respect of any amortization payments and any applications of Net Proceeds or Net
Sales Proceeds or otherwise), and (iv) the provisions of Section 2.1.5 otherwise
shall apply to any such amendments and delivery of new or component notes (such
provisions being incorporated herein by this reference);

(f) if requested by an Initial Lender, review any information regarding any of
the Properties, Borrower, Principal, Holdings, the Operating Company and the
Loan which is contained in the Disclosure Documents (including any amendment or
supplement to any thereof) as are being used by the requesting Initial Lender or
any affiliate thereof; and

(g) supply to each requesting Initial Lender such documentation, financial
statements and reports in form and substance required in order to comply with
any applicable securities laws (to the extent in Borrower’s possession, or in
the possession of Borrower’s advisors, agents or employees), including, without
limitation, if applicable, information necessary to comply with any applicable
reporting or information requirements under Regulation AB or Rule 144A,
Regulation D or Regulation S under the Securities Act of 1933, or the Exchange
Act.

Each Initial Lender engaging in an Assisted Securitization and Borrower shall
pay their respective costs and expenses incurred in connection with the
foregoing, including, without limitation, legal fees in connection with any of
the foregoing matters; except that all costs and expenses of each such Initial
Lender and Borrower associated with any restructuring of the Loan requested by
any such Initial Lender, including under Sections 2.1.5, shall be paid solely by
such Initial Lender.

Section 9.10. Securitization Indemnification. (a) Borrower understands that
certain of the Provided Information may be included in Disclosure Documents in
connection with any Assisted Securitization and may also be included in filings
with the SEC pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to any Assisted
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower will cooperate with each
Initial Lender in updating the Disclosure Document in connection with an
Assisted Securitization by providing all current information necessary to keep
the Disclosure Document accurate and complete in all material respects to the
extent in Borrower’s possession.

(b) Borrower agrees to provide, in connection with any Assisted Securitization,
an indemnification agreement (i) certifying that (A) Borrower has carefully
examined the Disclosure Documents, including, if applicable and without
limitation, the sections entitled “Risk Factors,” “Special Considerations,”
“Description of the Mortgages,” “Description of the Mortgage Loans and Mortgaged
Property,” “The Operating Company,” “The Borrower” and “Certain Legal Aspects of
the Mortgage Loan,” and/or such sections in Disclosure Documents under different
headings and containing information provided by the Borrower relating to the
Properties, Borrower, Principal, Holdings, the Operating Company and the Loan
and (B) such sections and such other information in the Disclosure Documents

 

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(to the extent such information relates to or includes any Provided Information
or any information regarding the Properties, Borrower, Principal, Holdings, the
Operating Company and the Loan) (collectively with the Provided Information, the
“Covered Disclosure Information”) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, (ii) indemnifying the applicable Initial Lender, and any
Affiliate of such Initial Lender that has filed any registration statement
relating to an Assisted Securitization or has acted as the sponsor or depositor
in connection with an Assisted Securitization, any Affiliate of the applicable
Initial Lender that acts as an underwriter, placement agent or initial purchaser
of Securities issued in the Assisted Securitization, any other co-underwriters,
co-placement agents or co-initial purchasers of Securities issued in the
Assisted Securitization, and each of their respective officers, directors,
partners, employees, representatives, agents and Affiliates and each Person or
entity who controls any such Person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the “Indemnified
Persons”), for any losses, claims, damages, liabilities, costs or expenses
(including, without limitation, legal fees and expenses for enforcement of these
obligations (collectively, the “Liabilities”)) to which any such Indemnified
Person may become subject (whether or not arising from any third party claim)
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Covered
Disclosure Information or arise out of or are based upon the omission or alleged
omission to state in the Covered Disclosure Information a material fact required
to be stated therein or necessary in order to make the statements in the Covered
Disclosure Information, in light of the circumstances under which they were
made, not misleading and (iii) agreeing to reimburse each Indemnified Person for
any legal or other expenses incurred by such Indemnified Person, as they are
incurred, in connection with investigating or defending the Liabilities
provided, however, that Borrower shall have liability with respect to
Liabilities arising out of or based upon the Covered Disclosure Information only
to the extent that such Liabilities arise out of or are based upon any such
untrue statement or omission made in the Covered Disclosure Information in
reliance upon and in conformity with information furnished to the applicable
Initial Lender or the Noteholders by or on behalf of Borrower in connection with
the preparation of the Disclosure Documents or in connection with the
underwriting or the closing of the Loan (including without limitation financial
statements of Borrower and operating statements and rent rolls with respect to
the Properties), and in no event shall Borrower be liable for Liabilities
arising from information contained in a Disclosure Document that was not
provided to Borrower for comment at least five (5) Business Days prior to its
dissemination or on which Borrower provided comments to Initial Lender in
writing and Initial Lender failed to incorporate such comments (assuming such
comments were accurate). This indemnity agreement will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (ii) and (iii) above shall be effective whether or not
an indemnification agreement described in clause (i) above is provided.

(c) In connection with filings under the Exchange Act (if any), Borrower agrees
to indemnify (i) the Indemnified Persons for Liabilities to which any such
Indemnified Person may become subject insofar as the Liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact in the Covered Disclosure Information, or the omission or alleged omission
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Information a material fact required to be stated therein or necessary in order
to make the statements in the Covered Disclosure Information, in light of the
circumstances under which they were made, not misleading and (ii) reimburse each
Indemnified Person for any legal or other expenses incurred by such Indemnified
Persons, as they are incurred, in connection with defending or investigating the
Liabilities.

(d) Promptly after receipt by an Indemnified Person of notice of any claim or
the commencement of any action, the Indemnified Person shall, if a claim in
respect thereof is to be made against Borrower, notify Borrower in writing of
the claim or the commencement of that action; provided, however, that the
failure to notify Borrower shall not relieve it from any liability which it may
have under the indemnification provisions of this Section 9.10 except to the
extent that it has been materially prejudiced by such failure and, provided,
further, that the failure to notify Borrower shall not relieve it from any
liability which it may have to an Indemnified Person otherwise than under the
provisions of this Section 9.10. If any such claim or action shall be brought
against an Indemnified Person, and it shall notify Borrower thereof, Borrower
shall be entitled to participate therein and, to the extent that it wishes,
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Person. After notice from any Borrower to an Indemnified Person of
its election to assume the defense of such claim or action, Borrower shall not
be liable to the Indemnified Person for any legal or other expenses subsequently
incurred by the Indemnified Person in connection with the defense thereof except
as provided in the following sentence; provided, however, if the defendants in
any such action include both Borrower, on the one hand, and one or more
Indemnified Persons on the other hand, and an Indemnified Person shall have
reasonably concluded that there are any legal defenses available to it and/or
other Indemnified Persons that are different or in addition to those available
to Borrower, the Indemnified Person or Persons shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in
the defense of such action on behalf of such Indemnified Person or Persons. The
Indemnified Person shall instruct its counsel to maintain reasonably detailed
billing records for fees and disbursements for which such Indemnified Person is
seeking reimbursement hereunder and shall submit copies of such detailed billing
records to substantiate that such counsel’s fees and disbursements are solely
related to the defense of a claim for which Borrower is required hereunder to
indemnify such Indemnified Person. Borrower shall not be liable for the expenses
of more than one (1) such separate counsel unless such Indemnified Person shall
have reasonably concluded that there may be legal defenses available to it that
are different from or additional to those available to another Indemnified
Person.

(e) Without the prior consent of the Indemnified Person in question (which
consent shall not be unreasonably withheld), Borrower shall not settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless Borrower shall
have given such Indemnified Person reasonable prior notice thereof and shall
have obtained an unconditional release of each Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceedings. As long as
Borrower has complied with its obligations to defend and indemnify hereunder,
Borrower shall not be liable for any settlement made by any Indemnified Person
without the consent of Borrower (which consent shall not be unreasonably
withheld).

 

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(f) Borrower agrees that if any indemnification or reimbursement sought pursuant
to this Section 9.10 is finally judicially determined to be unavailable for any
reason or is insufficient to hold any Indemnified Person harmless (with respect
only to the Liabilities that are the subject of this Section 9.10), then
Borrower, on the one hand, and such Indemnified Person, on the other hand, shall
contribute to the Liabilities for which such indemnification or reimbursement is
held unavailable or is insufficient: (x) in such proportion as is appropriate to
reflect the relative benefits to Borrower, on the one hand, and such Indemnified
Person, on the other hand, from the transactions to which such indemnification
or reimbursement relates; or (y) if the allocation provided by clause (x) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (x) but also the
relative faults of Borrower, on the one hand, and all Indemnified Persons, on
the other hand, as well as any other equitable considerations. Notwithstanding
the provisions of this Section 9.10, (A) no party found liable for a fraudulent
misrepresentation shall be entitled to contribution from any other party who is
not also found liable for such fraudulent misrepresentation, and (B) Borrower
agrees that in no event shall the amount to be contributed by the Indemnified
Persons collectively pursuant to this paragraph exceed the amount of the fees
(by underwriting discount or otherwise) actually received by the Indemnified
Persons in connection with the closing of the Loan or the Securitization.

(g) Borrower agrees that the indemnification, contribution and reimbursement
obligations set forth in this Section 9.10 shall apply whether or not any
Indemnified Person is a formal party to any lawsuits, claims or other
proceedings. Borrower further agrees that the Indemnified Persons are intended
third party beneficiaries under this Section 9.10.

(h) The liabilities and obligations of the Indemnified Persons and Borrower
under this Section 9.10 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

Notwithstanding anything to the contrary contained herein, Borrower shall have
no obligation to act as depositor with respect to the Loan or an issuer or
registrant with respect to the Securities issued in any Securitization.

Section 9.11. Amendments to the Co-Lender Agreement, Intercreditor Agreement,
Servicing Agreement and Participation Agreements. (a) On or prior to the Closing
Date, Lender has provided to Borrower copies of the servicing agreement with
Servicer, the Co-Lender Agreement, the Intercreditor Agreement and all other
intercreditor/participation agreements that are in effect on the Closing Date.
Lender will provide to Borrower copies of any additional or supplemental
servicing agreements, Co-Lender Agreements, Intercreditor Agreements and all
other new intercreditor/participation agreements that are entered into by Lender
subsequent to the Closing Date and any amendments, modifications or supplements
to any of the foregoing documents in effect on or executed after the Closing
Date (any such additional, supplemental or new servicing agreements, Co-Lender
Agreement, Intercreditor Agreement and/or intercreditor/participation agreement,
or any such amendments, modifications or supplements effected after the Closing
Date, a “New Syndication Arrangement”), with respect to, in connection with, or
otherwise affecting the Loan, the Notes, the Mezzanine Notes or the terms
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Arrangements will be, with respect to the substance of the voting matters set
forth in such agreements and the aggregate percentage interest of the parties
thereto required to consent to such voting matters, in each case, if applicable,
as set forth in each such agreement (such matters and percentage interests,
collectively, the “Voting Matters”), (i) substantially consistent with such
Voting Matters as are set forth in the Co-Lender Agreement, intercreditor
agreement or participation agreement (as applicable depending on the agreement
that is being supplemented, amended or replaced) in effect on the date hereof
(or, if such New Syndication Arrangement is not replacing, supplementing,
modifying or amending an agreement in effect on the Closing Date, then
substantially consistent with the Voting Matters set forth in the Co-Lender
Agreement) or, if not, reasonably acceptable to Borrower with respect to such
Voting Matters, and (ii) otherwise consistent with the provisions hereof and of
the other Loan Documents. Borrower shall have the right to reasonably approve
the substance of the Voting Matters set forth in each New Syndication
Arrangement; provided, that, to the extent that the provisions thereof
consisting of the Voting Matters, if any, either (x) are not material and
adverse to Borrower or (y) they otherwise comply with the immediately preceding
clauses (i) and (ii), then in either case Borrower’s consent to such New
Syndication Arrangement shall not be unreasonably withheld or delayed.

(b) Borrower hereby confirms its understanding that the references to
intercreditor and participation agreements in the foregoing paragraph are not
intended to include references to participation agreements entered into solely
between a Lender and a Participant on or after the date hereof in compliance
with Section 9.4.

Section 9.12. Collateral Agent. (a) Pursuant to that certain Co-Origination
Agreement dated January 28, 2008 by and among, inter alia, JPM and the other
Initial Lenders or their predecessors (as amended from time to time, the
“Co-Origination Agreement”), JPM and the other parties thereto agreed amongst
themselves to extend the Original Loan to Borrower and accordingly, JPM, on
behalf of itself and the Lenders or their predecessors party to the
Co-Origination Agreement, entered into the Original Loan Agreement and the
various loan documents contemplated thereby and has acted as the secured party
of record and mortgagee of record for purposes of the grants of security and
collateral contained in the various Loan Documents.

(b) Each Lender hereby irrevocably (i) designates and appoints Bank of America,
N.A., as the Collateral Agent with respect to the agreements, instruments,
insurance policies and certificates (including title policies and endorsements)
and other documents listed on Schedule XXXIV (collectively, the “Collateral Loan
Documents”), to act as secured party or other applicable named party (including,
without limitation, as named insured and loss payee) on behalf of the Lenders,
(ii) names the Collateral Agent as a replacement mortgagee of record and the
replacement secured party of record, and (iii) authorizes the Collateral Agent,
in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties (A) as are expressly delegated to the Collateral Agent by the terms
of this Agreement and the other Loan Documents and (B) as are necessary to
comply with any direction given to the Collateral Agent by the Servicer,
together with such other powers as are reasonably incidental thereto, with
respect to the Collateral Loan Documents. Collateral Agent hereby (1) accepts
such designation and appointment, (2) agrees to act as a replacement mortgagee
of record and as the

 

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replacement secured party of record, (3) agrees to reasonably cooperate with the
Servicer in the performance of its obligations and in acting upon the direction
of the Servicer, and (4) agrees to take such actions on behalf of Lender and
exercise such powers and perform such duties (i) as are expressly delegated to
it by the terms of this Agreement and the other Loan Documents and (ii) as are
necessary or advisable to comply with any direction given to the Collateral
Agent by the Servicer, together with such other powers as are reasonably
incidental thereto, with respect to the Collateral Loan Documents.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Collateral Agent shall not have any duties or responsibilities except those
expressly set forth herein or in the Collateral Loan Documents, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Collateral
Agent. Collateral Agent may execute any of its duties under this Agreement and
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Collateral Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care. Neither
Collateral Agent nor any of its officers, directors, employees, agents or
attorneys-in-fact shall be (a) liable for any action lawfully taken or omitted
to be taken by it or such person under or in connection with this Agreement or
any other Loan Document (except for its or such person’s own gross negligence or
willful misconduct) or (b) responsible in any manner to any Lender for any
recitals, statements, representations or warranties made by any Borrower herein
or in any report, statement or other document referred to or provided for in, or
received by such Collateral Agent under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Borrower to perform its obligations hereunder or
thereunder. Collateral Agent shall be under no obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Borrower. Collateral
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless it shall have received notice from
a Lender, Servicer or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default.”

(c) Collateral Agent agrees that it will confirm receipt (in a writing to each
Lender) of any Collateral Loan Document that it receives (including following
the recordation of any such Collateral Loan Documents, from time to time) within
ten (10) Business Days of the receipt of each such Collateral Loan Document (in
each case). Collateral Agent shall (or shall cause its designee) to review the
Loan Documents constituting the custodial file (as set forth on the closing
checklist of the Loan Documents to be delivered in connection with the
origination of the amended and restated Loan on the Closing Date) and, within
ten (10) Business Days of receipt thereof, deliver to the Lender a trust
receipt, in compliance with that certain custodial arrangement between the
Lender and Bank of America, N.A., as custodian, evidencing receipt of such Loan
Documents, together with a schedule of exceptions to such receipt. The
Collateral Agent (or its designee) shall continue to act as the custodian of the
Loan Documents on behalf of Lender and shall comply with the terms and
provisions of any existing custodial arrangement with the Lender with respect
thereto.

 

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(d) Collateral Agent, in its capacity as such, is a “representative” of each
Lender within the meaning of the term “secured party” as defined in the New York
Uniform Commercial Code. Each Lender authorizes the Collateral Agent to enter
into each of the Collateral Loan Documents to which it is a party and to take
all action contemplated in this Agreement and in such documents to be taken by
the Collateral Agent. Each Lender agrees that no Lender (other than the
Collateral Agent, in its capacity as the Collateral Agent) shall have the right
individually to seek to realize upon the security granted by any Collateral Loan
Document, it being understood and agreed that such rights and remedies may be
exercised solely by the Collateral Agent (for the benefit of each Lender) at the
direction of the Servicer in accordance with the Collateral Loan Documents, any
applicable Co-Lender Agreement and any applicable intercreditor or servicing
agreements. In the event that any collateral is hereafter pledged by any person
as collateral security for the Debt, the Collateral Agent is hereby authorized,
and hereby granted a power of attorney, to execute and deliver on behalf of each
Lender any Loan Documents necessary or appropriate to grant and perfect a first
priority lien on such collateral in favor of the Collateral Agent for the
benefit of Lender. Each Lender hereby authorizes the Collateral Agent to release
any lien granted to or held by the Collateral Agent upon any collateral as
permitted by, but only in accordance with, the direction of the Servicer and the
express terms of this Agreement, the applicable Loan Document and the applicable
provisions of the Co-Lender Agreement. Upon request by the Collateral Agent at
any time, and in each case subject to the requirements and approvals required in
the Co-Lender Agreement, each Lender shall confirm in writing the Collateral
Agent’s authority to release particular types or items of collateral pursuant to
the provisions of this Agreement. Upon any sale, lease, transfer or other
disposition of assets constituting collateral which is permitted pursuant to the
terms of any Loan Document or consented to in writing by the Lenders in
accordance with the provisions of the Co-Lender Agreement, as applicable, and
upon at least five (5) Business Days’ prior written request by the Borrower to
the Collateral Agent, the Collateral Agent shall (and is hereby irrevocably
authorized by each Lender to) execute such documents as may be necessary to
evidence the release of the liens granted to the Collateral Agent for the
benefit of Lender herein or pursuant hereto with respect to the collateral that
was so sold or transferred; provided, however, that (i) the Collateral Agent
shall not be required to execute any such document on terms which, in the
Collateral Agent’s reasonable opinion, would expose the Collateral Agent to
liability or create any obligation or entail any consequence other than the
release of such liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Debt or the secured
obligations or any liens upon (or obligations of any Borrower in respect of) all
interests retained by any Borrower, including (without limitation) the proceeds
of the sale, all of which shall continue to constitute part of the collateral.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the failure of Collateral Agent to take any action hereunder or under
any other Loan Document shall not (a) be deemed to be a waiver of any term or
condition of this Agreement or any of the other Loan Documents, or (b) adversely
affect any rights of Lender hereunder or under any other Loan Document.

