Exhibit 10.14

 

 

 

AMENDED AND RESTATED OPERATING LEASE

BETWEEN

[PROPCO]

as Landlord

AND

[OPCO]

as Tenant

Dated: as of August 31, 2010

 

Premises:    The [Casino Components], together with the related Fixtures, such
FF&E as is owned by the Landlord and the Leased Personal Property (each
capitalized term as defined herein) Facility Name:    [            ] Street
Address:    [            ] Town:    [            ] County:    [            ]
State:    [            ] Zip Code:    [            ]

 

 

 

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TABLE OF CONTENTS

 

          Page

ARTICLE A CERTAIN LEASE PROVISIONS

   1

ARTICLE B CERTAIN DEFINITIONS; PRINCIPLES OF CONSTRUCTION

   2

ARTICLE I

   PREMISES AND TERM    17

ARTICLE II

   BASE RENT; SUPPLEMENTARY RENT; COLLECTION BANK ACCOUNT AND DEPOSITS    18

ARTICLE III

   IMPOSITIONS    27

ARTICLE IV

   USE AND OPERATION OF PREMISES; DELEGATION TO MANAGER; MANAGEMENT AGREEMENT;
TRANSITION SERVICES; MANAGEMENT    30

ARTICLE V

   CONDITION OF PREMISES, ALTERATIONS AND REPAIRS    31

ARTICLE VI

   INSURANCE    33

ARTICLE VII

   DAMAGE OR DESTRUCTION    34

ARTICLE VIII

   CONDEMNATION    37

ARTICLE IX

   ASSIGNMENT AND SUBLETTING    39

ARTICLE X

   SUBORDINATION    44

ARTICLE XI

   OBLIGATIONS OF TENANT    48

ARTICLE XII

   DEFAULT BY TENANT; REMEDIES    52

ARTICLE XIII

   NO WAIVER    60

ARTICLE XIV

   ESTOPPEL CERTIFICATE; CONSENT    60

ARTICLE XV

   QUIET ENJOYMENT    61

ARTICLE XVI

   SURRENDER    61

ARTICLE XVII

   ACCESS    63

ARTICLE XVIII

   ENVIRONMENTAL MATTERS    63

ARTICLE XIX

   FINANCIAL AND REGULATORY REPORTING COVENANTS    67

ARTICLE XX

   LICENSED CASINO OPERATIONS    68

ARTICLE XXI

   MISCELLANEOUS PROVISIONS    74

SCHEDULE “A”

  

PREMISES

   Sch. A-1

SCHEDULE “B”

  

OPERATING LEASES

   Sch. B-1

EXHIBIT A

  

CASINO/HOTEL COMPONENTS FLOOR PLANS

   Ex. A-1

 

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AMENDED AND RESTATED OPERATING LEASE

THIS AMENDED AND RESTATED OPERATING LEASE is made as of the 31st day of August,
2010 (as the same may be amended, modified and/or restated from time to time in
accordance with the terms and conditions hereof, this “Lease”), between
[PROPCO], a Delaware limited liability company, having an office for the conduct
of business at [            ] (subject to Section 21.3(a) and Section 21.7,
“Landlord”), and [OPCO], a [            ] (subject to Section 21.3(b) and
Section 21.7, “Tenant”) having an office for the conduct of business at
[            ].

[WHEREAS, Landlord and Tenant entered into that certain Operating Lease (Casino
Components), dated as of January 28, 2008 (the “Original Lease”);

WHEREAS, the Original Lease was amended pursuant to that certain First Amendment
to Operating Lease dated as of May 22, 2008 (the “First Amendment;” the Original
Lease as modified by the First Amendment, the “Amended Lease”); and

WHEREAS, Landlord and Tenant now wish to further amend and restate the Amended
Lease as set forth herein.]

W I T N E S S E T H:

The parties hereto, for themselves, and their administrators, legal
representatives, successors and permitted assigns, hereby covenant as follows:

ARTICLE A

CERTAIN LEASE PROVISIONS

 

1.   Address for the Premises:    As set forth on Schedule A hereto. 2.  

(a)    “Term”:

   A term which is fifteen (15) years, beginning on the Commencement Date (as
defined below) and ending on the Expiration Date (as defined below) (the
“Term”).  

(b)    “Commencement Date”:

   The date of the Original Lease.  

(c)    “Expiration Date”:

   January 31, 2023, or such earlier date on which this Lease shall terminate or
be terminated pursuant to the terms hereof. 3.   “Base Rent” for the Premises:
   (a) For the first Lease Year (as defined below), $[_____] per annum, payable
in advance in equal

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     consecutive installments of $[_____] on the [_____] Business Day of each
month (the “Initial Annual Rent”), which amounts represent the full Initial
Annual Rent and monthly installments thereof for the first Lease Year;      (b)
For the second Lease Year, an amount per annum equal to the Initial Annual Rent
multiplied by the Escalation Percentage (as defined below), payable in advance
in equal consecutive installments on the [_____] Business Day of each month;  
   (c) For the third and each Lease Year thereafter during the Term, an amount
per annum equal to the Base Rent for the immediately prior Lease Year multiplied
by the Escalation Percentage, payable in advance in equal consecutive
installments on the [_____] Business Day of each month (the final Lease Year, if
less than a full year, to be prorated); and      (d) The “Escalation Percentage”
during the Term shall be one hundred and three percent (103%) per annum.     
Notwithstanding the foregoing, payments of Base Rent in any month shall be made
net of payments of Management Fees (as defined below) in respect of such month
as and to the extent provided in Article II. 4.   Use of Premises:    The
operation of the Premises (as defined herein) as a casino, and uses normally
incident thereto. 5.   Address for Notice:    As set forth in Section 21.8

ARTICLE B

CERTAIN DEFINITIONS; PRINCIPLES OF CONSTRUCTION

As used in this Lease, the following terms have the following meanings or are
defined in the section of this Lease so indicated:

“Affiliate” means, 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. As used in this definition, the term

 

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“control” means the possession, directly or indirectly, of the power to direct
or cause direction of the management and policies of a Person, whether through
having ordinary voting power to elect a majority of the board of directors (or
similar governing body) of such Person, by contract, or otherwise.

“Alterations” is defined in Section 5.4.

“Alternate Manager” shall have the meaning set forth in the Management
Agreement.

“Alternate Management Agreement” means a management agreement with an Alternate
Manager.

“Bankruptcy Code” means the provisions of 11 U.S.C. Section 101 et seq., as
amended from time to time, or any other present or future Legal Requirement
respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief
of debtors, dissolution or liquidation, and the rules and regulations
promulgated thereunder; in each case as the same may have been and hereafter may
be supplemented, modified, amended, restated or replaced from time to time.

“Base Rent” is defined in Article A, Section 3.

“Building” and “Buildings” respectively mean any one or more of the buildings
and the other improvements now or hereafter erected on the Land, including,
without limitation, the related Fixtures.

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

“Cash Management Account” shall mean a separate and identifiable account to be
held by for the benefit of Mortgagee, which shall be under the sole dominion and
control of Mortgagee, as specified by Mortgagee to Tenant from time to time.

[“Casino Components” shall mean, collectively, those portions of the Land and
Building 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, as represented by the marked areas of the floor plans,
attached hereto as Exhibit A.]

“Change in Control” shall have the meaning given such term in the Mortgage Loan
Agreement.

“Claims” is defined in Section 11.3.

 

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“Closing Date” and “Closing” is defined as the “Original Closing Date” or the
“Swap Closing Date”, as applicable, under the Loan Documents.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Collateral” is defined in Section 2.6.

“Collateral Agent” means Bank of America, N.A., a bank chartered under the laws
of the United States of America, as collateral agent for the Lender, together
with any successors, assigns or replacements in accordance with the applicable
Loan Documents.