(e) The Collateral Agent (i) may resign at any time upon notice to each Lender,
and (ii) may be removed at any time upon the decision of Lender made in
accordance with the applicable provisions of the Co-Lender Agreement. If the
Collateral Agent shall resign or be removed, Lender shall have the right to
select a replacement collateral agent in accordance with the Co-Lender
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the Collateral Agent shall assign all of the liens upon and security interests
in all collateral under the Collateral Loan Documents, and all right, title and
interest of the Collateral Agent under all the Collateral Loan Documents, to the
replacement Collateral Agent, without recourse to the Collateral Agent or any
Lender and at the expense of Borrower. No resignation or removal of the
Collateral Agent shall become effective until a replacement Collateral Agent
shall have been selected as provided in this Agreement and the Co-Lender
Agreement and shall have assumed in writing the obligations of the Collateral
Agent under this Agreement and under the Collateral Loan Documents. In the event
that a replacement Collateral Agent shall not have been selected as provided in
this Agreement or shall not have assumed such obligations within ninety
(90) days after the resignation or removal of the Collateral Agent, then the
Collateral Agent may apply to a court of competent jurisdiction for the
appointment of a replacement Collateral Agent. Lender shall notify Borrower in
writing of any change to the identity of the Collateral Agent that may be
appointed by Lender pursuant to the terms of the Co-Lender Agreement.

(f) The Collateral Agent shall be paid an annual fee of $15,000 for its services
by Borrower. For 2010, Borrower shall pay the prorated amount of such fee to
Collateral Agent on the Closing Date (i.e. services from the Closing Date
forward until December 31, 2010). Commencing January 2011 and annually each
January thereafter, Collateral Agent shall submit its invoice for $15,000 to
Borrower for payment. Borrower shall promptly pay such invoice within ten
(10) Business Days of receipt.

X. MISCELLANEOUS

Section 10.1. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the execution and delivery of the Loan Documents,
and shall continue in full force and effect so long as all or any of the Debt is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the legal
representatives, successors and assigns of such party. All covenants, promises
and agreements in this Agreement, by or on behalf of Borrower, shall inure to
the benefit of the legal representatives, successors and assigns of Lender.

Section 10.2. Lender’s Discretion. Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive. Whenever this
Agreement expressly provides that Lender may not withhold or shall be reasonable
in granting its consent or its approval of an arrangement or term, such
provisions shall also be deemed to prohibit Lender from delaying or conditioning
such consent or approval.

 

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Section 10.3. Governing Law.

(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
THE NOTEHOLDERS AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS WITH RESPECT TO ANY
INDIVIDUAL PROPERTY (OTHER THAN PERSONAL PROPERTY) CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY
(OTHER THAN PERSONAL PROPERTY) IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER AND EACH NOTEHOLDER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY NOTEHOLDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT
LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT:

Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, DE 19808

 

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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

Section 10.4. Amendments and Waivers. (a) Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in a writing signed by each Borrower, Collateral Agent and
Servicer (on behalf of the Requisite Lenders) (nor shall any provision of this
Agreement or any other Loan Document be waived except in a writing signed by
each Borrower, Collateral Agent and Servicer (on behalf of the Requisite
Lenders)), in each case subject to the following sentence. Amendments,
modifications, supplements, or waivers granted under, this Agreement or any Loan
Document shall be approved by (i) Lender as and to the extent required by (and
in such number or percentage as is set forth in) the Co-Lender Agreement (such
consent by Lender, in such number or percentage, the “Requisite Lenders”) and
(ii) the Specified Mezzanine Lender in such capacity, solely to the extent
required under Section 3.3(c) of the Note Sales Agreement. In the case of any
waiver, any Default or Event of Default waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.

(b) Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.

(c) To the extent required by any Gaming Law, Borrower shall notify all relevant
Gaming Authorities of any amendment to this Agreement or any Loan Document.

 

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Section 10.5. Delay Not a Waiver. Except as expressly set forth herein, neither
any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

Section 10.6. Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a notice to the other parties hereto in the manner provided for in
this Section 10.6):

 

If to Lenders, to Servicer on behalf of each Lender:

   c/o Bank of America, N.A., as Servicer   

Capital Markets Servicing Group

900 West Trade Street, Suite 650

Charlotte, North Carolina 28255

   Attention: Servicing Manager    Facsimile No.: (704) 317-0781

with a copy to:

   Bryan Cave LLP    One Wachovia Center   

301 S. College Street, Suite 3700

Charlotte, North Carolina 28202

Attention: Geoffrey Ralph Maibohm, Esq.

   Facsimile No.: (704) 749-9343

with a copy to:

  

Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

  

Attention: William P. McInerney, Esq.

Facsimile No.: (212) 504-6666

If to Collateral Agent:

  

Bank of America, N.A., as Collateral Agent

Capital Markets Servicing Group

900 West Trade Street, Suite 650

  

Charlotte, North Carolina 28255

Attention: Servicing Manager

   Facsimile No.: (704) 317-0781

 

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with a copy to Servicer on behalf of each Lender:

  

Bank of America, N.A., as Servicer

Capital Markets Servicing Group

  

900 West Trade Street, Suite 650

Charlotte, North Carolina 28255

Attention: Servicing Manager

   Facsimile No.: (704) 317-0781

with a copy to:

   Bryan Cave LLP    One Wachovia Center   

301 S. College Street, Suite 3700

Charlotte, North Carolina 28202

Attention: Geoffrey Ralph Maibohm, Esq.

   Facsimile No.: (704) 749-9343

with a copy to:

  

Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

  

Attention: William McInerney

Facsimile No.: (212) 504-6666

If to Borrower:

  

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: Chief Financial Officer

   Facsimile No.: (702) 407-6081

with a copy to:

  

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: General Counsel

  

Facsimile No.: (702) 407-6418

 

and

  

O’Melveny & Myers LLP

Times Square Tower

  

7 Times Square

New York, NY 10036

Attention: Gregory Ezring, Esq.

   Facsimile No.: (212) 326-2061

A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender’s receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming. Each Borrower
hereby designates Harrah’s Las Vegas

 

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Propco, LLC, a Delaware limited liability company (“Borrower Agent”), as the
party to give and receive notices on behalf of Borrower hereunder, and any
notice received by Lender by a Borrower other than Borrower Agent shall not
constitute effective notice to, or be binding upon Lender hereunder.
Notwithstanding the foregoing, any notice by Lender to one or more Borrowers
other than Borrower Agent shall be deemed to constitute effective notice to all
of the Borrowers.

Section 10.7. Trial by Jury. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER.

Section 10.8. Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

Section 10.9. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

Section 10.10. Preferences. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder (except that, unless there exists an
Event of Default, payments of principal shall be applied to components of the
Note on a pro-rata basis). To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.

Section 10.11. Waiver of Notice. Borrower hereby expressly waives, and shall not
be entitled to, any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of notice.

 

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Section 10.12. Remedies of Borrower. (a) In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment (except in cases of bad faith, gross negligence or willful
misconduct). The parties hereto agree that any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment.

(b) No Borrower shall assert, and each Borrower hereby waives (to the fullest
extent permitted under applicable law), any claim against any Lender, Servicer
or Collateral Agent on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, the Loan or the use of the proceeds
of the Loan.

Section 10.13. Expenses; Indemnity. (a) Borrower covenants and agrees to pay or,
if Borrower fails to pay, to reimburse, (i) each Lender, the Servicer and
Collateral Agent upon receipt of notice from any such Person for (1) all
reasonable documented out-of-pocket costs and expenses (including reasonable
attorneys’ fees and disbursements, including fees and disbursements of one local
counsel and one regulatory counsel per applicable jurisdiction for all such
Persons, and including, to the extent applicable, liquidation fees, workout
fees, special servicing fees and interest payable on advances made by the
Servicer with respect to delinquent debt service payments or expenses of curing
Borrowers’ defaults under the Loan Documents) incurred by such Person in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including, without limitation, any opinions requested by
such Person as to any legal matters arising under this Agreement or the other
Loan Documents with respect to the Properties) and (2) the filing and recording
fees and expenses, title insurance and reasonable fees and expenses of counsel
for providing to any Lender, the Servicer or Collateral Agent all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Liens in favor of Collateral Agent and Lender pursuant to this Agreement and the
other Loan Documents; (ii) the Servicer and Collateral Agent upon receipt of
notice from Servicer or Collateral Agent for all reasonable documented
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements, including fees and disbursements of one local counsel and one
regulatory counsel per applicable jurisdiction for all such Persons) incurred by
Servicer or Collateral Agent in connection with (1) Borrower’s ongoing
performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Original Closing Date, including,
without limitation, confirming compliance with environmental, gaming and
insurance requirements, if necessary or advisable due to reasonably suspected
non-compliance, (2) the release of any Individual Property in accordance with
the provisions of this

 

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Agreement, the Note Sales Agreement and the other Loan Documents, and (3) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Borrower;
(iii) each Lender, the Servicer and Collateral Agent upon receipt of notice from
any such Person for all reasonable, documented out-of-pocket costs and expenses
(including reasonable attorneys’ fees and disbursements, including fees and
disbursements of one local counsel and one regulatory counsel per applicable
jurisdiction for all such Persons) incurred by such Person in connection with
(1) the release of any Individual Property (and the application of Net Sales
Proceeds) except in respect of the release of O’Shea’s and the RDE Parcels as
specifically contemplated in this Agreement, (2) securing Borrower’s compliance
with any requests made pursuant to the provisions of this Agreement, if Borrower
defaults in its obligations hereunder, (3) enforcing or preserving any rights,
either in response to third party claims or in prosecuting or defending any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, Operating Company, Manager, this Agreement, the other Loan
Documents, the Properties, the Operating Leases, the Management Agreement, the
Shared Services Agreement, the IP Licenses or any other security given for or
document executed in connection with the Loan and (4) enforcing any obligations
of or collecting any payments due from Borrower or Guarantor under this
Agreement, the other Loan Documents or with respect to the Properties, Operating
Company, Manager, the Operating Leases, the Management Agreement, the Shared
Services Agreement, the IP Licenses or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a “work-out” or of any insolvency or bankruptcy proceedings; and
(iv) the fees of Collateral Agent set forth in Section 9.12(f) hereof; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to any Person to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of such Person. Any cost
and expenses due and payable to any Lender, the Servicer or Collateral Agent may
be paid from any amounts in the Cash Management Account or any other Reserve
Account upon the occurrence and during the continuance of an Event of Default.

(b) Borrower shall indemnify, defend and hold harmless each Lender, Servicer and
Collateral Agent from and against any and all other actual liabilities,
obligations, losses, damages (excluding, however, any punitive and consequential
damages), penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for each Lender in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not Lender shall be designated a party thereto), that may
be imposed on, incurred by, or asserted against any Lender in any manner
(whether or not arising from a third party claim) relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or any material misrepresentation by Borrower contained in any
report, certificate, financial statement or other instrument, agreement,
document or other material or written information furnished by or on behalf of
Borrower pursuant to this Agreement or any other Loan Document, (ii) the use or
intended use of the proceeds of the Loan, (iii) the Leases or any of the duties,
responsibilities or obligations of Borrower or any Operating Company thereunder,
(iv) the transactions contemplated in the Collection Account Agreements, or
relating to the Blocked Account or the Working Capital Account, or (iv) any
third-party claims alleging that the Loan, the Operating Lease, the Operating
Lease Guaranty,

 

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the Management Agreement, the Shared Services Agreement, the IP Licenses or any
of the Loan Documents or documents executed in connection with the Loan violates
any agreements or Legal Requirements binding on the Borrower or its Affiliates
or their respective properties (collectively, the “Indemnified Liabilities”);
provided, however, that Borrower shall not have any obligation to Lender
hereunder to the extent that such Indemnified Liabilities arise from the gross
negligence, illegal acts, fraud or willful misconduct of such Lender. To the
extent that the undertaking to indemnify, defend and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.

(c) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to
reimburse Lender for, any fees and expenses incurred by any Rating Agency in
connection with any request by Borrower that required Rating Agency Confirmation
pursuant to the terms hereof.

Section 10.14. Schedules Incorporated. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

Section 10.15. Offsets, Counterclaims and Defenses. Any assignee of any Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

Section 10.16. No Joint Venture or Partnership; Servicer a Third Party
Beneficiary; No Other Third Party Beneficiaries. (a) Borrower and each
Noteholder intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein
is intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Borrower and any Noteholder nor to grant any
Noteholder any interest in the Properties other than that of mortgagee,
beneficiary or lender.

(b) Servicer shall be a third party beneficiary of those provisions of this
Agreement that relate to the Servicer (and such provisions shall inure to the
benefit of Servicer).

(c) Except as provided in subparagraph (b) above, except as provided in
Section 2.2.7(f) and except as otherwise expressly provided herein, this
Agreement and the other Loan Documents are solely for the benefit of each
Noteholder and Borrower and nothing contained in this Agreement or the other
Loan Documents shall be deemed to confer upon anyone other than each Noteholder
and Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained herein or therein. All

 

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conditions to the obligations of Lender to execute and deliver this Agreement
and the Loan Documents are imposed solely and exclusively for the benefit of
Lender, and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that any
Lender will refuse to make (or continue to extend) the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by such Lender if, in such
Lender’s sole discretion, such Lender deem it advisable or desirable to do so.

Section 10.17. Conversion to LLC; Tax Elections. Notwithstanding any provision
of this Agreement or the other Loan Documents to the contrary, each of Paris Las
Vegas Holding, Inc., Harrah’s Laughlin Inc., Harrah’s Las Vegas, Inc., Harrah’s
Atlantic City Holding, Inc., Rio Properties Inc. and Flamingo Las Vegas Holding,
Inc. will be permitted, in the Borrower’s sole discretion, to convert to a
limited liability company. In addition, notwithstanding any provision of this
Agreement or the other Loan Documents to the contrary, each Borrower will be
permitted to make tax elections in its discretion at any time with respect to
any Consolidated Entity or equity owner thereof; provided, that (i) any such
election that would reasonably be expected to have a current or future material
adverse tax consequence for any Borrower shall require the prior written consent
of holders of 66-2/3% of the aggregate principal amount of the Loan and the
Mezzanine Loans outstanding at such time (it being understood that any such
election in connection with or in reasonable anticipation of a sale of the Rio
Las Vegas shall be permitted without limitation) and (ii) in addition, if any
such election requires the consent of the holders of the Loan and the Mezzanine
Loan pursuant to the foregoing clause (i) and such election adversely affects
the Borrower in a manner that is different than the affect on the Mezzanine
Borrowers, then such election will also require the consent of holders of 66-2/3
of the aggregate principal amount of the Loan outstanding at such time (it being
understood that any such election in connection with or in reasonable
anticipation of a sale of the Rio Las Vegas shall be permitted without
limitation).

Section 10.18. Cross-Default; Cross-Collateralization; Waiver of Marshalling of
Assets. (a) Borrower acknowledges that the Loan was made to Borrower upon the
security of the Noteholder’s collective interest in the Properties and in
reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of each Individual Property taken
separately. Borrower agrees that the Mortgages are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Mortgages shall constitute an Event of Default under
each of the other Mortgages which secure the Note; (ii) an Event of Default
under the Note or this Loan Agreement shall constitute an Event of Default under
each Mortgage; (iii) each Mortgage shall constitute security for the Note as if
a single blanket lien were placed on all of the Properties as security for the
Note; and (iv) such cross-collateralization shall in no event be deemed to
constitute a fraudulent conveyance.

(b) To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower’s partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order

 

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of alienation, homestead exemption, the administration of estates of decedents,
or any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Properties for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Properties in
preference to every other claimant whatsoever. In addition, Borrower, for itself
and its successors and assigns, waives in the event of foreclosure of any or all
of the Mortgages, any equitable right otherwise available to Borrower which
would require the separate sale of the Properties or require Lender to exhaust
its remedies against any Individual Property or any combination of the
Properties before proceeding against any other Individual Property or
combination of Properties; and further in the event of such foreclosure Borrower
does hereby expressly consent to and authorize, at the option of Lender, the
foreclosure and sale either separately or together of any combination of the
Properties.

Section 10.19. Waiver of Counterclaim. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.

Section 10.20. Conflict; Construction of Documents; Reliance. In the event of
any conflict between the provisions of this Loan Agreement and any of the other
Loan Documents, the provisions of this Loan Agreement shall control. The parties
hereto acknowledge that they were represented by competent counsel in connection
with the negotiation, drafting and execution of the Loan Documents and that such
Loan Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of any Lender or any parent, subsidiary or
Affiliate of any Lender. No Lender shall be subject to any limitation whatsoever
in the exercise of any rights or remedies available to it or them under any of
the Loan Documents or any other agreements or instruments which govern the Loan
by virtue of the ownership by it or any parent, subsidiary or Affiliate of any
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to the exercise of any such rights or
remedies. Borrower acknowledges that each Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

Section 10.21. Brokers and Financial Advisors. Borrower hereby represents that
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement (other than those the fees and other claims of which shall be
paid by Borrower). Borrower hereby agrees to indemnify, defend and hold each
Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind (including Lender’s attorneys’ fees and expenses) in any
way relating to or arising from a claim by any Person that such Person acted on
behalf of Borrower or Lender in connection with the transactions contemplated
herein. Each Lender hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. The provisions
of this Section 10.21 shall survive the expiration and termination of this
Agreement and the payment of the Debt.

 

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Section 10.22. Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, including, without limitation,
the Commitment Letter dated December 19, 2006 between Affiliates of the Borrower
and the Initial Lenders and the Letter Agreement dated as of March 5, 2010
between Borrower and Lender, are superseded by the terms of this Agreement and
the other Loan Documents.

Section 10.23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
counterparts together shall constitute one agreement with the same effect as if
the parties had signed the same signature page.

Section 10.24. Intentionally Omitted.

Section 10.25. Gaming Laws. (a) All rights, remedies and powers in or under this
Agreement and the other Loan Documents may be exercised only to the extent that
the exercise thereof does not violate any applicable provisions of the Gaming
Laws.

(b) The Noteholders agree to cooperate with all Gaming Authorities in connection
with the provision in a timely manner of such documents or other information as
may be requested by such Gaming Authorities relating to the Loan or Loan
Documents.

(c) The Noteholders acknowledge and agree that if Borrower receives a notice
from any applicable New Jersey Gaming Authority that any Noteholder is a
disqualified holder (and such Noteholder is notified by the Borrower in writing
of such disqualification), Borrower shall, following any available appeal of
such determination by such Gaming Authority (unless the rules of the applicable
New Jersey Gaming Authority do not permit such Noteholder to retain its Note
pending appeal of such determination) have the right to (i) cause such
disqualified holder to transfer and assign, without recourse, all of its
interests, rights and obligations in its Note or (ii) in the event that (A) such
Borrower is unable to cause such Noteholder to so assign such Note after using
its best efforts to cause such an assignment and (B) no Default or Event of
Default has occurred and is continuing, prepay such disqualified holder’s Note.
Notice to such disqualified holder shall be given ten (10) days prior to the
required date of assignment or prepayment, as the case may be, and shall be
accompanied by evidence demonstrating that such transfer or prepayment is
required pursuant to applicable New Jersey Gaming Laws. If reasonably requested
by any such disqualified Noteholder, the Borrower will use commercially
reasonable efforts to cooperate with any such Noteholder that is seeking to
appeal such determination and to afford such Note holder an opportunity to
participate in any proceedings relating thereto. Notwithstanding anything herein
to the contrary, any prepayment of a Note shall be at a price that, unless
otherwise directed by the applicable New Jersey Gaming Authority, shall be equal
to the sum of the principal amount of such Note and interest to the date such
Noteholder or holder became a disqualified holder (plus any fees and other
amounts accrued for the account of such disqualified Noteholder to the date such
Noteholder became a disqualified holder).

 

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(d) If during the existence of an Event of Default hereunder or any of the other
Loan Documents it shall become necessary or, in the opinion of the Lender,
advisable for an agent, supervisor, receiver or other representative of the
Noteholders to become licensed or qualified or to be found suitable under any
Gaming Law as a condition to receiving the benefit of any Collateral encumbered
by the Loan Documents or to otherwise enforce the rights of the Noteholders
under the Loan Documents, the Borrower hereby agrees to promptly execute such
documents as may be required in connection with such applications or requests
for findings of suitability.

Section 10.26. Certain Additional Rights of Lender (VCOC). Notwithstanding
anything to the contrary contained in this Agreement, Lender shall have:

(a) the right to routinely consult with and advise Borrower’s management
regarding the significant business activities and business and financial
developments of Borrower, provided that any such advice or consultation shall be
completely nonbinding on Borrower, and; provided, however, that such
consultations shall not include discussions of environmental compliance programs
or disposal of hazardous substances;

(b) the right, in accordance with the terms of this Agreement, to examine the
books and records of Borrower at any reasonable times upon reasonable notice;

(c) the right, in accordance with the terms of this Agreement, including,
without limitation, Section 5.1.11 hereof, to receive monthly, quarterly and
year end financial reports, including balance sheets, statements of income,
shareholder’s equity and cash flow, a management report and schedules of
outstanding indebtedness, in each case to the extent explicitly set forth
herein; and

(d) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to reasonably approve any acquisition
by Borrower of any other significant real property.

The rights described above in this Section 10.26 that are afforded to any Lender
may be exercised by any entity which owns and controls, directly or indirectly,
substantially all of the interests in such Lender.

Section 10.27. Ratification of Acknowledgment and Consent. Borrower hereby
represents, warrants and covenants that (i) the Acknowledgement and Consent
(First Mezzanine Loan) dated May 22, 2008 (“Consent to Pledge”), executed by
Borrower in its capacity as Issuer (as such term is defined in the Consent to
Pledge) shall remain in full force and effect, notwithstanding execution of
(A) that certain Omnibus Amendment and Assignment (Initial Lenders) (First
Mezzanine Loan) dated as of the date hereof, among JPM, First Mezzanine Lenders
and First Mezzanine Borrower, (B) that certain Assignment and Assumption of
Amended and Restated Pledge and Security Agreement (First Mezzanine Loan) dated
as of the date hereof, between the First Mezzanine Lenders and the First
Mezzanine Loan Collateral Agent, and (C) that certain Ratification of Amended
and Restated Pledge and Security

 

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Agreement (First Mezzanine Loan) dated as of the date hereof, by First Mezzanine
Borrower in favor of the First Mezzanine Loan Collateral Agent for the benefit
of the First Mezzanine Lenders (the instruments in A, B and C being collectively
referred to herein as the “First Mezzanine Pledge Agreement Modifications”),
(ii) as used in the Consent to Pledge and in this paragraph, the term “Pledge
Agreement” means the Amended and Restated Pledge Agreement described in the
Consent to Pledge, as modified by the First Mezzanine Pledge Agreement
Modifications, and as it may be further amended, restated, replaced,
supplemented or otherwise modified from time to time, (iii) Borrower
acknowledges receipt of a copy of the First Mezzanine Pledge Agreement
Modifications and agrees that each Pledgor (as such term is defined in the
Pledge Agreement) is bound by the Pledge Agreement, and (iv) Borrower
understands and agrees that from and after the date hereof, (X) the term
“Lender” as it appears in the Pledge Agreement and in the Consent to Pledge
shall refer to the First Mezzanine Loan Collateral Agent, in its capacity as
collateral agent and secured party of record for the benefit of the First
Mezzanine Lenders, (Y) First Mezzanine Loan Collateral Agent is acting as the
collateral agent for the First Mezzanine Lenders pursuant to Section 9.12 of the
First Mezzanine Loan Agreement, and (Z) any references to “Lender” in the Pledge
Agreement or in the Consent to Pledge in which “Lender” is acting under the
Pledge Agreement or the Consent to Pledge as beneficiary, secured party,
assignee or mortgagee of record shall, unless the context clearly otherwise
shall require, be deemed to refer to First Mezzanine Loan Collateral Agent, in
its capacity as collateral agent for the First Mezzanine Lenders. The Borrower
acknowledges that the First Mezzanine Lenders are an intended third party
beneficiary of the representations, warranties and covenants of Borrower made in
the foregoing sentence which representations, warranties and covenants shall
inure to the direct benefit of First Mezzanine Lenders and may be enforced by
First Mezzanine Lenders in any proceeding at law or in equity.

XI. JOINT AND SEVERAL LIABILITY; WAIVERS

Section 11.1. Joint and Several Liability; Primary Obligors. Each entity
comprising Borrower (each, a “Borrower Entity”) shall be a primary obligor with
respect to payment of the Debt and performance of Borrower’s obligations under
the Loan Documents and all such Borrower Entities shall be jointly and severally
liable for payment of the Debt and performance of such other obligations. As
used in this Article, references to “Other Borrowers” shall mean all Borrower
Entities other than the particular Borrower Entity referred to.

Section 11.2. Waivers. Without limiting the primary liability of each Borrower
Entity as set forth above, to the extent any such Borrower Entity is determined
to be secondarily liable with respect to any portion of the Debt or any other
obligation hereunder, the following shall apply:

11.2.1. No Duty To Pursue Others. It shall not be necessary for Lender (and each
Borrower Entity hereby waives any rights which such Borrower Entity may have to
require Lender), in order to enforce the obligations of such Borrower Entity
hereunder, first to (a) institute suit or exhaust its remedies against any Other
Borrower or others liable on the Debt or any other person, (b) enforce Lender’s
rights against any collateral mortgaged, pledged or granted by any Other
Borrower which shall ever have been given to secure the Debt (“Other Borrower
Collateral”), (c) enforce Lender’s rights against any other guarantors of the
Debt,

 

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(d) join Borrower or any others liable on the Debt in any action against any
Other Borrower seeking to enforce the Loan Documents, (e) exhaust any remedies
available to Lender against any collateral which shall ever have been given to
secure the Debt, or (f) resort to any other means of obtaining payment of the
Loan by any Other Borrower. Lender shall not be required to mitigate damages or
take any other action pertaining to any Other Borrower or any Other Borrower
Collateral to reduce, collect or enforce the Debt from any Other Borrower.

11.2.2. Waivers. Such Borrower Entity agrees to the provisions of the Loan
Documents, and hereby waives notice of (a) any loans or advances made by any
Noteholder to any Other Borrower, (b) acceptance of the Loan Documents, (c) any
amendment or extension of the Note, this Agreement or of any other Loan
Documents entered into by any Other Borrower, (d) the execution and delivery by
any Other Borrower and any Lender of any other loan or credit agreement or of
any Other Borrower’s execution and delivery of any promissory notes or other
documents arising under the Loan Documents or in connection with the Other
Borrower Collateral, (e) the occurrence of any breach by any Other Borrower or
an Event of Default with respect to any Other Borrower or Other Borrower
Collateral, (f) any Noteholder’s transfer or disposition of the Debt, or any
part thereof, (g) sale or foreclosure (or posting or advertising for sale or
foreclosure) of any Other Borrower Collateral, (h) protest, proof of non-payment
or default by any Other Borrower and (i) any other action at any time taken or
omitted by any Lender, and, generally, all demands and notices to any Other
Borrower of every kind in connection with the Loan Documents, any documents or
agreements evidencing, securing or relating to any of the Debt.

11.2.3. Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding
anything to the contrary contained in the Loan Documents, each Borrower hereby
unconditionally and irrevocably waives, releases and abrogates, prior to the
payment in full of the Loan and for a period of ninety-one (91) days thereafter
any and all rights it may now or hereafter have under any agreement, at law or
in equity (including any law subrogating such Borrower Entity to the rights of
any Lender), to assert any claim against or seek contribution, indemnification
or any other form of reimbursement (other than pursuant to the express
provisions of the Contribution Agreement) from any Other Borrower or any other
party liable for payment of any or all of the Debt for any payment made by such
Borrower Entity under or in connection with the Loan Documents or otherwise.

11.2.4. Events And Circumstances Not Reducing Or Discharging Guarantor’s
Obligations. Each Borrower Entity hereby consents and agrees to each of the
following, and agrees that such Borrower Entity’s obligations under the Loan
Documents shall not be released, diminished, impaired, reduced or adversely
affected by any of the following, and waives any common law, equitable,
statutory or other rights (including rights to notice) which such Borrower
Entity might otherwise have as a result of or in connection with any of the
following:

(a) Modifications. Any renewal, extension, increase, modification, alteration,
restatement or rearrangement entered into by any Other Borrower of all or any
part of the Debt, the Note, the Loan Agreement, the other Loan Documents, or any
other document, instrument, contract or understanding between any Other
Borrower, any Lender, or any other parties, pertaining to the Debt or any
failure of Lender to notify Borrower Entity of any such action.

 

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(b) Adjustment. Any adjustment, indulgence, forbearance or compromise that might
be granted or given by Lender to any Other Borrower.

(c) Condition of Borrower or Borrower Entity. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of any Other Borrower or any other party at any time liable for
the payment of all or part of the Debt; or any dissolution of any Other
Borrower, or any sale, lease or transfer of any or all of the assets of Borrower
or of any Other Borrower, or any changes in the shareholders, partners or
members of any Other Borrower; or any reorganization of any Other Borrower.

(d) Invalidity of Debt. The invalidity, illegality or unenforceability of all or
any part of the Debt, or any document or agreement executed in connection with
the Debt, for any reason whatsoever, including the fact that (a) the Debt, or
any part thereof, exceeds the amount permitted by law, (b) the act of creating
the Debt or any part thereof is ultra vires, (c) the officers or representatives
executing the Note, the Loan Agreement or the other Loan Documents or otherwise
creating the Debt acted in excess of their authority, (d) the Debt violate
applicable usury laws, (e) any Other Borrower has valid defenses, claims or
offsets (whether at law, in equity or by agreement) which render the Debt wholly
or partially uncollectible from such Other Borrower, (f) the creation,
performance or repayment of the Debt (or the execution, delivery and performance
of any document or instrument by any Other Borrower representing part of the
Debt or executed in connection with the Debt, or given to secure the repayment
of the Debt) is illegal, uncollectible or unenforceable, or (g) the Notes, the
Loan Agreement or any of the other Loan Documents have been forged or otherwise
are irregular or not genuine or authentic, it being agreed that such Borrower
Entity shall remain liable hereon regardless of whether any Other Borrower or
any other Person be found not liable on the Debt or any part thereof for any
reason.

(e) Release of Obligors. Any full or partial release of the liability of any
Other Borrower on the Debt, or any part thereof, or of any guarantor(s) thereof,
or any other person or entity now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Debt, or any part thereof, it being
recognized, acknowledged and agreed by such Borrower Entity that such Borrower
Entity may be required to pay the Debt in full without assistance or support of
any other party, and such Borrower Entity has not been induced to enter into the
Loan Documents on the basis of a contemplation, belief, understanding or
agreement that other Persons will be liable to pay or perform the Debt, or that
Lender will look to other Persons to pay or perform the Debt.

(f) Other Collateral. The taking or accepting of any other security, collateral
or guaranty, or other assurance of payment, for all or any part of the Debt.

(g) Release of Collateral. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including negligent, willful,
unreasonable or unjustifiable impairment) of any collateral, property or
security at any time existing in connection with, or assuring or securing
payment of, all or any part of the Debt.

 

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(h) Care and Diligence. The failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale
or other handling or treatment of Other Borrower Collateral, all or any part of
such collateral, property or security, including any neglect, delay, omission,
failure or refusal of Lender (a) to take or prosecute any action for the
collection of any of the Debt or (b) to foreclose, or initiate any action to
foreclose, or, once commenced, prosecute to completion any action to foreclose
upon Other Borrower Collateral, or (c) to take or prosecute any action in
connection with any instrument or agreement evidencing or securing all or any
part of the Debt.

(i) Unenforceability. The fact that any collateral, security, security interest
or lien contemplated or intended to be given, created or granted as security for
the repayment of the Debt, or any part thereof, shall not be properly perfected
or created, or shall prove to be unenforceable or subordinate to any other
security interest or lien, it being recognized and agreed by such Borrower
Entity that such Borrower Entity is not entering into the Loan Documents in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the Debt.

(j) Offset. Any existing or future right of offset, claim or defense of Borrower
against Lender, or any other Person, or against payment of the Debt by any Other
Borrower, whether such right of offset, claim or defense arises in connection
with the Debt (or the transactions creating the Debt) or otherwise.

(k) Merger. The reorganization, merger or consolidation of any Other Borrower
into or with any other corporation or entity.

(l) Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else.

Section 11.3. Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Loan Documents, the Debt, or Other Borrower
Collateral, whether or not such action or omission prejudices such Borrower
Entity or increases the likelihood that such Borrower Entity will be required to
pay the Debt pursuant to the terms hereof, it is the unambiguous and unequivocal
intention of such Borrower Entity that such Borrower Entity shall be obligated
to pay the Debt when due, notwithstanding any occurrence, circumstance, event,
action, or omission whatsoever pertaining to any Other Borrower or any Other
Borrower Collateral, whether contemplated or not, and whether or not otherwise
or particularly described herein, which obligation shall be deemed satisfied
only upon the full and final payment and satisfaction of the Debt.

Section 11.4. No Release or Novation. This Agreement constitutes an amendment
and restatement of the Original Agreement and is not intended to and shall not
extinguish any of the indebtedness or obligations of Borrower under the Notes,
the Original Loan Agreement or any other Loan Documents in such a manner as
would constitute a release or

 

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novation of the original indebtedness or obligations of Borrower under the
Notes, the Original Loan Agreement or any other Loan Document, nor shall this
Agreement affect or impair the priority of any liens created thereby or in
connection therewith, it being the intention of the parties hereto to preserve
all liens and security interests securing payment of the Notes and the Debt,
which liens and security interests are acknowledged by Borrower to be valid and
subsisting against the Collateral and any other security or collateral for the
Debt.

Section 11.5. Intentionally Omitted.

Section 11.6. Intentionally Omitted.

Section 11.7. Platform; Borrower Materials. Borrower hereby acknowledges that
(a) any agent designated by Lender (or Servicer) may make available to the
Noteholders materials and/or information provided by or on behalf of the
Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks or another similar electronic system (the “Platform”),
and (b) certain of the Noteholders may be “public-side” Noteholders (i.e.,
Noteholders that do not wish to receive material non-public information with
respect to the Borrower or its securities) (each, a “Public Lender”). Borrower
hereby agrees that it will use commercially reasonable efforts to identify that
portion of the Borrower Materials that may be distributed to the Public Lenders
and that (i) all such Borrower Materials shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof, (ii) by marking Borrower Materials
“PUBLIC,” Borrower shall be deemed to have authorized Lender, the Servicer and
its or their agents acting on its or their behalf to treat such Borrower
Materials as either publicly available information or not material information
(although it may be sensitive and proprietary) with respect to the Borrower or
its securities for purposes of United States Federal and state securities laws,
(iii) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor,” and (iv) Lender
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform not designated
“Public Investor”.

In no event shall Lender, Servicer, the agent selected by Lender for purposes of
distributing Borrower Materials or maintaining a Platform pursuant to this
Section 11.7 or any of its or their respective affiliates or subsidiaries, or
any of the directors, trustees, officers, employees, agents and advisors (any
such Persons, an “Information Recipient”) have any liability to the Borrower or
any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and non-appealable judgment to have
resulted from the gross negligence or willful misconduct of any such Information
Recipient; provided, however, that in no event shall any Information Recipient
have any liability to the Borrower, Servicer, Collateral Agent or any Noteholder
or any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages). ANY PLATFORM SHALL BE PROVIDED
“AS IS” AND “AS AVAILABLE”, WITHOUT WARRANTY OR LIABILITY OF ANY KIND, INCLUDING
REGARDING THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM.

 

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Section 11.8. Confidentiality. Each of the Lenders, Servicer and Collateral
Agent agrees that it shall maintain in confidence any information relating to
the Properties, Borrower, Guarantor and any Consolidated Entity furnished to it
by or on behalf of the Borrower, Guarantor or any Consolidated Entity (other
than information that (a) has become available to the public other than as a
result of a disclosure by such party in breach of this Section 11.8, (b) has
been independently developed by such Lender, Servicer or Collateral Agent
without violating this Section 11.8, or (c) was or becomes available to such
Lender, Servicer or Collateral Agent from a third party which, to such person’s
actual knowledge, had not breached an obligation of confidentiality to the
Borrower, Guarantor or a Consolidated Entity) and shall not reveal the same
other than to its affiliates, directors, trustees, officers, employees,
advisors, attorneys, accountants, agents, sub-agents and other Lenders or
Mezzanine Lenders (so long as each such person shall have been instructed to
keep the same confidential in accordance with this Section 11.8 or terms
substantially similar to this Section), except: (A) in connection with a
Securitization (including Securitizations which are not Assisted
Securitizations), information determined in good faith by the applicable Lender
or Lenders as necessary or appropriate in order to consummate a successful
Securitization (taking into account investor expectations, Rating Agency
requirements, applicable laws and regulations and market standards, in each case
as determined in good faith by the applicable Lender or Lenders) (it being
understood and agreed that in connection with such disclosure under this clause
(A), (i) the applicable Lender or Lenders will consult in good faith with the
Borrower and will consider in good faith matters raised by the Borrower in such
consultation, provided, however, that such Lender or Lenders will have the sole
right to make the determinations described in this clause (A) and (ii) such
disclosure shall not include financial projections, budgets or other
forward-looking financial information of the Borrower, the Guarantor or any
Consolidated Entity, unless required by applicable law), (B) to the extent
necessary to comply with law or any legal process or the requirements of any
Governmental Authority, the National Association of Insurance Commissioners or
of any securities exchange on which securities of the disclosing party or any
Affiliate of the disclosing party are listed or traded, (C) as part of normal
reporting or review procedures to, or examinations by, Governmental Authorities
or self regulatory authorities, including the National Association of Insurance
Commissioners or the National Association of Securities Dealers, Inc., (D) in
order to enforce its rights under any Loan Document in any proceeding,
including, without limitation, any judicial or non-judicial foreclosure
proceedings, uniform commercial code sale, strict foreclosure or transfer
proceedings and/or any out of court proceedings, (E) to any direct, indirect or
prospective Assignee (including, without limitation, investors and proposed
investors in any Securitization, with respect to information not otherwise
disclosed pursuant to clause (A) above) of, or direct, indirect or prospective
Participant in, any of its rights under this Agreement, or any assignee of any
Individual Property or interest therein post-foreclosure, together with the
advisors, attorneys and/or accountants of any such Assignee, Participant or
assignee (so long as any such person shall have been instructed to keep the same
confidential in accordance with this Section 11.8 or terms substantially similar
to this Section) and (F) to any direct, indirect or prospective contractual
counterparty in swap agreements or such contractual counterparty’s professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section 11.8 or terms substantially similar to this Section). This Section 11.8
supersedes the confidentiality provisions present on any Platform previously or
hereafter agreed to by the Lenders with respect to the confidentiality
obligations of the Lenders and in the event of any conflict with respect to the
confidentiality obligations of the Lenders between this Section 11.8 and such
confidentiality provisions, this Section 11.8 shall govern.