“Collection Account” shall mean, individually or collectively as the context
indicates, (a) those certain segregated accounts to be established by Tenant
with Collection Bank into which Tenant shall cause all credit card receipts and
all Revenues to be deposited pursuant to the terms hereof, and (b) subject to
Landlord’s and Mortgagee’s prior reasonable approval, such replacement
collection account or accounts established by Tenant at any successor Collection
Bank.

“Collection Account Agreement” shall mean those certain account control
agreements required under the Mortgage Loan Agreement to be entered into among
Mortgagee, Landlord, the Affiliates of Landlord that are landlords under the
Other Operating Leases, Tenant, the Affiliates of Tenant that are tenants under
the Other Operating Leases, and Collection Bank, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

“Collection Bank” shall mean those Persons that are parties to the Collection
Account Agreement from time to time, which Persons must meet the requirements
for a Collection Bank set forth in the Mortgage Loan Agreement.

“Commencement Date” is set forth in Article A, Section 2(b).

“Customer Data” shall mean all retained data to the extent arising out of
customers’ use of the [casino] at the Premises [including, without limitation,
gambler history data]. For clarity, “Customer Data” excludes any data to the
extent arising out of customers’ use of other facilities owned by the Tenant’s
Affiliates.

“Default” means the occurrence of an event or condition which with notice or
lapse of time or both would become an Event of Default.

“Default Rate” shall mean a rate per annum equal to two percent above the per
annum weighted average interest rate of the Loans from time to time, which as of
the date hereof is the sum of five percent (5%) plus LIBOR (as defined in and
determined under the Mortgage Loan Documents), but in no event in excess of the
amount that may be legally charged and collected by Landlord from Tenant.

“Diligence Activities” shall have the meaning set forth in the Management
Agreement.

 

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“Ending Date” is defined in Section 8.2.

“Environmental Law” and “Environmental Laws” are defined in Section 18.11.

“Equipment” shall mean, with respect to the [Casino Components], any equipment
now or hereafter used at or in connection with the [Casino Components] or is
located thereon or therein (excluding all Gaming Equipment), including all
machinery, equipment, furnishings, and electronic data-processing and other
office equipment 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.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any corresponding or succeeding provisions of applicable law, and the rules
and regulations promulgated thereunder; in each case as the same may have been
and hereafter may be supplemented, modified, amended, restated or replaced from
time to time.

“Event of Default” is defined in Section 12.1.

“Expiration Date” is defined in Article A, Section 2(c).

“FF&E” shall mean, 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
inventory and similar items) and all other similar property now or hereafter
located at the [Casino Components] or usable in connection with the present or
future operation and occupancy of the [Casino Components] “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 other hotel or casino furniture, furnishings and equipment. Notwithstanding
the foregoing, FF&E shall not include any (i) Gaming Equipment, (ii) Fixtures or
(iii) items owned by tenants (other than Tenant) or by third party operators
(other than Tenant).

 

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“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 this Lease.

“Fixtures” shall mean all Equipment now owned, or the ownership of which is
hereafter acquired, which is so related to the Land and the Buildings included
in the Casino Components 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 Building, 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 Buildings or the Land
(other than the portion thereof included in the Hotel Components), 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 Landlord’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.

“Force Majeure” is defined in Section 21.15.

“GAAP” means generally accepted accounting principles, applied on a “consistent
basis”, as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.

“Gaming Authorities” shall mean, in any jurisdiction in which Landlord, Tenant
or any of its or their subsidiaries manages or conducts any casino, or gaming
business or activities, the applicable gaming board, commission or other
Governmental Authority which (a) has, or may at any time after the Closing Date
have, jurisdiction over the gaming activities at the Premises or any successor
to such authority or (b) is, or may at any time after the Closing Date be,
responsible for interpreting, administering and enforcing the Gaming Laws.