 

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Notwithstanding anything to the contrary in this Section 11.8, (i) no individual
Lender shall have any liability in respect of a breach of this Section 11.8 by
Servicer, Collateral Agent and/or any other individual Lender, it being agreed
that each individual Lender shall have liability under this Section 11.8 if
and only if, and only to the extent, such individual Lender breaches its
obligations under this Section 11.8 and (ii) no Borrower, Borrower Entity or
Guarantor shall be entitled to any defense, offset or counterclaim with respect
to the enforcement of the rights of the Servicer, Collateral Agent or the
Lenders under this Agreement or any of the other Loan Documents due to any
breach of this Section 11.8 by Servicer, Collateral Agent, any Lender or any
other Person (with the sole remedy for any such breach being an action for
damages by Borrower, Borrower Entity or Guarantor, as the case may be, against
the specific individual party that breached this Section 11.8, any of which
actions shall be subject to Section 10.12(b) of this Agreement).

Borrower hereby agrees that it shall file or shall cause to be filed with the
SEC within three (3) Business Days of the Closing Date each of the Loan
Agreement, the Note Sales Agreement, the Operating Lease, the Management
Agreement, each Mezzanine Loan Agreement, the Co-Lender Agreement and the
Intercreditor Agreement (such agreements, together with any amendments,
supplements or modifications thereto, the “Filed Documents). It is understood
and agreed that the filing of a “form of” the Operating Lease (Casino
Component), a “form of” the Operating Lease (Hotel Component) and a “form of”
the Management Agreement (as opposed to those with respect to each of the
Properties) shall satisfy the foregoing sentence. Without limitation of the
obligations of the Lenders pursuant to Section 9.11, the Lenders shall provide
to the Borrowers on or prior to the execution thereof, a copy of any agreement
or instrument that effects any amendment, supplement or modification to the
Co-Lender Agreement or the Intercreditor Agreement as in effect on the Closing
Date and the parties agree that the Borrower may in its discretion in light of
its legal obligations file (or cause to be filed) any such agreement or
instrument with the SEC.

Section 11.9. Amendment and Restatement. Borrower and Lender hereby agree that
the Original Loan Agreement is hereby amended and restated in its entirety, and
that from and after the date hereof, all of the terms and conditions contained
in this Agreement shall replace the terms and conditions of the Original Loan
Agreement, it being understood and agreed that the execution of this Agreement
shall not impair the liens of any of the Loan Documents. The parties agree that
this Agreement and the other Loan Documents are each dated as of August 31,
2010, but this Agreement and such other Loan Documents are each effective as of
September 1, 2010.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

BORROWER:

HARRAH’S LAS VEGAS PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title:

HARRAH’S ATLANTIC CITY PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title:

PARIS LAS VEGAS PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title:

RIO PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title:

--------------------------------------------------------------------------------

FLAMINGO LAS VEGAS PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title:

HARRAH’S LAUGHLIN PROPCO, LLC,

a Delaware limited liability company

By:   /s/ Authorized Signatory   Name:   Title: LENDERS: JPMORGAN CHASE BANK,
N.A. By:   /s/ Authorized Signatory   Name:   Title: BANK OF AMERICA, N.A. By:  
/s/ Authorized Signatory   Name:   Title: CITIBANK, N.A. By:   /s/ Authorized
Signatory   Name:   Title:

--------------------------------------------------------------------------------

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (f/k/a CREDIT SUISSE, CAYMAN ISLANDS
BRANCH) By:   /s/ Authorized Signatory   Name:   Title: By:   /s/ Authorized
Signatory   Name:   Title: MERRILL LYNCH MORTGAGE LENDING, INC. By:   /s/
Authorized Signatory   Name:   Title: GOLDMAN SACHS MORTGAGE COMPANY By: Goldman
Sachs Real Estate Funding Corp., its General Partner By:   /s/ Authorized
Signatory   Name:   Title:

MORGAN STANLEY MORTGAGE

CAPITAL HOLDINGS LLC

By:   /s/ Authorized Signatory   Name:   Title:

--------------------------------------------------------------------------------

GERMAN AMERICAN

CAPITAL CORPORATION

By:   /s/ Authorized Signatory   Name:   Title: By:   /s/ Authorized Signatory  
Name:   Title: COLLATERAL AGENT: BANK OF AMERICA, N.A. By:   /s/ Authorized
Signatory   Name:   Title:

--------------------------------------------------------------------------------

SCHEDULE I

LIST, ADDRESSES AND TAX IDENTIFICATION

NUMBERS OF BORROWERS

[Redacted.]

 

SCHEDULE I

--------------------------------------------------------------------------------

SCHEDULE II

PROPERTIES – ALLOCATED LOAN AMOUNTS

 

   

Property

   Allocated Loan Amount 1.   Harrah’s Las Vegas    $ 738,461,538.00 2.   Rio
Las Vegas    $ 707,692,308.00 3.   Flamingo Las Vegas    $ 707,692,308.00 4.  
Paris Las Vegas    $ 892,307,692.00 5.   Harrah’s Atlantic City    $
713,846,154.00 6.   Harrah’s Laughlin    $ 240,000,000.00

 

SCHEDULE II

--------------------------------------------------------------------------------

SCHEDULE III

TAX IDENTIFICATION NUMBERS OF OPERATING COMPANY

[Redacted.]

 

SCHEDULE III

--------------------------------------------------------------------------------

SCHEDULE IV

COLLECTION ACCOUNT AGREEMENTS/WORKING CAPITAL ACCOUNT AGREEMENT

 

(1) Amended and Restated Deposit Account Control Agreement, dated as of the date
hereof, by and among Flamingo Individual Borrower, Flamingo Las Vegas Operating
Company, LLC, Collateral Agent and Bank of America, N.A.

 

(2) Amended and Restated Deposit Account Control Agreement, dated as of the date
hereof, by and among Harrah’s AC Individual Borrower, Harrah’s Atlantic City
Operating Company, LLC, Collateral Agent and Bank of America, N.A.

 

(3) Amended and Restated Deposit Account Control Agreement, dated as of the date
hereof, by and among Rio Individual Borrower, Rio Properties, Inc., Collateral
Agent and Bank of America, N.A.

 

(4) Amended and Restated Restricted Account Agreement, dated as of the date
hereof, by and among Harrah’s LV Individual Borrower, Harrah’s Las Vegas, Inc.,
Collateral Agent and Wells Fargo Bank, National Association

 

(5) Amended and Restated Deposit Account Control Agreement, dated as of the date
hereof, by and among Paris Individual Borrower, Paris Las Vegas Operating
Company, LLC, Collateral Agent and Bank of America, N.A.

 

(6) Amended and Restated Restricted Account Agreement, dated as of the date
hereof, by and among Harrah’s Laughlin Individual Borrower, Harrah’s Laughlin,
Inc., Collateral Agent and Wells Fargo Bank, National Association

 

(7) Working Capital Account Agreement, dated as of the date hereof, by and among
Flamingo Individual Borrower, Flamingo Las Vegas Operating Company, LLC,
Collateral Agent and Bank of America, N.A.

 

(8) Working Capital Account Agreement, dated as of the date hereof, by and among
Harrah’s AC Individual Borrower, Harrah’s Atlantic City Operating Company, LLC,
Collateral Agent and Bank of America, N.A.

 

(9) Working Capital Account Agreement, dated as of the date hereof, by and among
Rio Individual Borrower, Rio Properties, Inc., Collateral Agent and Bank of
America, N.A.

 

(10) Working Capital Account Agreement, dated as of the date hereof, by and
among Harrah’s LV Individual Borrower, Harrah’s Las Vegas, Inc., Collateral
Agent and Bank of America, N.A.

 

SCHEDULE IV

--------------------------------------------------------------------------------

(11) Working Capital Account Agreement, dated as of the date hereof, by and
among Paris Individual Borrower, Paris Las Vegas Operating Company, LLC,
Collateral Agent and Bank of America, N.A.

 

(12) Working Capital Account Agreement, dated as of the date hereof, by and
among Harrah’s Laughlin Individual Borrower, Harrah’s Laughlin, Inc., Collateral
Agent and Bank of America, N.A.

 

SCHEDULE IV

--------------------------------------------------------------------------------

SCHEDULE V

OFF-SHORE ACCOUNTS

[Redacted.]

 

SCHEDULE V

--------------------------------------------------------------------------------

SCHEDULE VI

OPERATING LEASES

 

(1) Amended and Restated Operating Lease (Hotel Component), dated as of the date
hereof, between Harrah’s Las Vegas Propco, LLC and Harrah’s Las Vegas, Inc.

 

(2) Amended and Restated Operating Lease (Casino Component), dated as of the
date hereof, between Harrah’s Las Vegas Propco, LLC and Harrah’s Las Vegas, Inc.

 

(3) Amended and Restated Operating Lease, dated as of the date hereof, between
Harrah’s Atlantic City Propco, LLC and Harrah’s Atlantic City Operating Company,
LLC.

 

(4) Amended and Restated Operating Lease (Hotel Component), dated as of the date
hereof, between Paris Las Vegas Propco, LLC and Paris Las Vegas Operating
Company, LLC.

 

(5) Amended and Restated Operating Lease (Casino Component), dated as of the
date hereof, between Paris Las Vegas Propco, LLC and Paris Las Vegas Operating
Company, LLC.

 

(6) Amended and Restated Operating Lease (Hotel Component), dated as of the date
hereof, between Rio Propco, LLC and Rio Properties, Inc.

 

(7) Amended and Restated Operating Lease (Casino Component), dated as of the
date hereof, between Rio Propco, LLC and Rio Properties, Inc.

 

(8) Amended and Restated Operating Lease (Hotel Component), dated as of the date
hereof, between Flamingo Las Vegas Propco, LLC and Flamingo Las Vegas Operating
Company, LLC.

 

(9) Amended and Restated Operating Lease (Casino Component), dated as of the
date hereof, between Flamingo Las Vegas Propco, LLC and Flamingo Las Vegas
Operating Company, LLC.

 

(10) Amended and Restated Operating Lease (Hotel Component), dated as of the
date hereof, between Harrah’s Laughlin Propco, LLC and Harrah’s Laughlin, Inc.

 

(11) Amended and Restated Operating Lease (Casino Component), dated as of the
date hereof, between Harrah’s Laughlin Propco, LLC and Harrah’s Laughlin, Inc.

 

SCHEDULE VI – PAGE 1

--------------------------------------------------------------------------------

SCHEDULE VIA

OPERATING LEASE GUARANTY

 

(1) Amended and Restated Lease Guaranty Agreement (Harrah’s Las Vegas (Hotel)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor
of Harrah’s Las Vegas Propco, LLC

 

(2) Amended and Restated Lease Guaranty Agreement (Harrah’s Las Vegas (Casino)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor
of Harrah’s Las Vegas Propco, LLC

 

(3) Amended and Restated Lease Guaranty Agreement (Harrah’s Atlantic City),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor
of Harrah’s Atlantic City Propco, LLC

 

(4) Amended and Restated Lease Guaranty Agreement (Paris Las Vegas (Hotel)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of Paris
Las Vegas Propco, LLC

 

(5) Amended and Restated Lease Guaranty Agreement (Paris Las Vegas (Casino)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of Paris
Las Vegas Propco, LLC

 

(6) Amended and Restated Lease Guaranty Agreement (Rio Properties (Hotel)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of Rio
Propco, LLC

 

(7) Amended and Restated Lease Guaranty Agreement (Rio Properties (Casino)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of Rio
Propco, LLC

 

(8) Amended and Restated Lease Guaranty Agreement (Flamingo Las Vegas (Hotel)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor
of Flamingo Las Vegas Propco, LLC

 

(9) Amended and Restated Lease Guaranty Agreement (Flamingo Las Vegas (Casino)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of
Flamingo Las Vegas Propco, LLC

 

(10) Amended and Restated Lease Guaranty Agreement (Harrah’s Laughlin (Hotel)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor
of Harrah’s Laughlin Propco, LLC

 

(11) Amended and Restated Lease Guaranty Agreement (Harrah’s Laughlin (Casino)),
dated as of the date hereof, by Harrah’s Entertainment, Inc., in favor of
Harrah’s Laughlin Propco, LLC

 

SCHEDULE VIA

--------------------------------------------------------------------------------

SCHEDULE VII

PERMITTED FUND MANAGERS

The following entities and their Affiliates:

 

(a) Apollo Real Estate Advisors

 

(b) Apollo Management, L.P.

 

(c) TPG Capital, L.P.

 

(d) DLJ Real Estate Capital Partners

 

(e) [omitted]

 

(f) Capital Trust, Inc.

 

(g) Archon Capital, L.P.

 

(h) Whitehall Street Real Estate Fund, L.P.

 

(i) The Blackstone Group International Ltd.

 

(j) Colony Capital, Inc.

 

(k) Praedium Group

 

(l) J.E. Robert Companies

 

(m) Fortress Investment Group LLC

 

(n) Lone Star Opportunity Fund

 

(o) Clarion Partners

 

(p) Walton Street Capital, LLC

 

(q) Starwood Financial Trust

 

(r) BlackRock, Inc.

 

SCHEDULE VII

--------------------------------------------------------------------------------

SCHEDULE VIII

ORGANIZATIONAL CHART

See attached.

 

LOGO [g63676flowchart_1a.jpg]

LOGO [g63676flowchart_2a.jpg]

 

SCHEDULE VIII

--------------------------------------------------------------------------------

SCHEDULE IX

GAMING LICENSES

[Redacted.]

 

SCHEDULE IX

--------------------------------------------------------------------------------

SCHEDULE X

RENT ROLL/SPACE LEASES

[Redacted.]

 

SCHEDULE X

--------------------------------------------------------------------------------

SCHEDULE XI

INTENTIONALLY OMITTED

 

SCHEDULE XI

--------------------------------------------------------------------------------

SCHEDULE XII

RECOGNITION AGREEMENT

____________________________

(Collateral Agent, for the benefit of Lender)

- and -

____________________________

(Tenant)

________________________________________________

RECOGNITION AGREEMENT

________________________________________________

Dated:

Location:

Section:

Block:

Lot:

County:

PREPARED BY AND UPON

RECORDATION RETURN TO:

New York, New York

Attention:

Esq.

File No.:

Title No.:

 

 

 

NOTE: Modify formatting to reflect state-specific requirements.

 

SCHEDULE XII – PAGE 1

--------------------------------------------------------------------------------

RECOGNITION AGREEMENT

THIS RECOGNITION AGREEMENT (this “Agreement”) is made as of the [            ]
day of [                        ], 20[__] by and between
[                        ], in its capacity as collateral agent (in such
capacity, together with its successors and assigns, “Collateral Agent”) for the
lenders that are (or may become) parties to the Loan Agreement (hereinafter
defined) (collectively, and together with their respective successors and
assigns, the “Lenders”) and [                                ], having an
address at [                                ] (“Tenant”).

RECITALS:

A. Lenders made a loan to Landlord (defined below) pursuant to the provisions of
that certain Second Amended and Restated Loan Agreement dated August 31, 2010,
between Lenders, Collateral Agent, Landlord and certain affiliates of Landlord
(such agreement, as the same may be amended, modified or supplemented from time
to time, the “Loan Agreement”). The Loan is evidenced by certain promissory
notes made in favor of Lenders and secured by a certain [Mortgage] [Deed of
Trust], Fixture Filing, Security Agreement and Assignment of Leases and Rents
dated as of [                    ], 2008 given by Landlord in favor of JPMorgan
Chase Bank, N.A. (as amended by [First Amendment] to [Mortgage] [Deed of Trust],
Fixture Filing, Security Agreement and Assignment of Leases and Rents dated as
of August 31, 2010, among Landlord, Collateral Agent and the Lender, the
“Mortgage”), which Mortgage encumbers the fee and, if applicable, leasehold
estate of Landlord in certain premises described in Exhibit A attached hereto
(the “Property”);

B. Tenant occupies a portion of the Property under and pursuant to the
provisions of a certain lease dated [                            ] between
[                            ], as landlord (“Landlord”) and Tenant, as tenant
(the “Lease”); and

C. Tenant has agreed to subordinate the Lease to the Mortgage and to the lien
thereof and Lenders have agreed to grant non-disturbance to Tenant under the
Lease on the terms and conditions hereinafter set forth.

AGREEMENT:

For good and valuable consideration, Tenant and Collateral Agent (on behalf of
the Lenders) agree as follows:

1. Subordination. Tenant agrees that the Lease and all of the terms, covenants
and provisions thereof and all rights, remedies and options of Tenant thereunder
are and shall at all times continue to be subject and subordinate in all
respects to the Mortgage and to the lien thereof and all terms, covenants and
conditions set forth in the Mortgage and the Loan Agreement including, without
limitation all renewals, increases, modifications, spreaders, consolidations,
replacements and extensions thereof and to all sums secured thereby with the
same force and effect as if the Mortgage and Loan Agreement had been executed,
delivered and (in the case of the Mortgage) recorded prior to the execution and
delivery of the Lease.

 

SCHEDULE XII – PAGE 2

--------------------------------------------------------------------------------

2. Non-Disturbance. Collateral Agent (on behalf of the Lenders) agrees that if
any action or proceeding is commenced by Collateral Agent (on behalf of the
Lenders) for the foreclosure of the Mortgage or the sale of the Property, Tenant
shall not be named as a party therein unless such joinder shall be required by
law; provided, however, such joinder shall not result in the termination of the
Lease or disturb the Tenant’s possession or use of the premises demised
thereunder, and the sale of the Property in any such action or proceeding shall
be made subject to all rights of Tenant under the Lease except as set forth in
Section 3 below, provided that at the time of the commencement of any such
action or proceeding or at the time of any such sale or exercise of any such
other rights (a) the term of the Lease shall have commenced pursuant to the
provisions thereof, (b) Tenant shall be in possession of the premises demised
under the Lease, (c) the Lease shall be in full force and effect and (d) Tenant
shall not be in default under any of the terms, covenants or conditions of the
Lease or of this Agreement on Tenant’s part to be observed or performed beyond
the expiration of any applicable notice or grace periods.