“Gaming Equipment” shall mean any and all gaming devices [(in Nevada, as defined
in Nevada Revised Statutes Chapter 463)], 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 [(in
Nevada, as defined in Nevada Revised Statutes Chapter 463)], gaming tables,
cards, dice, chips, tokens, player tracking systems, cashless wagering systems
[(in Nevada, as defined in Nevada Revised Statutes Chapter 463)], electronic
betting systems, mobile gaming systems [(in Nevada, as defined in the
regulations promulgated under Nevada Revised Statutes Chapter 463)] and
associated equipment [(in Nevada, as defined in Nevada Revised Statutes Chapter
463)] which are located at the Premises, owned or leased by Tenant and used or
useable exclusively in the present or future operation of slot machines and live
games at the Premises, together with all improvements and/or additions thereto.

 

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“Gaming Equipment Facility Agreement” shall mean any of the Gaming Facility
Agreements dated as of January 28, 2008, between Landlord and Tenant, relating
to the financing of Gaming Equipment.

“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 Landlord,
Tenant or any of its or their subsidiaries in any jurisdiction, as in effect
from time to time, including the policies, interpretations and administration
thereof by the Gaming Authorities.

“Gaming License” shall mean, in any jurisdiction in which Landlord, Tenant or
any of its or their subsidiaries conducts any casino or 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 Tenant 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 Tenant under applicable Gaming
Laws as a result of any increase or decrease in gaming business at the
applicable [Casino Components], 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 Components],
such cash funds and reserves that are held and maintained on-site at each
Premises by Tenant, in its capacity as the duly licensed operator of the [Casino
Components], including (without limitation) casino chips, tokens, checks and
markers; provided, however, that all such Gaming Operating Reserves (a) are
solely for use in the day-to-day operation and management of the [Casino
Components] in the ordinary course of business, (b) are funded and maintained in
accordance with the Gaming Liquidity Requirements and (c) are in amounts
customary and generally comparable for casinos comparable to the [Casino
Components] in question. The Gaming Operating Reserves may exceed the minimum
amounts required to be maintained on-site by Tenant as required by the Gaming
Liquidity Requirements.

“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, any of the foregoing having
jurisdiction over the Premises (or any operations conducted thereat), Landlord
or Tenant. For the avoidance of doubt, the term “Governmental Authority” shall
include, and be deemed to include, all Gaming Authorities.

 

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“Hazardous Substance” and “Hazardous Substances” are defined in Section 18.12.

“HOC” shall mean Harrah’s Operating Company, Inc.

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

[“Hotel Components” shall mean, collectively, those portions of the Land and
Building not devoted to the Casino Components, specifically including those
portions of the Land and Building devoted to the operation of a hotel and
related facilities, 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 the Premises, and (b) any theaters/performing arts spaces, as
represented by the unmarked areas of the floor plans, attached hereto as Exhibit
A, but specifically excluding the Casino Components.]

“Immaterial Use” is defined in Section 18.1.

“Imposition” and “Impositions” are defined in Section 3.1.

“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 Party” and “Indemnified Parties” are defined in Section 11.3.

“Insurance Premiums” is defined in Section 6.2.

“Intellectual Property” 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; (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, copyrights and
applications, registrations, and renewals thereof; (iii) inventions and
discoveries, whether patentable or not, and all invention disclosures, patents
and applications therefor, including divisionals, continuations, and renewals
thereof; and (iv) confidential information, trade secrets, and nonpublic
know-how, including business methods and plans, customer and supplier
information and lists.

 

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“IP License” shall mean, 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 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 Landlord, Manager, and
Tenant, pursuant to which each Landlord licenses certain Intellectual Property
to Manager and Tenant, 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 by and between IP Licensor, Manager, Borrower and Tenant, as amended
on the date hereof, and as the same may be further amended, restated, replaced,
supplemented or otherwise modified from time to time.

“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 and assigns.

“Land” means those certain plots, parcels and pieces of real property described
on Schedule A hereto.

“Landlord” is defined in the introductory paragraph to this Lease.

“Lease” is defined in the introductory paragraph hereof.