3. Attornment. Collateral Agent (on behalf of the Lenders) and Tenant agree that
upon the conveyance of the Property by reason of the foreclosure of the Mortgage
or the acceptance of a deed or assignment in lieu of foreclosure or otherwise,
the Lease shall not be terminated or affected thereby (at the option of the
transferee of the Property (the “Transferee”) if the conditions set forth in
Section 2 above have not been met at the time of such transfer) but shall
continue in full force and effect as a direct lease between the Transferee and
Tenant upon all of the terms, covenants and conditions set forth in the Lease
and in that event, Tenant agrees to attorn to the Transferee and the Transferee
shall accept such attornment, and the Transferee shall not be (a) obligated to
complete any construction work required to be done by Landlord pursuant to the
provisions of the Lease or to reimburse Tenant for any construction work done by
Tenant, in each case prior to Transferee’s ownership of the Property, (b) liable
(i) for Landlord’s failure to perform any of its obligations under the Lease
which have accrued prior to the date on which the Transferee shall become the
owner of the Property, or (ii) for any act or omission of Landlord, whether
prior to or after such foreclosure or sale, (c) required to make any repairs to
the Property or to the premises demised under the Lease required as a result of
fire, or other casualty or by reason of condemnation unless the Transferee shall
be obligated under the Lease to make such repairs and shall have received
sufficient casualty insurance proceeds or condemnation awards to finance the
completion of such repairs, (d) required to make any capital improvements to the
Property or to the premises demised under the Lease which Landlord may have
agreed to make, but had not completed, or to perform or provide any services not
related to possession or quiet enjoyment of the premises demised under the
Lease, (e) subject to any offsets, defenses, abatements or counterclaims which
shall have accrued to Tenant against Landlord prior to the date upon which the
Transferee shall become the owner of the Property, (f) liable for the return of
rental security deposits, if any, paid by Tenant to Landlord in accordance with
the Lease unless such sums are actually received by the Transferee, (g) bound by
any payment of rents, additional rents or other sums which Tenant may have paid
more than one (1) month in advance to any prior Landlord unless (i) such sums
are actually received by the Transferee or (ii) such prepayment shall have been
expressly approved of by the Transferee, (h) bound to make any payment to Tenant
which was required under the Lease, or otherwise, to be made prior to the time
the Transferee succeeded to Landlord’s interest, (i) bound by any agreement
amending, modifying or terminating the Lease made without the prior written
consent of the Lenders prior to the time the Transferee succeeded to Landlord’s
interest or (j) bound by any assignment of the Lease or sublease of the
Property, or any portion thereof, made prior to the time the Transferee
succeeded to Landlord’s interest other than if pursuant to the provisions of the
Lease.

 

SCHEDULE XII – PAGE 3

--------------------------------------------------------------------------------

4. Notice to Tenant. After notice is given to Tenant by Collateral Agent and/or
the Lenders (or a servicer acting on behalf of the Lenders) that the Landlord is
in default under the Note and the Mortgage and that the rentals under the Lease
should be paid to Lenders pursuant to the terms of the assignment of leases and
rents executed and delivered by Landlord to Lenders in connection therewith,
Tenant shall thereafter pay to Lenders or as directed by the Lenders (or a
servicer on behalf of the Lenders), all rentals and all other monies due or to
become due to Landlord under the Lease and Landlord hereby expressly authorizes
Tenant to make such payments to Lenders (or a servicer, as directed) and hereby
releases and discharges Tenant from any liability to Landlord on account of any
such payments.

5. Lender’s Consent. Tenant shall not, without obtaining the prior written
consent of the Lenders (or a servicer acting on behalf of the Lenders),
(a) enter into any agreement amending, modifying or terminating the Lease,
(b) prepay any of the rents, additional rents or other sums due under the Lease
for more than one (1) month in advance of the due dates thereof, (c) voluntarily
surrender the premises demised under the Lease or terminate the Lease without
cause or shorten the term thereof, or (d) assign the Lease or sublet the
premises demised under the Lease or any part thereof other than pursuant to the
provisions of the Lease; and any such amendment, modification, termination,
prepayment, voluntary surrender, assignment or subletting, without Lender’s
prior consent, shall not be binding upon Lender.

6. Lender to Receive Notices. Tenant shall provide Collateral Agent with copies
of all written notices sent to Landlord pursuant to the Lease simultaneously
with the transmission of such notices to the Landlord. Tenant shall notify
Collateral Agent of any default by Landlord under the Lease which would entitle
Tenant to cancel the Lease or to an abatement of the rents, additional rents or
other sums payable thereunder, and agrees that, notwithstanding any provisions
of the Lease to the contrary, no notice of cancellation thereof or of such an
abatement shall be effective unless Collateral Agent shall have received notice
of default giving rise to such cancellation or abatement and shall have failed
within sixty (60) days after receipt of such notice to cure such default, or if
such default cannot be cured within sixty (60) days, shall have failed within
sixty (60) days after receipt of such notice to commence and thereafter
diligently pursue any action necessary to cure such default. Collateral Agent
shall provide copies of all notices sent to it pursuant to this Section 6 to
Lenders (or the servicer designated by Lenders, in a notice to Collateral Agent)
promptly upon receipt of same.

 

SCHEDULE XII – PAGE 4

--------------------------------------------------------------------------------

7. Notices. All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (hereinafter
defined) after having been deposited for overnight delivery with any reputable
overnight courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the U.S.
Postal Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If to Tenant:

   __________________________    __________________________   
__________________________    Attention: _________________   
Facsimile No. _____________

If to Collateral Agent:

   [                                     ]

With a copy to:

  

New York, New York

Attention:

Facsimile No.

If to the Lenders:

   __________________________    __________________________   
__________________________    Attention: _________________   
Facsimile No. _____________

or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section, the term “Business Day” shall
mean a day on which commercial banks are not authorized or required by law to
close in New York, New York.

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

8. Joint and Several Liability. If Tenant consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Agreement shall be binding upon and inure to the benefit of
Collateral Agent and Tenant and their respective successors and assigns. Each
Lender shall be a third party beneficiary of this Agreement, and this Agreement
shall inure to the benefit of each Lender.

9. Definitions. The term “Collateral Agent” as used herein shall include the
successors and assigns of Collateral Agent and any person, party or entity which
shall become the owner of the Property by reason of a foreclosure of the
Mortgage or the acceptance of a deed or assignment in lieu of foreclosure or
otherwise. The term “Lender” as used herein shall include the successors and
assigns of Lender. The term “Landlord” as used herein shall mean and include the
present landlord under the Lease and such landlord’s predecessors and successors
in interest under the Lease, but shall not mean or include Lender. The term
“Property” as used herein shall mean the Property, the improvements now or
hereafter located thereon and the estates therein encumbered by the Mortgage.

10. No Oral Modifications. This Agreement may not be modified in any manner or
terminated except by an instrument in writing executed by the parties hereto.

11. Governing Law. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State where the Property is located and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State where the Property is located.

 

SCHEDULE XII – PAGE 5

--------------------------------------------------------------------------------

12. Inapplicable Provisions. If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.

13. Duplicate Originals; Counterparts. This Agreement may be executed in any
number of duplicate originals and each duplicate original shall be deemed to be
an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

14. Number and Gender. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.

15. Transfer of Loan. Each Lender may sell, transfer and deliver the Note and
assign the Mortgage, this Agreement and the other documents executed in
connection therewith to one or more investors in the secondary mortgage market
(“Investors”). In connection with such sale, each Lender may retain or assign
responsibility for servicing the loan, including the Note, the Mortgage, this
Agreement and the other documents executed in connection therewith, or may
delegate some or all of such responsibility and/or obligations to a servicer
including, but not limited to, any subservicer or master servicer, on behalf of
the Investors. All references to Lender herein shall refer to and include any
such servicer to the extent applicable.

16. Further Acts. Tenant will, at the cost of Tenant, and without expense to
Collateral Agent or any Lender, do, execute, acknowledge and deliver all and
every such further acts and assurances as Lender shall, from time to time,
require, for the better assuring and confirming unto Collateral Agent and each
Lender the property and rights hereby intended now or hereafter so to be, or for
carrying out the intention or facilitating the performance of the terms of this
Agreement or for filing, registering or recording this Agreement, or for
complying with all applicable laws.

17. Limitations on Lender’s Liability. Tenant acknowledges that Collateral Agent
and each Lender is obligated only to Landlord upon the terms and subject to the
conditions set forth in the Loan Agreement. In no event shall Collateral Agent
or any Lender or any purchaser of the Property at foreclosure sale or any
grantee of the Property named in a deed-in-lieu of foreclosure, nor any heir,
legal representative, successor, or assignee of Lender or any such purchaser or
grantee (collectively, the “Subsequent Landlord”) have any personal liability
for the obligations of Landlord under the Lease and should the Subsequent
Landlord succeed to the interests of the Landlord under the Lease, Tenant shall
look only to the estate and property of any such Subsequent Landlord in the
Property for the satisfaction of Tenant’s remedies for the collection of a
judgment (or other judicial process) requiring the payment of money in the event
of any default by any Subsequent Landlord as landlord under the Lease, and no
other property or assets of any Subsequent Landlord shall be subject to levy,
execution or other enforcement

 

SCHEDULE XII – PAGE 6

--------------------------------------------------------------------------------

procedure for the satisfaction of Tenant’s remedies under or with respect to the
Lease; provided, however, that the Tenant may exercise any other right or remedy
provided thereby or by law in the event of any failure by Subsequent Landlord to
perform any such material obligation.

 

SCHEDULE XII – PAGE 7

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Collateral Agent (on behalf of each Lender) and Tenant have
duly executed this Agreement as of the date first above written.

 

COLLATERAL AGENT: [                             ] By:       Name:   Title:
TENANT:

_____________________________,

a _________________

By:       Name:   Title:

 

The undersigned accepts and agrees to the provisions of Section 4 hereof:
LANDLORD:

______________________,

a ________________________________

By:       Name:   Title:

 

SCHEDULE XII – PAGE 8

--------------------------------------------------------------------------------

ACKNOWLEDGMENTS

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

 

SCHEDULE XII – PAGE 9

--------------------------------------------------------------------------------

EXHIBIT A

LEGAL DESCRIPTION

 

SCHEDULE XII – PAGE 10

--------------------------------------------------------------------------------

SCHEDULE XIII

FIRST MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 1, LLC

 

2. Harrah’s Atlantic City Mezz 1, LLC

 

3. Paris Las Vegas Mezz 1, LLC

 

4. Rio Mezz 1, LLC

 

5. Flamingo Las Vegas Mezz 1, LLC

 

6. Harrah’s Laughlin Mezz 1, LLC

 

SCHEDULE XIII

--------------------------------------------------------------------------------

SCHEDULE XIV

SECOND MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 2, LLC

 

2. Harrah’s Atlantic City Mezz 2, LLC

 

3. Paris Las Vegas Mezz 2, LLC

 

4. Rio Mezz 2, LLC

 

5. Flamingo Las Vegas Mezz 2, LLC

 

6. Harrah’s Laughlin Mezz 2, LLC

 

SCHEDULE XIV

--------------------------------------------------------------------------------

SCHEDULE XV

THIRD MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 3, LLC

 

2. Harrah’s Atlantic City Mezz 3, LLC

 

3. Paris Las Vegas Mezz 3, LLC

 

4. Rio Mezz 3, LLC

 

5. Flamingo Las Vegas Mezz 3, LLC

 

6. Harrah’s Laughlin Mezz 3, LLC

 

SCHEDULE XV

--------------------------------------------------------------------------------

SCHEDULE XVI

FOURTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 4, LLC

 

2. Harrah’s Atlantic City Mezz 4, LLC

 

3. Paris Las Vegas Mezz 4, LLC

 

4. Rio Mezz 4, LLC

 

5. Flamingo Las Vegas Mezz 4, LLC

 

6. Harrah’s Laughlin Mezz 4, LLC

 

SCHEDULE XVI

--------------------------------------------------------------------------------

SCHEDULE XVII

FIFTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 5, LLC

 

2. Harrah’s Atlantic City Mezz 5, LLC

 

3. Paris Las Vegas Mezz 5, LLC

 

4. Rio Mezz 5, LLC

 

5. Flamingo Las Vegas Mezz 5, LLC

 

6. Harrah’s Laughlin Mezz 5, LLC

 

SCHEDULE XVII

--------------------------------------------------------------------------------

SCHEDULE XVIII

SIXTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 6, LLC

 

2. Harrah’s Atlantic City Mezz 6, LLC

 

3. Paris Las Vegas Mezz 6, LLC

 

4. Rio Mezz 6, LLC

 

5. Flamingo Las Vegas Mezz 6, LLC

 

6. Harrah’s Laughlin Mezz 6, LLC

 

SCHEDULE XVIII

--------------------------------------------------------------------------------

SCHEDULE XIX

SEVENTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 7, LLC

 

2. Harrah’s Atlantic City Mezz 7, LLC

 

3. Paris Las Vegas Mezz 7, LLC

 

4. Rio Mezz 7, LLC

 

5. Flamingo Las Vegas Mezz 7, LLC

 

6. Harrah’s Laughlin Mezz 7, LLC

 

SCHEDULE XIX

--------------------------------------------------------------------------------

SCHEDULE XX

EIGHTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 8, LLC

 

2. Harrah’s Atlantic City Mezz 8, LLC

 

3. Paris Las Vegas Mezz 8, LLC

 

4. Rio Mezz 8, LLC

 

5. Flamingo Las Vegas Mezz 8, LLC

 

6. Harrah’s Laughlin Mezz 8, LLC

 

SCHEDULE XX

--------------------------------------------------------------------------------

SCHEDULE XXI

NINTH MEZZANINE BORROWER

 

1. Harrah’s Las Vegas Mezz 9, LLC

 

2. Harrah’s Atlantic City Mezz 9, LLC

 

3. Paris Las Vegas Mezz 9, LLC

 

4. Rio Mezz 9, LLC

 

5. Flamingo Las Vegas Mezz 9, LLC

 

6. Harrah’s Laughlin Mezz 9, LLC

 

SCHEDULE XXI

--------------------------------------------------------------------------------

SCHEDULE XXII

CONVENTION CENTER PARCEL

[Redacted.]

 

SCHEDULE XXII

--------------------------------------------------------------------------------

SCHEDULE XXIII

EXCEPTION REPORT

None.

 

SCHEDULE XXIII

--------------------------------------------------------------------------------

SCHEDULE XXIV

LITIGATION

None.

 

SCHEDULE XXIV

--------------------------------------------------------------------------------

SCHEDULE XXV

DESCRIPTION OF O’SHEA’S

[Redacted.]

 

SCHEDULE XXV

--------------------------------------------------------------------------------

SCHEDULE XXVI

First Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXVI

--------------------------------------------------------------------------------

SCHEDULE XXVII

Second Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXVII

--------------------------------------------------------------------------------

SCHEDULE XXVIII

Third Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXVIII

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SCHEDULE XXIX

Fourth Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXIX

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SCHEDULE XXX

Fifth Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXX

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SCHEDULE XXXI

Sixth Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXXI

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SCHEDULE XXXII

Seventh Mezzanine Lenders

[Redacted.]

 

SCHEDULE XXXII

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SCHEDULE XXXIV

DESCRIPTION OF RDE PARCELS

[Redacted.]

 

SCHEDULE XXXIII

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SCHEDULE XXXIV

DOCUMENTS ASSIGNED TO COLLATERAL AGENT

 

1. Collateral Assignment of Rights by Flamingo Las Vegas Propco, LLC in favor of
JPMorgan Chase Bank, N.A., dated as of January 28, 2008.

 

2. Collateral Assignment of Rights by Harrah’s Atlantic City Propco, LLC in
favor of JPMorgan Chase Bank, N.A., dated as of February 20, 2008.

 

3. Collateral Assignment of Rights by Harrah’s Las Vegas Propco, LLC in favor of
JPMorgan Chase Bank, N.A., dated as of January 28, 2008.

 

4. Collateral Assignment of Rights by Harrah’s Laughlin Propco, LLC in favor of
JPMorgan Chase Bank, N.A., dated as of May 22, 2008.

 

5. Collateral Assignment of Rights by Paris Las Vegas Propco, LLC in favor of
JPMorgan Chase Bank, N.A., dated as of May 22, 2008.

 

6. Collateral Assignment of Rights by Rio Propco, LLC in favor of JPMorgan Chase
Bank, N.A., dated as of January 28, 2008.

 

7. Deposit Account Control Agreement among Flamingo Las Vegas Propco, LLC,
JPMorgan Chase Bank, N.A., Flamingo Las Vegas Operating Company, LLC and Bank of
America, N.A., dated as of March 3, 2008.

 

8. Deposit Account Control Agreement among Harrah’s Atlantic City Propco, LLC,
JPMorgan Chase Bank, N.A., Harrah’s Atlantic City Operating Company, LLC and
Bank of America, N.A., dated as of March 3, 2008.

 

9. Deposit Account Control Agreement among Paris Las Vegas Propco, LLC, JPMorgan
Chase Bank, N.A., Paris Las Vegas Operating Company, LLC and Bank of America,
N.A., dated as of May 22, 2008.

 

10. Deposit Account Control Agreement among Rio Propco, LLC, JPMorgan Chase
Bank, N.A., Rio Properties, Inc. and Bank of America, N.A., dated as of March 3,
2008.

 

11. Restricted Account Agreement among Harrah’s Las Vegas Propco, LLC, JPMorgan
Chase Bank, N.A., Harrah’s Las Vegas, Inc. and Wells Fargo Bank, National
Association, dated as of February 28, 2008.

 

12. Restricted Account Agreement among Harrah’s Laughlin Propco, LLC, JPMorgan
Chase Bank, N.A., Harrah’s Laughlin, Inc. and Wells Fargo Bank, National
Association, dated as of May 22, 2008.

 

13. Loan Policy of Title Insurance, Policy No. 08500348, issued by LandAmerica
Lawyers Title to JPM. (Location: Harrah’s Flamingo)

 

SCHEDULE XXXIV

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14. Loan Policy of Title Insurance, Policy No. 08501248, issued by LandAmerica
Lawyers Title to JPM. (Location: Paris Las Vegas)

 

15. Loan Policy of Title Insurance, Policy No. 08500349, issued by LandAmerica
Lawyers Title to JPM. (Location: Rio Las Vegas)

 

16. Loan Policy of Title Insurance, Policy No. 08500347, issued by LandAmerica
Lawyers Title to JPM. (Location: Harrah’s Las Vegas)

 

17. Loan Policy of Title Insurance, Policy No. 07-000099, issued by LandAmerica
Lawyers Title to JPM. (Location: Harrah’s Atlantic City)

 

18. Loan Policy of Title Insurance, Policy No. 08501247, issued by LandAmerica
Lawyers Title to JPM. (Location: Laughlin)

 

19. Any casualty, liability and other insurance policies and certificates
(delivered under the Original Loan Agreement) naming JPM as Lender, loss payee,
additional insured or named insured, if any.