“Lease Year” is defined in Section 2.1(b).

“Leased Personal Property” means all of the food service preparation and
distribution equipment, housekeeping equipment, maintenance equipment,
activities equipment, computer equipment and systems, signs, telephones,
telecommunications and other building systems and other equipment and personal
property owned by Landlord that is necessary to physically equip and maintain,
to enable Tenant to operate, the Premises and which is located in the Buildings
on the Closing Date, and any and all replacements thereof, whether purchased or
placed in the Buildings by Landlord or Tenant.

“Legal Requirements” shall mean, with respect to the Premises, all federal,
state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Premises or any part thereof (including, without
limitation, all Environmental Laws and Gaming Laws), or affecting the
construction, use, alteration or operation thereof, or any part thereof, whether
now

 

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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 Tenant
or Landlord, at any time in force affecting the Premises or any part thereof,
including, without limitation, any which may (a) require repairs, modifications
or alterations in or to the Premises 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 either any of the holders of the Mortgage Loan and/or the
holders of Mezzanine Loans, or collectively, such holders, as the context shall
require.

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or restriction
on transfer of, on or affecting Landlord, Tenant, the Premises, 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.

“Loans” means (i) the Mortgage Loan and (ii) the Mezzanine Loan.

“Loan Documents” means (i) the Mortgage Loan Documents and (ii) the Mezzanine
Loan Documents.

“Management Agreement” means that certain Hotel and Casino Management Agreement,
dated as of the date hereof and effective as of the Effective Time (as defined
therein), by and between [MANAGER], a [            ], as manager, Tenant and
Landlord.

“Management Fees” means, as applicable, (i) the fees and expenses payable to
Manager by Tenant pursuant to Article III of the Management Agreement and any
other fees and expenses required to be paid pursuant to the Management
Agreement, collectively, (ii) the fees and expenses payable to an Alternate
Manager by Tenant pursuant to an Alternate Management Agreement or (iii) prior
to the effectiveness of the Management Agreement or any Alternate Management
Agreement, as applicable, the amount that would be payable under either the
Management Agreement or Alternate Management Agreement, as applicable, had such
agreement then been in effect.

“Manager” shall have the meaning set forth in the Management Agreement.

“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

 

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(financial or otherwise) of (i) Landlord, (ii) Guarantor (as defined in the
Mortgage Loan Agreement), (iii) Tenant, (iv) this Lease or (v) the Premises;
(b) the ability of Landlord or its affiliates to perform, in all material
respects, their respective obligations under each of the Loan Documents to which
it is a party; (c) the ability of Tenant to perform, in all material respects,
its obligations under this Lease; (d) the enforceability or validity of (i) this
Lease or the Other Operating Leases, or (ii) any Loan Document or the perfection
or priority of any Lien created under any Loan Document; (e) the value of, or
cash flow from, the Premises or the operations thereof; or (f) the material
rights, interests and remedies of Mortgagee or holder of a Mezzanine Loan under
any of its respective Loan Documents.

“Material Alteration” shall mean any Work with respect to all or a portion of
the Premises that (i) when aggregated with all other Alterations at the Premises
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 (as defined
in the Mortgage Loan Agreement on the Original Closing Date) for the Premises
and the Allocated Loan Amounts under (and as defined in each of) the Mezzanine
Loan Agreements on the Original Closing Date for the Premises or (ii) when
aggregated with all other Alterations at each of the Premises (as such term is
defined in each of the Other Operating Leases), including the Premises, then
being conducted, involve an estimated total cost in excess of an amount equal to
five percent (5%) of the sum of the outstanding principal amount of the Mortgage
Loan and the Mezzanine Loans on the Original Closing Date (and, as used herein,
“Threshold Amount” shall mean whichever of said 5% or 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”).