 

20. As to its rights as REF Mortgage Lender, the Windstorm Insurance
Intercreditor Agreement, dated as of January 28, 2008, by and among JPM, each of
the Other Owners party thereto, Holdings, Bank of America, N.A., and the Other
Secured Parties party thereto. Together with any insurance policies and other
documents entered into in connection therewith.

 

21. As to its rights as REF Mortgage Lender, the Supplemental Agreement
Regarding Windstorm Insurance Intercreditor Agreement, dated as of May 22, 2008,
by and among Showboat Atlantic City Propco, LLC, and Holdings, in favor or JPM.
Together with any insurance policies and other documents entered into in
connection therewith.

 

22. Guaranty Agreement (Gaming Equipment), dated as of January 28, 2008, by
Holdings in favor of JPM.

 

23. Guaranty Agreement (Gaming Equipment), dated as of February 20, 2008, by
Holdings in favor of JPM.

 

24. Guaranty Agreement (Gaming Equipment), dated as of May 22, 2008, by Holdings
in favor of JPM.

 

25. Amended and Restated Collateral Assignment of Interest Rate Cap Agreement,
dated as of May 22, 2008, by and among Borrower and JPM.

 

26. Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases
and Rents, dated as of January 28, 2008, made by Harrah’s Las Vegas Propco, LLC
to Lawyers Title of Nevada, Inc. for the benefit of JPM, as amended and
assigned.

 

SCHEDULE XXXIV

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27. Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases
and Rents, dated as of January 28, 2008, made by Rio Propco, LLC to Lawyers
Title of Nevada, Inc. for the benefit of JPM, as amended and assigned.

 

28. Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases
and Rents, dated as of January 28, 2008, made by Flamingo Las Vegas Propco, LLC
to Lawyers Title of Nevada, Inc. for the benefit of JPM, as amended and
assigned.

 

29. Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases
and Rents, dated as of May 22, 2008, made by Paris Las Vegas Propco, LLC to
Lawyers Title of Nevada, Inc. for the benefit of JPM, as amended and assigned.

 

30. Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases
and Rents, dated as of May 22, 2008, made by Harrah’s Laughlin Propco, LLC to
Lawyers Title of Nevada, Inc. for the benefit of JPM, as amended and assigned.

 

31. Mortgage and Security Agreement, dated as of January 28, 2008, among
Atlantic City Propco, LLC to JPM, as amended and assigned.

 

32. Assignment of Leases and Rents, dated as of January 28, 2008, among Harrah’s
Las Vegas Propco, LLC and JPM, as amended and assigned.

 

33. Assignment of Leases and Rents, dated as of January 28, 2008, among Rio
Propco, LLC and JPM, as amended and assigned.

 

34. Assignment of Leases and Rents, dated as of January 28, 2008, among Flamingo
Las Vegas Propco, LLC and JPM, as amended and assigned.

 

35. Amendment to and Assignment of Assignment of Leases and Rents, dated as of
May 22, 2008, among Paris Las Vegas Propco, LLC and JPM, as amended and
assigned.

 

36. Assignment of Assignment of Leases and Rents, dated as of May 22, 2008,
among Harrah’s Laughlin Propco, LLC and JPM, as amended and assigned.

 

37. Amendment to and Assignment of Assignment of Leases and Rents, dated as of
January 28, 2008, among Atlantic City Propco, LLC and JPM, as amended and
assigned.

 

SCHEDULE XXXIV

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EXHIBIT A

FORM OF OPINION FROM INTEREST RATE CAP PROVIDER

[                    ], 2010

[Collateral Agent, the Lenders, and their respective successors and assigns]

 

  Re: Harrah’s Loan Agreement and Related Transactions

Ladies and Gentlemen:

We have acted as [                    ] counsel to [                    ], a
[                    ] (the “[                    ]”) in connection with the
preparation, execution and delivery of the Interest Rate Protection Agreement
(the “Agreement”), dated as of [                    ], 2010 (the “Trade Date”),
the trade confirmation (the “Confirmation”) dated [                    ], 2010
evidencing the rate cap transactions between the Seller and Buyer entered into
on the Trade Date and the Collateral Assignment of Interest Rate Protection
Agreement (the “Collateral Assignment”) dated as of [                    ], 2010
by and between [                    ] (“Counterparty”) and
[                    ], in its capacity as collateral agent (in such capacity,
the “Collateral Agent”) for the lenders (from time to time) a party to that
certain Second Amended and Restated Loan Agreement dated as of August 31, 2010
among Collateral Agent, JPMorgan Chase Bank, N.A., Bank of America, N.A.,
Citibank, N.A., Merrill Lynch Mortgage Lending, Inc., Credit Suisse, Cayman
Islands Branch, German American Capital Corporation, Morgan Stanley Mortgage
Capital Holdings LLC and Goldman Sachs Mortgage Company (collectively, “Lender”)
and the borrowers a party thereto (such Master Agreement, Confirmation and
Collateral Assignment collectively, the “Rate Cap Documents”).

In our examination we have assumed the genuineness of all signatures, the legal
capacity and competency of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies.

In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:

(a) the executed Agreement;

(b the executed Confirmation;

(c) the executed Collateral Assignment; and

(d) such other documents as we have deemed necessary or appropriate as a basis
for the opinions set forth below.

 

EXHIBIT A – PAGE 1

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Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

1. the Counterparty is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has the organizational
power and authority to execute and deliver, and to perform its obligations
under, the Rate Cap Documents;

2. the execution and delivery of the Rate Cap Documents by the Counterparty, and
any other agreement which the Counterparty has executed and delivered pursuant
thereto, and the performance of its obligations thereunder have been and remain
duly authorized by all necessary action and do not contravene any provision of
its certificate of incorporation or by-laws (or equivalent organizational
documents) or any law, regulation or contractual restriction binding on or
affecting it or its property;

3. all consents, authorizations and approvals required for the execution and
delivery by the Counterparty of the Rate Cap Documents, and any other agreement
which the Counterparty has executed and delivered pursuant thereto, and the
performance of its obligations thereunder have been obtained and remain in full
force and effect, all conditions thereof have been duly complied with, and no
other action by, and no notice to or filing with any governmental authority or
regulatory body is required for such execution, delivery or performance;

4. the Rate Cap Documents, and any other agreement which the Counterparty has
executed and delivered pursuant thereto, has been duly executed and delivered by
the Counterparty and constitutes the legal, valid and binding obligation of the
Counterparty, enforceable against the Counterparty in accordance with its or
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law); and

5. The choice of New York law to govern the Rate Cap Documents is a valid choice
and would be given effect by the courts of [            ] and there are no
provisions in the Rate Cap Documents that are repugnant to the laws or public
policy of [            ]. If any final and conclusive judgment of a State or a
Federal court in New York City is rendered against the Seller in connection with
any action arising out of or relating to the Rate Cap Documents, such judgment
would be recognized and enforced by the courts of [            ] without any
re-trial or re-examination of the action.

This opinion is for the benefit of the addressees of this opinion and their
respective successors and assigns, and their respective counsel, and may not be
relied upon by you for any purpose other than in connection with the
above-referenced transaction and may not be relied upon by or furnished to any
other person, firm or corporation for any purpose without my/this firm’s prior
written consent.

 

EXHIBIT A – PAGE 2

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EXHIBIT B

FORM OF COMPLETION GUARANTY

THIS GUARANTY OF COMPLETION (the “Guaranty”) is executed as of [            ] by
[HARRAH’S ENTERTAINMENT, INC., a Delaware corporation, having an address at One
Caesars Palace Drive, Las Vegas, Nevada 89019] (whether one or more collectively
referred to as “Guarantor”), in favor of each of JPMORGAN CHASE BANK, N.A., a
banking association chartered under the laws of the United States of America
(together with its successors and assigns, “JPM”), BANK OF AMERICA, N.A., a
banking association chartered under the laws of the United States of America
(together with its successors and assigns, “BOA”), CITIBANK, N.A., a banking
association chartered under the laws of the United States of America (together
with its successors and assigns, “Citibank”), MERRILL LYNCH MORTGAGE LENDING,
INC., a Delaware corporation (together with its successors and assigns,
“Merrill”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH (together with its successors
and assigns, “CS”), GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation
(together with its successors and assigns, “DB”), MORGAN STANLEY MORTGAGE
CAPITAL HOLDINGS LLC, a New York limited liability company (together with its
successors and assigns, “Morgan”), GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership (together with its successors and assigns, “Goldman”) and
the other Lenders that may become a party hereto from time to time to the Loan
Agreement (as hereinafter defined) (collectively, together with their successors
and assigns, and together with JPM, BOA, Citibank, Merrill, CS, DB, Morgan and
Goldman, “Lender”).

W I T N E S S E T H :

WHEREAS, Lender and the parties identified on the pages of the Loan Agreement
(as hereinafter defined) collectively as “Borrower” are executing and delivering
that certain Second Amended and Restated Loan Agreement dated as of August 31,
2010 (as the same may be amended, restated, replaced, supplemented, or otherwise
modified from time to time, the “Loan Agreement”), in connection with a Loan (as
defined in the Loan Agreement) of Four Billion and No/100 Dollars
($4,000,000,000.00);

WHEREAS, the Loan is evidenced and/or secured by the Note, the Mortgages and the
other Loan Documents (as such terms, together with all other capitalized terms
used and not defined herein, are defined in the Loan Agreement);

WHEREAS, Lender is not willing to consent to the performance of a Material
Alteration (as defined in the Loan Agreement) unless Guarantor unconditionally
guarantees payment and performance to Lender of the Guaranteed Obligations (as
herein defined); [define Material Alteration in question with more specificity]
and

WHEREAS, Guarantor is the owner of a direct or indirect interest in Borrower,
and Guarantor will directly benefit from the agreement of Lender to consent to
the performance of the Material Alteration.

 

EXHIBIT B – PAGE 1

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NOW, THEREFORE, as an inducement to Lender to approve the performance of the
Material Alteration, and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:

I.

NATURE AND SCOPE OF GUARANTY

Section 1.1 Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the payment
and performance of the Guaranteed Obligations as and when the same shall be due
and payable, whether by lapse of time, by acceleration of maturity or otherwise.
Guarantor hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Obligations as a primary obligor.

Section 1.2 Definitions. As used herein, the following terms shall have the
following meanings ascribed to such terms:

(a) the term “Guaranteed Obligations” shall mean the obligations or liabilities
of Borrower to Lender under the Loan Agreement (i) to timely complete the
[Material Alteration to be described] in accordance with the terms of the Loan
Agreement, and in compliance with all applicable Legal Requirements, Permitted
Encumbrances and governmental approvals and free and clear of all Liens; (ii) to
pay for all hard costs and for all obligations, liabilities, costs and expenses
incurred in connection with the completion of such [Material Alterations]; and
(iii) to pay for all soft costs incurred in connection with the operation,
construction, maintenance and management of such [Material Alteration];

(b) the term “Officer’s Certificate” shall mean, with respect to a Guarantor
that is a corporation, partnership, limited liability company or other entity, a
certificate delivered to Lender by such Guarantor, which is signed by an
authorized senior officer of such Guarantor, by such Guarantor’s managing member
or general partner, as applicable, and with respect to a Guarantor that is a
natural person, a certificate signed and delivered to Lender by such Guarantor.

Section 1.3. Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to any Guaranteed Obligations arising or created after any
attempted revocation by Guarantor. The fact that at any time or from time to
time the Guaranteed Obligations may be increased or reduced shall not release or
discharge the obligation of Guarantor to Lender with respect to the Guaranteed
Obligations. This Guaranty may be enforced by Servicer (on behalf of Lender) and
shall not be discharged by the assignment or negotiation of all or part of the
Note.

Section 1.4. Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender
hereunder, shall not be reduced, discharged or released because or by reason of
any existing or future offset, claim or defense of Borrower, or any other party,
against Lender or against payment of the Guaranteed Obligations, whether such
offset, claim or defense arises in connection with the Guaranteed Obligations
(or the transactions creating the Guaranteed Obligations) or otherwise.

 

EXHIBIT B – PAGE 2

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Section 1.5. Payment By Guarantor. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, Guarantor shall, immediately upon demand by Servicer
(on behalf of Lender), and without presentment, protest, notice of protest,
notice of non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity, or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed
Obligations to Servicer, on behalf of Lender, at Servicer’s address as set forth
herein. Such demand(s) may be made at any time coincident with or after the time
for payment of all or part of the Guaranteed Obligations, and may be made from
time to time with respect to the same or different items of Guaranteed
Obligations. Such demand shall be deemed made, given and received in accordance
with the notice provisions hereof.

Section 1.6. No Duty To Pursue Others. It shall not be necessary for Servicer
(on behalf of Lender) (and Guarantor hereby waives any rights which Guarantor
may have to require Servicer), in order to enforce the obligations of Guarantor
hereunder, first to (a) institute suit or exhaust its remedies against Borrower
or others liable on the Loan or the Guaranteed Obligations or any other person,
(b) enforce Servicer’s and or Lender’s rights against any collateral which shall
ever have been given to secure the Loan, (c) enforce Servicer’s and/or Lender’s
rights against any other guarantor, (d) join Borrower or any others liable on
the Guaranteed Obligations in any action seeking to enforce this Guaranty,
(e) exhaust any remedies available to Servicer or the Lender against any
collateral which shall ever have been given to secure the Loan, or (f) resort to
any other means of obtaining payment of the Guaranteed Obligations. Servicer (on
behalf of Lender) and the Lender shall not be required to mitigate damages or
take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.7. Waivers. Guarantor agrees to the provisions of the Loan Documents,
and hereby waives notice of (a) any loans or advances made by any Lender to
Borrower, (b) acceptance of this Guaranty, (c) any amendment or extension of the
Note, the Loan Agreement or of any other Loan Documents, (d) the execution and
delivery by Borrower, Collateral Agent, Servicer and/or the Lender of any other
loan or credit agreement or of Borrower’s execution and delivery of any
promissory notes or other documents arising under the Loan Documents or in
connection with any of the Properties, (e) the occurrence of any breach by
Borrower or an Event of Default, (f) Lender’s transfer or disposition of the
Guaranteed Obligations, or any part thereof, (g) sale or foreclosure (or posting
or advertising for sale or foreclosure) of any collateral for the Guaranteed
Obligations, (h) protest, proof of non-payment or default by Borrower and
(i) any other action at any time taken or omitted by Servicer (on behalf of the
Lender) or any Lender or Collateral Agent, and, generally, all demands and
notices of every kind in connection with this Guaranty, the Loan Documents, any
documents or agreements evidencing, securing or relating to any of the
Guaranteed Obligations.

Section 1.8. Payment of Expenses. In the event that Guarantor should breach or
fail to timely perform any provisions of this Guaranty, Guarantor shall,
immediately upon demand by Servicer (on behalf of the Lender), pay Servicer all
reasonable costs and expenses (including court costs and reasonable attorneys’
fees) incurred by Servicer in the enforcement hereof or the preservation of
Lender’s rights hereunder. The covenant contained in this Section shall survive
the payment and performance of the Guaranteed Obligations.

 

EXHIBIT B – PAGE 3

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Section 1.9. Effect of Bankruptcy. In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower and Guarantor that Guarantor’s obligations hereunder shall not be
discharged except by Guarantor’s performance of such obligations and then only
to the extent of such performance.

Section 1.10. Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, Guarantor
hereby unconditionally and irrevocably waives, releases and abrogates any and
all rights it may now or hereafter have under any agreement, at law or in equity
(including, without limitation, any law subrogating the Guarantor to the rights
of Lender), to assert any claim against or seek contribution, indemnification or
any other form of reimbursement from Borrower or any other party liable for
payment of any or all of the Guaranteed Obligations for any payment made by
Guarantor under or in connection with this Guaranty or otherwise.

Section 1.11. Borrower. The term “Borrower” as used herein shall include any new
or successor corporation, association, partnership (general or limited), limited
liability company, joint venture, trust or other individual or organization
formed as a result of any merger, reorganization, sale, transfer, devise, gift
or bequest of Borrower or any interest in Borrower.

II.

EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING GUARANTOR’S OBLIGATIONS

Guarantor hereby consents and agrees to each of the following, and agrees that
Guarantor’s obligations under this Guaranty shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
common law, equitable, statutory or other rights (including without limitation
rights to notice) which Guarantor might otherwise have as a result of or in
connection with any of the following:

Section 2.1. Modifications. Any renewal, extension, increase, modification,
alteration or rearrangement of all or any part of the Guaranteed Obligations,
the Note, the Pledge Agreement, the Loan Agreement, the other Loan Documents, or
any other document, instrument, contract or understanding between or among (as
applicable) Borrower, Collateral Agent, Servicer and Lender, or any other
parties, pertaining to the Guaranteed Obligations or any failure of Servicer (on
behalf of Lenders) or the Lenders (or Collateral Agent or Servicer on behalf of
Lenders) to notify Guarantor of any such action.

 

EXHIBIT B – PAGE 4

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Section 2.2. Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender, Collateral Agent or Servicer (on
behalf of the Lender) to Borrower or any Guarantor (as defined in the Loan
Agreement).

Section 2.3. Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower, Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners or
members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor.

Section 2.4. Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations, or any
document or agreement executed in connection with the Guaranteed Obligations,
for any reason whatsoever, including without limitation the fact that (a) the
liability comprising the Guaranteed Obligations, or any part thereof, exceeds
the amount permitted by law, (b) the act of creating the Guaranteed Obligations
or any part thereof is ultra vires, (c) the officers or representatives
executing the Note, the Loan Agreement or the other Loan Documents or otherwise
creating the Guaranteed Obligations acted in excess of their authority, (d) the
liability comprising the Guaranteed Obligations, or any part thereof, violates
applicable usury laws, (e) the Borrower has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Guaranteed
Obligations wholly or partially uncollectible from Borrower, (f) the creation,
performance or repayment of the Guaranteed Obligations (or the execution,
delivery and performance of any document or instrument representing part of the
Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations) is
illegal, uncollectible or unenforceable, or (g) the Note, the Loan Agreement or
any of the other Loan Documents have been forged or otherwise are irregular or
not genuine or authentic, it being agreed that Guarantor shall remain liable
hereon regardless of whether Borrower or any other Person be found not liable on
the Guaranteed Obligations or any part thereof for any reason.

Section 2.5. Release of Obligors. Any full or partial release of the liability
of Borrower on the Guaranteed Obligations, or any part thereof, or of any
co-guarantors, or any other person or entity now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Guaranteed Obligations, or any
part thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that other Persons will be liable to pay or perform the Guaranteed
Obligations, or that Lender (or Servicer on behalf of Lender) will look to other
Persons to pay or perform the Guaranteed Obligations.

Section 2.6. Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Obligations.

 

EXHIBIT B – PAGE 5

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Section 2.7. Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.

Section 2.8. Care and Diligence. The failure of Lender (or Servicer or
Collateral Agent on behalf of Lender) or any other party to exercise diligence
or reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such collateral, property or
security, including but not limited to any neglect, delay, omission, failure or
refusal of Lender (or Servicer or Collateral Agent on behalf of Lender) (a) to
take or prosecute any action for the collection of any of the Guaranteed
Obligations or (b) to foreclose, or initiate any action to foreclose, or, once
commenced, prosecute to completion any action to foreclose upon any security
therefor, or (c) to take or prosecute any action in connection with any
instrument or agreement evidencing or securing all or any part of the Guaranteed
Obligations.

Section 2.9. Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations, or any part thereof,
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Obligations.

Section 2.10. Offset. Any existing or future right of offset, claim or defense
of Borrower against Lender (or Collateral Agent or Servicer on behalf of
Lender), or any other Person, or against payment of the Guaranteed Obligations,
whether such right of offset, claim or defense arises in connection with the
Guaranteed Obligations (or the transactions creating the Guaranteed Obligations)
or otherwise.

Section 2.11. Merger. The reorganization, merger or consolidation of Borrower
into or with any other corporation or entity.

Section 2.12. Preference. Any payment by Borrower to Lenders (or any of them) or
Servicer or Collateral Agent (in either case, on behalf of Lenders) is held to
constitute a preference under bankruptcy laws, or for any reason Lenders (or any
of them) or Servicer or Collateral Agent (in either case, on behalf of Lenders)
is required to refund such payment or pay such amount to Borrower or someone
else.

Section 2.13. Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Loan Documents, the Guaranteed Obligations, or
the security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the Guaranteed Obligations pursuant to the terms hereof, it is the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or

 

EXHIBIT B – PAGE 6

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uncontemplated, and whether or not otherwise or particularly described herein,
which obligation shall be deemed satisfied only upon the full and final payment
and satisfaction of the Guaranteed Obligations.

III.

REPRESENTATIONS AND WARRANTIES

To induce Lender to consent to the performance of the Material Alterations,
Guarantor represents and warrants to Lender as follows:

Section 3.1. Benefit. Guarantor is an affiliate of Borrower, is the owner of a
direct or indirect interest in Borrower, and has received, or will receive,
direct or indirect benefit from the making of this Guaranty.

Section 3.2. Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
the Borrower and is familiar with the value of any and all collateral intended
to be created as security for the payment of the Note or Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty.

Section 3.3. No Representation By Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce
the Guarantor to execute this Guaranty.

Section 3.4. Guarantor’s Financial Condition. As of the date hereof, and after
giving effect to this Guaranty and the contingent obligation evidenced hereby,
Guarantor is, and will be, solvent, and has and will have assets which, fairly
valued, exceed its obligations, liabilities (including contingent liabilities)
and debts, and has and will have property and assets sufficient to satisfy and
repay its obligations and liabilities.

Section 3.5. Organization. Guarantor has been duly organized and is validly
existing and in good standing with the requisite power and authority to own its
property and to transact the business in which it is now engaged.

Section 3.6. Proceedings. Guarantor has taken all necessary action to authorize
the execution, delivery and performance of this Guaranty. This Guaranty has been
duly executed and delivered by Guarantor and constitutes the legal, valid and
binding obligations of Guarantor enforceable against Guarantor in accordance
with its terms, subject only to applicable bankruptcy, insolvency and similar
laws affecting the rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

Section 3.7. No Conflicts. The execution, delivery and performance of this
Guaranty by Guarantor will not conflict with or result in the breach of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of Guarantor pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement, management

 

EXHIBIT B – PAGE 7

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agreement or other agreement or instrument to which Guarantor is a party or by
which any of Guarantor’s property or assets is subject, nor will such action
result in any violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over Guarantor or
any of Guarantor’s properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any such
Governmental Authority required for the execution, delivery and performance by
Guarantor of this Guaranty has been obtained and is in full force and effect.

Section 3.8. Agreements. Guarantor is not a party to any agreement or instrument
or subject to any restriction which might materially and adversely affect
Guarantor or Guarantor’s business, properties or assets, operations or
condition, financial or otherwise. Guarantor is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which it is bound.

Section 3.9. Legality. The execution, delivery and performance by Guarantor of
this Guaranty and the consummation of the transactions contemplated hereunder do
not, and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Guarantor is subject or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, deed of trust, charge, lien,
or any contract, agreement or other instrument to which Guarantor is a party or
which may be applicable to Guarantor. This Guaranty is a legal and binding
obligation of Guarantor and is enforceable in accordance with its terms, except
as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors’ rights.

Section 3.10. Loan Document Representations and Warranties. Guarantor hereby
acknowledges, assumes, ratifies and affirms each of the representations and
warranties made by Borrower in the Loan Documents with respect to “Guarantor
(Recourse Carveouts),” including those set forth in Article IV of the Loan
Agreement, as if the same were set forth fully herein as the representations and
warranties made by Guarantor herein

Section 3.11. Survival. All representations and warranties made by Guarantor
herein shall survive the execution hereof.

IV.

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1. Subordination of All Guarantor Claims. As used herein, the term
“Guarantor Claims” shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the Person in whose
favor such debts or liabilities may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may hereafter be
acquired by Guarantor. The Guarantor Claims shall include without limitation all
rights and claims of Guarantor against Borrower (arising as a result of
subrogation

 

EXHIBIT B – PAGE 8

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or otherwise) as a result of Guarantor’s payment of all or a portion of the
Guaranteed Obligations. Upon the occurrence of an Event of Default or Default,
Guarantor shall not receive or collect, directly or indirectly, from Borrower or
any other party any amount upon the Guarantor Claims.

Section 4.2. Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application upon
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.

Section 4.3. Payments Held in Trust. In the event that, notwithstanding anything
to the contrary in this Guaranty, Guarantor should receive any funds, payment,
claim or distribution which is prohibited by this Guaranty, Guarantor agrees to
hold in trust for Lender an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions so
received except to pay them promptly to Lender, and Guarantor covenants promptly
to pay the same to Lender.

Section 4.4. Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower’s assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower’s assets securing payment of the Guaranteed
Obligations, regardless of whether such encumbrances in favor of Guarantor or
Lender presently exist or are hereafter created or attach. Without the prior
written consent of Lender, Guarantor shall not (a) exercise or enforce any
creditor’s right it may have against Borrower, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or
insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interests, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.

 

EXHIBIT B – PAGE 9

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V.

MISCELLANEOUS

Section 5.1. Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided by law. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

Section 5.2. Notices. Any notice, demand, statement, request or consent made
hereunder shall be in writing and shall be deemed to be received by the
addressee on the third day following the day such notice is deposited with the
United States Postal Service first class certified mail, return receipt
requested, addressed to the address, as set forth below, of the party to whom
such notice is to be given, or to such other address as either party shall in
like manner designate in writing. The addresses of the parties hereto are as
follows:

 

If to Guarantor:    One Caesars Palace Drive    Las Vegas, Nevada 89019   
Attention: Chief Financial Officer    Facsimile No.: (702) 407-6081 with a copy
to:    One Caesars Palace Drive    Las Vegas, Nevada 89019    Attention: General
Counsel    Facsimile No.: (702) 407-6418 with a copy to:    O’Melveny & Myers
LLP    Times Square Tower    7 Times Square    New York, NY 10036    Attention:
Gregory Ezring, Esq.    Facsimile No.: (212) 326-2061 If to Lenders, to Servicer
on behalf of each Lender:    c/o Bank of America, N.A., as Servicer    Capital
Markets Servicing Group    900 West Trade Street, Suite 650    Charlotte, North
Carolina 28255    Attention: Janice M. Smith    Facsimile No.: (704) 317-0781

 

EXHIBIT B – PAGE 10

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with a copy to:    Bryan Cave LLP    One Wachovia Center    301 S. College
Street, Suite 3700    Charlotte, North Carolina 28202    Attention: Geoffrey
Ralph Maibohm, Esq.    Facsimile No.: (704) 749-9343 with a copy to:   
Cadwalader, Wickersham & Taft LLP    One World Financial Center    New York, New
York 10281    Attention: William P. McInerney, Esq.    Facsimile No.:
(212) 504-6666

Section 5.3. Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New York and the applicable laws of the
United States of America. Any legal suit, action or proceeding against Lender or
Guarantor arising out of or relating to this Guaranty may at Lender’s option be
instituted in any Federal or State court in the City of New York, County of New
York, pursuant to Section 5-1402 of the New York General Obligations Law and
Guarantor waives any objections which it may now or hereafter have based on
venue and/or forum non conveniens of any such suit, action or proceeding, and
Guarantor hereby irrevocably submits to the jurisdiction of any such court in
any suit, action or proceeding. Guarantor does hereby designate and appoint:

Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, DE 19808

as its authorized agent to accept and acknowledge on its behalf service of any
and all process which may be served in any such suit, action or proceeding in
any Federal or State court in New York, New York, and agrees that service of
process upon said agent at said address and written notice of said service
mailed or delivered to Guarantor in the manner provided herein shall be deemed
in every respect effective service of process upon Guarantor in any such suit,
action or proceeding in the State of New York.

Section 5.4. Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Guaranty, such provision shall be fully severable and this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

Section 5.5. Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.

 

EXHIBIT B – PAGE 11

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Section 5.6. Parties Bound; Assignment; Joint and Several. This Guaranty shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives; provided, however,
that an assignment by Lender of all or any part of its interest in the Loan
shall not affect the liability of Guarantor hereunder and provided further, that
Guarantor may not, without the prior written consent of Lender, assign any of
its rights, powers, duties or obligations hereunder. If Guarantor consists of
more than one person or party, the obligations and liabilities of each such
person or party shall be joint and several.

Section 5.7. Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Guaranty.

Section 5.8. Recitals. The recital and introductory paragraphs hereof are a part
hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.

Section 5.9. Counterparts. To facilitate execution, this Guaranty may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature of, or on behalf of, each party, or that the
signature of all Persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Guaranty to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.

Section 5.10. Rights and Remedies. If Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.

Section 5.11. Other Defined Terms. Any capitalized term utilized herein shall
have the meaning as specified in the Loan Agreement, unless such term is
otherwise specifically defined herein.

Section 5.12. Entirety. THIS GUARANTY EMBODIES THE FINAL AND ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED
OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THIS GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF

 

EXHIBIT B – PAGE 12

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PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

Section 5.13. Waiver of Right To Trial By Jury. GUARANTOR HEREBY AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE LOAN AGREEMENT, THE
MORTGAGE, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.

Section 5.14. Reinstatement in Certain Circumstances. If at any time any payment
of the principal of or interest under the Note or any other amount payable by
the Borrower under the Loan Documents is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantor’s obligations hereunder with respect to such payment
shall be reinstated as though such payment has been due but not made at such
time.

Section 5.15. State Specific Provisions and Waivers.

5.15.1 In the event of any inconsistencies between the other terms and
conditions of this Guaranty and this Section 5.15, the terms and conditions of
this Section 5.15 shall control and be binding.

5.15.2 With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Nevada:

By executing this Guaranty, Guarantor (A) to the fullest extent permitted by
law, waives and relinquishes any defense based on any right of subrogation,
reimbursement, contribution or indemnification or any other suretyship defenses
it otherwise might or would have under Nevada law or other applicable law
(including, to the extent permitted by Nevada Revised Statutes (“NRS”)
Section 40.495, any defense or benefit that may be derived from NRS 40.430 and
judicial decisions relating thereto, and/or NRS 40.451 et seq., and judicial
decisions relating thereto, and/or NRS 40.465 et seq., and judicial decisions
relating thereto) and agrees that it will be fully liable under this Guaranty
even though Lender forecloses against any Property as security for the Debt or
the Guaranteed Obligations; (B) waives any and all defenses now or hereafter
arising or asserted by reason of Guarantor’s rights under NRS 104.3605,

 

EXHIBIT B – PAGE 13

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Guarantor specifically agreeing that such waiver shall constitute a waiver of
discharge under NRS 104.3605(9); and (C) to the fullest extent permitted by law,
agrees that such Guarantor will not assert any such defense in any action or
proceeding which any of the Noteholders may commence to enforce this Guaranty.

5.15.3 With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of California:

(i) Modifications to Loan and Loan Documents. Guarantor agrees that Lender may
do any of the following without affecting the enforceability of this Guaranty or
the other Loan Documents: (A) take or release additional security for any
obligation in connection with the Loan Documents; (B) discharge or release (by
judicial or nonjudicial foreclosure, acceptance of a deed in lieu of foreclosure
or otherwise) any party or parties liable under the Loan Documents; (C) accept
or make compositions or other arrangements or file or refrain from filing a
claim in any bankruptcy proceeding of Borrower, any guarantor of Borrower’s
obligations under the Loan Documents or any pledgor of collateral for any
Person’s obligations to Lender; and (D) credit payments in such manner and order
of priority to principal, interest or other obligations as Lender may determine.

Guarantor agrees that Lender’s right to enforce this Guaranty is absolute and is
not contingent upon the genuineness, validity or enforceability of any of the
Loan Documents. Guarantor waives all benefits and defenses it may have under
California Civil Code Section 2810 and agrees that Lender’s rights under this
Guaranty shall be enforceable even if Borrower has no liability at the time of
execution of the Loan Documents or later ceases to be liable.

Guarantor waives all benefits and defenses it may have under California Civil
Code Section 2809 and agrees that Lender’s rights under the Loan Documents will
remain enforceable even if the amount secured by the Loan Documents is larger in
amount and more burdensome than that for which Borrower is responsible. The
enforceability of the Loan Documents against Guarantor shall continue until all
sums due under the Loan Documents have been paid in full and shall not be
limited or affected in any way by any impairment or any diminution or loss of
value of any security or collateral for Borrower’s obligations under the Loan
Documents, from whatever cause, the failure of any security interest in any such
security or collateral or any disability or other defense of Borrower, any
guarantor of Borrower’s obligations under the Loan Documents, any other pledgor
of collateral for any Person’s obligations to Lender or any other Person in
connection with the Loan.

Guarantor waives all benefits and defenses it may have under California Civil
Code Sections 2845, 2849 and 2850, including, without limitation, the right to
require Lender to (i) proceed against Borrower, any guarantor of Borrower’s
obligations under the Loan Documents, any other pledgor of collateral for any
Person’s obligations to Lender or any other Person in connection with the Loan,
(ii) proceed against or exhaust any other security or collateral Lender may
hold, or (iii) pursue any other right or remedy for Borrower’s benefit, and
agree that Lender may exercise its rights under this Guaranty or may foreclose
against any of the Individual Properties without taking any action against
Borrower, any guarantor of Borrower’s obligations under the Loan Documents, any
pledgor of collateral for any Person’s obligations to Lender or any other Person
in connection with the Loan, and without proceeding against or exhausting any
security or collateral Lender holds.

 

EXHIBIT B – PAGE 14

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Guarantor waives any rights or benefits it may have by reason of California Code
of Civil Procedure Section 580a which could limit the amount which Lender could
recover in a foreclosure of any of the Individual Properties to the difference
between the amount owing under the Loan Documents and the fair value of any such
Individual Property or interests sold at a nonjudicial foreclosure sale or sales
of any other real property held by Lender as security for the obligations under
the Loan Documents.

Guarantor, as a guarantor or surety, waives diligence and all demands, protests,
presentments and notices of protest, dishonor, nonpayment and acceptance of the
Loan Documents.

Guarantor waives all rights and defenses that are or may become available to the
guarantor or other surety by reason of California Civil Code Sections 2787 to
2855.

(ii) Guarantor Informed of Borrower’s Condition. Guarantor acknowledges that it
has had an opportunity to review the Loan Documents, the value of the security
for each of the other entities comprising Borrower under the Loan Documents and
the financial condition of each of the other entities comprising Borrower and
the ability of such entity to satisfy its obligations to Lender. Guarantor
agrees to keep itself fully informed of all aspects of the financial condition
of Borrower and of the performance of Borrower to Lender and agrees that Lender
has no duty to disclose to Guarantor any information pertaining to Borrower or
any security for the obligations of the other entities comprising Borrower under
the Loan Documents.

(iii) Waiver of Estoppel Defense. Upon Borrower’s default under the Loan
Documents, Lender may elect to foreclose nonjudicially on real property given by
Borrower or others as security under the Loan Documents and also to exercise its
rights under this Guaranty. Guarantor acknowledges that its right to seek
reimbursement from Borrower for any amounts paid by it to Lender under this
Guaranty will be eliminated if Lender elects to so foreclose on Guarantor’s
property. Nevertheless, Guarantor waives any such right to reimbursement and
agrees that a nonjudicial foreclosure by Lender against any real property
security owned by Guarantor or others will not affect the enforceability of the
Loan Documents on Guarantor’s interest in any of the Individual Properties. In
order to further effectuate such waiver, each Guarantor hereby agrees to waive
all rights and defenses arising out of an election of remedies by Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to any of the Individual Properties, has destroyed its rights of subrogation and
reimbursement against Borrower by the operation of Section 580d of the Code of
Civil Procedure or otherwise.

(iv) Subrogation. Guarantor waives its rights under California Civil Code
Sections 2847, 2848 and 2849.

 

EXHIBIT B – PAGE 15

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(v) Confirmation of Waivers. In accordance with California Civil Code
Section 2856(c), Guarantor, as guarantor, hereby makes the following waivers:

The guarantor waives all rights and defenses that the guarantor may have because
the debtor’s debt is secured by real property. This means, among other things:

(A) The creditor may collect from the guarantor without first foreclosing on any
other real or personal property collateral pledged by the debtor or any other
person.

(B) If the creditor forecloses on any real property collateral pledged by the
debtor: (1) the amount of the debt may be reduced only by the price for which
the collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (2) the creditor may collect from the guarantor
even if the creditor, by foreclosing on the real property collateral, has
destroyed any right the guarantor may have to collect from the debtor.

This is an unconditional and irrevocable waiver of any rights and defenses the
guarantor may have because the debtor’s debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedures.

VI

COVENANTS

Section 6.1. Financial Reporting.

(a) Guarantor shall keep and maintain or will cause to be kept and maintained on
a Fiscal Year basis proper and accurate books and records, in accordance with
GAAP (or such other accounting basis acceptable to Lender), reflecting the
financial affairs of Guarantor. Lender shall have the right from time to time to
examine such books and records at the office of Guarantor or other Person
maintaining such books and records and to make copies or extracts thereof on the
same basis, and subject to the same terms and conditions on which, Lender has
the right under Section 5.1.11 of the Loan Agreement to examine, copy and
extract the books and records of Borrower.

(b) Guarantor shall furnish Lender all financial statements and similar items
relating to Guarantor as and when, and on the same terms and conditions as,
Borrower is required to furnish same with respect to Borrower under
Section 5.1.11 of the Loan Agreement; it being agreed, however, that
(i) Guarantor’s financial statements shall not be required to include
information that is specific to the operations of Borrower (e.g., information
with respect to the Properties), and (ii) wherever hereunder Guarantor is
required to deliver an Officer’s Certificate by virtue of the incorporation
herein of a provision of the Loan Agreement, same shall mean an Officer’s
Certificate as herein defined (as opposed to an Officer’s Certificate as defined
in the Loan Agreement).