“Mezzanine Loan” means, individually or collectively, as the context requires,
(a) each loan made by JPM and certain co-lenders to an owner or an indirect
owner of Landlord concurrently with the execution and delivery of the Original
Lease and (b) any future loan made by a lender to an owner or indirect owner of
Landlord and secured by a Mezzanine Pledge, and all renewals, modifications,
consolidations, replacements, restatements and extensions of such loan or any
such future loan. As of the date hereof, there are nine (9) loans constituting
the Mezzanine Loans, and Tenant has been provided with complete sets of copies
of each of the Mezzanine Loan Documents. Further, if a Mezzanine Pledge shall be
foreclosed on, or the collateral pledged thereunder sold pursuant to the terms
contained therein, or an assignment-in-lieu in respect of such collateral be
granted, or there shall occur or be granted any other transaction, enforcement
action, order or relief as a result of a default or imminent default in respect
of a Mezzanine Loan, and thereafter such Mezzanine Loan shall no longer be
outstanding, then for all purposes hereof, such Mezzanine Loan shall
nevertheless be deemed to continue to be outstanding, and the related Mezzanine
Loan Documents in full force and effect, and Landlord (in addition to its rights
hereunder as Landlord) shall have the right to enforce all of the provisions
hereof referring to or incorporating the terms of such Mezzanine Loan Documents,
including those rights granted to the holder of such Mezzanine Loan.

“Mezzanine Loan Documents” means all documents and instruments evidencing or
securing the Mezzanine Loan and all renewals, modifications, consolidations,
replacements, restatements and extensions thereof.

 

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“Mezzanine Pledges” means the pledges and security interests granted to (a) JPM
concurrently with the execution and delivery of the Original Lease, which pledge
and security interests have immediately heretofore been assigned by JPM to the
Lender and immediately thereafter assigned by Lender to Collateral Agent, and
(b) any future holder of any pledge or series of pledges as security for any
Mezzanine Loan together with all interest thereon and all other amounts payable
under the Mezzanine Loan Documents, and all renewals, modifications,
consolidations, replacements, restatements and extensions thereof.

“Monthly Disbursements” is defined in Section 2.4(a).

“Monthly Operating Lease Rent Amount” means one twelfth (1/12) of the Operating
Lease Rent due under this Lease for each Lease Year.

“Mortgage” means the mortgage or series of mortgages, or deed of trust or series
of deeds of trust, granted by Landlord to or for the benefit of (a) JPM
concurrently with the execution and delivery of the Original Lease, which
mortgages and deeds of trust have heretofore been assigned by JPM to the Lender
and immediately thereafter assigned by the Lender to Collateral Agent and
amended, and all renewals, modifications, consolidations, replacements,
restatements and extensions thereof, and (b) any future holder of any mortgage
or series of mortgages, or beneficiary of any deed of trust or series of deeds
of trust as security for the Mortgage Loan together with all interest thereon
and all other amounts payable under the Mortgage Loan Documents, and all
renewals, modifications, consolidations, replacements, restatements and
extensions thereof.

“Mortgage Loan” means (a) the loan made by JPM and certain co-lenders to
Landlord and certain of its Affiliates concurrently with the execution and
delivery of the Original Lease or (b) any future loan made by one or more
lenders to Landlord (either alone or together with one or more other Persons)
and secured by a Mortgage, and all renewals, modifications, consolidations,
replacements, restatements and extensions of such loan or any such future loan,
provided the terms of such future loan (including any reserve requirements
contained therein) are not materially adverse to Tenant as compared to the terms
of the loan described in clause (a) above. Further, if a Mortgage shall be
foreclosed on, or the Premises sold pursuant to a power of sale contained in a
Mortgage, or a deed-in-lieu in respect of the Premises be granted, or there
shall occur or be granted any other transaction, enforcement action, order or
relief as a result of a default or imminent default in respect of the Mortgage
Loan, and thereafter no Mortgage Loan shall be outstanding, then for all
purposes hereof, the Mortgage Loan shall nevertheless be deemed to continue to
be outstanding, and the Mortgage Loan Documents in full force and effect, and
Landlord (in addition to its rights hereunder as Landlord) shall have the right
to enforce all of the provisions hereof referring to or incorporating the terms
of the Mortgage Loan Documents, including those rights granted to Mortgagee.