Section 6.2. Financial Covenants. At all times during the term of the Loan,
Guarantor shall meet the Minimum Value Test (as defined in the Loan Agreement).

 

EXHIBIT B – PAGE 16

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Section 6.3. Dissolution. Guarantor shall not engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
or transfer, lease or sell, in one transaction or any combination of
transactions, all or substantially all of the property or assets of Guarantor
except to the extent expressly permitted by the Loan Documents.

Section 6.4. Principal Place of Business. Guarantor shall not change its chief
executive office or chief place of business set forth on Schedule I without
first giving Lender thirty (30) days prior notice.

Section 6.5. For the avoidance of doubt, references herein to the Servicer
and/or to the Collateral Agent acting on behalf of Lender or otherwise are not
intended to and shall not reduce or diminish the obligations of Guarantor, or
relieve Guarantor of any of its obligations under, this Guaranty (and any such
references shall not diminish the rights and claims of the Lenders as the
ultimate and intended beneficiaries of such obligations).

[NO FURTHER TEXT ON THIS PAGE]

 

EXHIBIT B – PAGE 17

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EXECUTED as of the day and year first above written.

 

GUARANTOR:

[HARRAH’S ENTERTAINMENT, INC., a

    Delaware corporation]

By:       Name:   Title:

 

EXHIBIT B – PAGE 18

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EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION

Reference is made to that certain Second Amended and Restated Loan Agreement
dated as of August 31, 2010 among Harrah’s Las Vegas Propco, LLC, Harrah’s
Atlantic City Propco, LLC, Rio Proco, LLC, Flamingo Las Vegas Propco, LLC,
Harrah’s Laughlin Propco, LLC, and Paris Las Vegas Propco, LLC, collectively, as
Borrower, Bank of America, N.A., as collateral agent, and JPMorgan Chase Bank,
N.A., Bank of America, N.A., Citibank, N.A., Credit Suisse AG, Cayman Island
Branch (f/k/a Credit Suisse, Cayman Islands Branch), Merrill Lynch Mortgage
Lending, Inc., Goldman Sachs Mortgage Company, Morgan Stanley Mortgage Capital
Holdings LLC, German American Capital Corporation and each other lender that may
become a party thereto from time to time (the same may be amended and restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”).
Capitalized terms used in this Assignment and Assumption and not defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.

1. The Assignor identified below hereby sells and assigns, without recourse
except as specifically set forth herein, to the Assignee identified below, and
the Assignee hereby purchases and assumes, without recourse except as
specifically set forth herein, from the Assignor, effective as of the Effective
Date set forth below (but not prior to the registration of the information
contained herein in the Register maintained by Servicer pursuant to the Loan
Agreement), Assignor’s interest in the Loan and Assignor’s rights and
obligations under the Loan Agreement, the other Loan Documents, the Co-Lender
Agreement and the Intercreditor Agreement (such interests, collectively, the
“Assigned Interests”). From and after the Effective Date (i) the Assignee shall
be a party to and be bound by the provisions of the Loan Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and under the Loan Documents and
(ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Agreement.

2. The Assignor (i) warrants that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim and that the
outstanding balance of its interest in the Loan, without giving effect to
assignments thereof which have not become effective, is as set forth in this
Assignment and Acceptance; (ii) except as set forth in (i) above, the Assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Loan Agreement, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement, any other Loan Document
or any other instrument or document furnished pursuant thereto, or the financial
condition of Borrower or any of its or their Subsidiaries or the performance or
observance by Borrower or any of its or their Subsidiaries of any of its
obligations under the Loan Agreement, any other Loan Document or any other
instrument or document furnished pursuant thereto. [Add additional
representations, if applicable]

 

EXHIBIT C – PAGE 1

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3. The Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance; (b) confirms that it has received a
copy of the Loan Agreement, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Collateral Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (d) appoints and authorizes the
Collateral Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Loan Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto as are
delegated to the Collateral Agent by the terms thereof, and (e) agrees that it
will be bound by the provisions of the Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender.

4. This Assignment and Acceptance is being delivered to the Servicer together
with, if the Assignee is not a United States Person (as defined in
Section 7701(a)(30) of the Code), the forms specified in the Loan Agreement,
duly completed and executed by such Assignee.

5. This Assignment and Acceptance shall be construed in accordance with and
governed by the law of the State of New York without regard to conflicts of law
principles that would require the application of the laws of another
jurisdiction.

6. Date of Assignment:

7. Legal Name of Assignor:

8. Legal Name of Assignee:

9. Assignee’s Address for Notices:

10. Effective Date of Assignment:

11. Percentage Assigned of Applicable Loan:

 

Loan

   Principal Amount
Assigned    Percentage Assigned of Applicable Loan (set forth,
to at least 8  decimals, as a percentage of the Loan
of all Lenders thereunder)      $                              % 

[Signature Page Follows]

 

EXHIBIT C – PAGE 2

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The terms set forth above are hereby agreed to:

[                             ]

      as Assignor

By:       Name:   Title:

 

[                             ]

      as Assignee

By:       Name:   Title:

 

Accepted:

[                             ],

      as Servicer and Register

By:       Name:   Title:

 

EXHIBIT C – PAGE 3

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EXHIBIT D

EBITDAM CALCULATION

 

EBITDAM Calculation:

     (a)   Consolidated Net Income:   

______________________

  (b)   plus, the sum of the following (in each case without duplication and to
the extent the respective amounts described in subclauses (i) through (vi) below
reduced such Consolidated Net Income (and were not excluded therefrom)):       
(i)    provision for taxes based on income, profits or capital for such period,
including, without limitation, state, franchise and similar taxes and foreign
withholding taxes (including penalties and interest related to taxes or arising
from tax examinations)   

______________________

    (ii)    Interest Expense for such period (net of interest income for such
period)   

______________________

    (iii)    depreciation and amortization expenses for such period including,
but not exclusively, the amortization of intangible assets, deferred financing
fees and Capitalized Software Expenditures and amortization of unrecognized
prior service costs and actuarial gains and losses related to pensions and other
post-employment benefits   

______________________

    (iv)    any expenses or charges (other than depreciation or amortization
expense as described in the preceding clause (iii)) related to any acquisition,
disposition, recapitalization or the incurrence, modification or repayment of
Indebtedness permitted to be incurred by this Agreement (including a refinancing
thereof) (whether or not successful), including (y) any amendment or other
modification of such Indebtedness, and (z) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any such
Indebtedness   

______________________

 

EXHIBIT D – PAGE 1

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    (v)    restructuring charges or reserves (which, for the avoidance of doubt,
shall include, without limitation, the effect of inventory optimization
programs, retention, severance, systems establishment costs, contract
termination costs, future lease commitments and excess pension charges), to the
extent that such expenses, charges or reserves are considered to be
extraordinary expenses under GAAP   

______________________

    (vi)    any costs or expense incurred pursuant to any management equity plan
or stock option plan or any other management or employee benefit plan or
agreement or any stock subscription or shareholder agreement, to the extent that
such cost or expenses are funded with cash proceeds contributed to the capital
of the Consolidated Entities   

______________________

    (vii)    any other non-cash charges; provided, that, for purposes of this
subclause (vii), any non-cash charges or losses shall be treated as cash charges
or losses in any subsequent period during which cash disbursements attributable
thereto are made (but excluding, for the avoidance of doubt, amortization of a
prepaid cash item that was paid in a prior period)   

______________________

    (viii)    management fees and expenses (including reimbursable expenses)
equal to the actual management fees and expenses (including reimbursable
expenses) paid under the Management Agreement, without double counting actual
amounts incurred and otherwise reflected in the calculation of EBITDAM   

______________________

    (ix)    if the Captive Insurance Company shall be utilized to provide
terrorism coverage hereunder, the amount of the premiums expended by Borrower to
obtain such terrorism coverage to the extent such amount exceeds the Terrorism
Premium Limit and such excess is retained by the Captive Insurance Company   

______________________

 

EXHIBIT D – PAGE 2

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    (c)   minus, the sum of (without duplication and to the extent such amounts
increased such Consolidated Net Income (and were not excluded therefrom))
non-cash items increasing Consolidated Net Income of the Consolidated Entities
for such period (but excluding any such items (A) in respect of which cash was
received in a prior period or will be received in a future period or (B) which
represent the reversal of any accrual of, or cash reserve for, anticipated cash
charges that reduced EBITDAM in any prior period)        EBITDAM   

______________________

  Consolidated Net Income Calculation:       (1)   Net Income on a consolidated
basis, excluding, without duplication:   

______________________

        (i)   any net after-tax extraordinary, nonrecurring or unusual gains or
losses or income or expense or charge (less all fees and expenses relating
thereto), including, without limitation, any severance, relocation or other
restructuring expenses, any expenses related to any reconstruction,
decommissioning, recommissioning or reconfiguration of fixed assets for
alternative uses, fees, expenses or charges relating to new product lines,
curtailments or modifications to pension and post-retirement employee benefit
plans, excess pension charges, acquisition integration costs, facilities opening
costs, project start-up costs, business optimization costs, signing, retention
or completion bonuses   

______________________

        (ii)   any net after-tax income or loss from disposed, abandoned,
transferred, closed or discontinued operations and any net after-tax gain or
loss on disposal of disposed, abandoned, transferred, closed or discontinued
operations   

______________________

 

EXHIBIT D – PAGE 3

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        (iii)   any net after-tax gain or loss (less all fees and expenses or
charges relating thereto) attributable to business dispositions or asset
dispositions other than in the ordinary course of business (as determined in
good faith by the management of the Borrower)   

______________________

        (iv)   cumulative effect of a change in accounting principles during
such period   

______________________

        (v)   effects of purchase accounting adjustments (including the effects
of such adjustments pushed down to such Person) in component amounts required or
permitted by GAAP, resulting from the application of purchase accounting in
relation to any consummated acquisition or the amortization or write-off of any
amounts thereof, net of taxes   

______________________

        (vi)   any impairment charges or asset write-offs, in each case pursuant
to GAAP, and the amortization of intangibles arising pursuant to GAAP   

______________________

        (vii)   any non-cash compensation charge or expenses realized or
resulting from stock option plans, employee benefit plans or post-employment
benefit plans, or grants or sales of stock, stock appreciation or similar
rights, stock options, restricted stock, preferred stock or other rights   

______________________

        (viii)   accruals and reserves that are established or adjusted within
twelve (12) months after the Original Closing Date and that are so required to
be established or adjusted in accordance with GAAP or as a result of adoption or
modification of accounting policies   

______________________

        (ix)   non-cash gains, losses, income and expenses resulting from fair
value accounting required by the applicable standard under GAAP and related
interpretations   

______________________

 

EXHIBIT D – PAGE 4

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        (x)   (i) the non-cash portion of “straight-line” rent expense shall be
excluded and (ii) the cash portion of “straight-line” rent expense which exceeds
the amount expensed in respect of such rent expense shall be included   

______________________

        (xi)   to the extent covered by insurance and actually reimbursed, or,
so long as such Person has made a determination that there exists reasonable
evidence that such amount will in fact be reimbursed by the insurer and only to
the extent that such amount is (i) not denied by the applicable carrier in
writing within 180 days and (ii) in fact reimbursed within 365 days of the date
of such evidence (with a deduction for any amount so added back to the extent
not so reimbursed within 365 days), expenses with respect to liability or
casualty events or business interruption   

______________________

        (xii)   any net after-tax income or loss (less all fees and expenses or
charges relating thereto) attributable to the early extinguishment of
Indebtedness   

______________________

        (xiii)   non-cash charges for deferred tax asset valuation allowances   

______________________

  Consolidated Net Income   

______________________

 

EXHIBIT D – PAGE 5

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EXHIBIT E

EXCESS CASH FLOW CALCULATION

 

Excess Cash Flow Calculation:    EBITDAM of the Consolidated Entities   

______________________

minus, without duplication    (a)   Consolidated Debt Service (other than, as to
any debt service payable to Affiliates, prepayments of any such debt) paid
during such Excess Cash Flow Period   

______________________

(b)   the amount of Optional Note Purchases paid for during such Excess Cash
Flow Period (other than Optional Note Purchases funded with equity contributions
to a Consolidated Entity) in accordance with the Note Sales Agreement   

______________________

(c)   the greater of (1) capital expenditures by the Consolidated Entities
during such Excess Cash Flow Period that are paid in cash (and not financed)
during such Excess Cash Flow Period and (2) the amount used to fund the FF&E
Reserve Account during such Excess Cash Flow Period   

______________________

(d)   Capital Expenditures that (i) a Consolidated Entity shall, during such
Excess Cash Flow Period, become obligated to make in cash (and that shall not be
financed), (ii) are not paid for by a Consolidated Entity during such Excess
Cash Flow Period (to the extent permitted under this Agreement) and (iii) are
anticipated to be paid for by a Consolidated Entity (and not financed) during,
and not after, the immediately following Excess Cash Flow Period; provided, that
any amount so deducted shall not be deducted again in a subsequent Excess Cash
Flow Period   

______________________

(e)   taxes paid in cash by the Consolidated Entities on a consolidated basis or
Permitted Tax Distributions made by the Consolidated Entities during such Excess
Cash Flow Period or that will be paid or made during (and not after) the
immediately following Excess Cash Flow Period; provided, that with respect to
any such amounts to be paid after the close of such Excess Cash Flow Period,
(i) any amount so deducted shall not be deducted again in a subsequent Excess
Cash Flow Period, and (ii) appropriate reserves shall have been established in
accordance with GAAP   

______________________

(f)   amount equal to any increase in Working Capital of the Consolidated
Entities for such Excess Cash Flow Period   

______________________

--------------------------------------------------------------------------------

(g)   amounts paid in cash during such Excess Cash Flow Period on account of
items that were accounted for as non-cash reductions of Net Income in
determining Consolidated Net Income or as non-cash reductions of Consolidated
Net Income in determining EBITDAM of the Consolidated Entities in a prior Excess
Cash Flow Period   

______________________

(h)   the amount related to items that were added to or not deducted from Net
Income in calculating Consolidated Net Income or were added to or not deducted
from Consolidated Net Income in calculating EBITDAM to the extent such items
represented a cash payment (which had not reduced Excess Cash Flow upon the
accrual thereof in a prior Excess Cash Flow Period), or an accrual for a cash
payment, by the Consolidated Entities or did not represent cash received by the
Consolidated Entities, in each case on a consolidated basis during such Excess
Cash Flow Period   

______________________

(i)   in each case, during such Excess Cash Flow Period     

(1) amounts paid under (and in accordance with the provisions of) the Management
Agreement or, prior to the effectiveness of the Management Agreement, that would
be paid under the Management Agreement if it was in effect (in the aggregate)

  

______________________

 

(2) amounts paid under (and in accordance with the provisions of) the Shared
Services Agreement

  

______________________

 

(3) the amount of any Reserve Funds deposited into any Reserve Account (other
than amounts deposited in the Working Capital Account described in clause
(j) below and other than amounts deposited in the FF&E Reserve Account as
described in clause (c) above)

  

______________________

 

(4) amounts reasonably anticipated by Borrower to be paid to the Second Option
Noteholders (as such term is defined in the Note Sales Agreement) in respect of
such Excess Cash Flow Period in accordance with the terms of the Note Sales
Agreement (which amounts shall be adjusted, as appropriate, in the calculation
of Excess Cash Flow for the final Excess Cash Flow Period in each fiscal year,
when such amounts are capable of actual determination and, following which, such
amounts are paid)

  

______________________

 

EXHIBIT E – PAGE 2

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(j)   amounts (if any) deposited into the Working Capital Account during such
Excess Cash Flow Period (provided, that, (i) the aggregate amount of cash that
may be deposited into the Working Capital Account during any Excess Cash Flow
Period shall not exceed $20,000,000 (which amount shall be reduced
proportionally, following the sale of any Individual Property other than to a
Borrower or Mezzanine Borrower, based on the Allocated Loan Amount of the
Individual Property sold and the Allocated Loan Amounts of all of the
Properties, in each case as of the date hereof) and (ii) immediately after
giving effect to any such deposit into the Working Capital Account, the balance
in such account shall not exceed $50,000,000 (which amount shall be reduced
proportionally, following the sale of any Individual Property other than to a
Borrower or Mezzanine Borrower, based on the Allocated Loan Amount of the
Individual Property sold and the Allocated Loan Amounts of all of the
Properties, in each case as of the date hereof))   

______________________

(k)

  if the Pre-Funded Deferred Purchase Price (as defined in the Note Sales
Agreement) is paid pursuant to Section 2.3 of the Note Sales Agreement     

(i) for the Excess Cash Flow Period ending December 31, 2010, an amount equal to
the lesser of (1) Excess Cash Flow for such period (calculated without giving
effect to this clause (k)) and (2) the amount of the Pre-Funded Deferred
Purchase Price paid to the Mezzanine Lenders pursuant to the terms of the Note
Sales Agreement during such Excess Cash Flow Period and

  

______________________

 

(ii) for each subsequent Excess Cash Flow Period after the Excess Cash Flow
Period ending December 31, 2010 until such time as the Remaining Pre-Funded
Deferred Purchase Price has been reduced to zero, an amount equal to the lesser
of (1) Excess Cash Flow for such period (calculated without giving effect to
this clause (k)) and (2) the amount of the Remaining Pre-Funded Deferred
Purchase Price outstanding at such time

  

______________________

plus, without duplication of:    (l)   amount equal to any decrease in Working
Capital for such Excess Cash Flow Period   

______________________

 

EXHIBIT E – PAGE 3

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(m)   to the extent any capital expenditures referred to in clause (d) above
were deducted from Excess Cash Flow in the prior Excess Cash Flow Period and not
made in the current Excess Cash Flow Period, the amount of such Capital
Expenditures that were not so made in the current Excess Cash Flow Period, and
to the extent any taxes referred to in clause (e) above were deducted from
Excess Cash Flow in the prior Excess Cash Flow Period and are not paid in the
current Excess Cash Flow Period, the amount of such taxes that were not so paid
in the current Excess Cash Flow Period   

______________________

(n)   any extraordinary or nonrecurring gain realized in cash during such Excess
Cash Flow Period (except to the extent such gain consists of (1) Net Sales
Proceeds that are applied to repay the Debt or Mezzanine Loans, or (2) Net
Proceeds that are applied in accordance with Section 6.4)   

______________________

(o)   to the extent deducted in the computation of EBITDAM, cash interest income
  

______________________

(p)   the amount related to items that were deducted from or not added to Net
Income in connection with calculating Consolidated Net Income or were deducted
from or not added to Consolidated Net Income in calculating EBITDAM to the
extent either (i) such items represented cash received by a Consolidated Entity
or (ii) such items do not represent cash paid by a Consolidated Entity, in each
case on a consolidated basis during such Excess Cash Flow Period   

______________________

(q)   amount of any withdrawal from the Working Capital Account during such
Excess Cash Flow Period    Excess Cash Flow   

______________________

 

EXHIBIT E – PAGE 4