“Mortgage Loan Agreement” means the Loan Agreement, dated as of January 28,
2008, between Landlord and certain of its Affiliates, as borrower, and JPM, as
lender, as amended and restated as of May 22, 2008 and immediately heretofore
assigned by JPM, as lender, to the Lender and thereafter amended and restated
pursuant to that certain Second Amended and Restated Loan Agreement, dated as of
the date hereof, and as further amended, restated, supplemented or otherwise
modified from time to time.

 

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“Mortgage Loan Documents” means all documents and instruments evidencing or
securing the Mortgage Loan and all renewals, modifications, consolidations,
replacements, restatements and extensions thereof, provided that if at the time
in question there shall be no Mortgage Loan Documents (even after application of
the terms of the last sentence of the definition of “Mortgage Loan”), then
references herein to Mortgage Loan Documents shall instead be deemed to refer to
the most senior Mezzanine Loan Documents. Tenant has been provided with a
complete set of copies of the Mortgage Loan Documents.

“Mortgagee” means the Lender (as defined in the Mortgage Loan Agreement) or, to
the extent as to any act, omission, consent, approval or right which Collateral
Agent (as defined in the Mortgage Loan Agreement) is authorized to take, give,
withhold or exercise on behalf of the Lender in accordance with any Mortgage
Loan Document, Collateral Agent, provided that if at the time in question there
shall be no Mortgage Loan (even after application of the terms of the last
sentence of the definition of “Mortgage Loan”), then references herein to
Mortgagee shall instead be deemed to refer to the Lender (as defined in and
under the most senior Mezzanine Loan) or, to the extent as to any act, omission,
consent, approval or right which Collateral Agent (as defined in and under the
most senior Mezzanine Loan) is authorized to take, give, withhold or exercise on
behalf of the Lender in accordance with any Mezzanine Loan Document, Collateral
Agent.

[“New Jersey Casino Control Act” means the New Jersey Casino Control Act, as
codified in NJSA 5:12-1 et seq., and the regulations promulgated thereunder.]

“Note Sales Agreement” means the Note Sales Agreement, dated as of the date
hereof, as amended, restated, replaced, supplemented or otherwise modified from
time to time, among Holdings, Tenant, and the other lenders and borrowers party
thereto.

“OC Accounts” is defined in Section 2.4(c).

“Off-Shore Accounts” is defined in Section 2.4(a).

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

“Operating Lease Guaranty” shall mean that certain Lease Guaranty Agreement,
executed and delivered by Harrah’s Entertainment, Inc. (in such capacity, the
“Lease Guarantor”), dated as of the date hereof, guaranteeing the payment and
performance by Tenant of its obligations hereunder this Lease, as the same may
be amended, supplemented, replaced or otherwise modified from time to time in
accordance with the provisions thereof.

“Operating Lease Rent” means, collectively, all Base Rent, Supplementary Rent
and Other Rent payable hereunder.

“Operating Permit” is defined in Section 20.17.

“Other Gaming Equipment Facility Agreement” shall mean each Gaming Equipment
Facility Agreement as defined in one or more of the Other Operating Leases,
relating to the financing of gaming equipment between the respective landlord
and the tenant under such Operating Lease.

 

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“Other Operating Leases” shall mean those Operating Leases identified on
Schedule B other than this Lease.

“Other Rent” is defined in Section 2.2.

“Permitted Exceptions” means those matters affecting title to the Premises
described in Section 1.1; provided that the term “Permitted Exceptions” shall
not include any Liens securing any Indebtedness of Landlord other than the Liens
securing the Mortgage Loan.

“Permitted Indebtedness” 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 Premises and the routine
administration of Tenant 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 and are paid when due, (b) accrued and unpaid payroll,
benefits and payroll taxes with respect to employees of Tenant or its Affiliates
engaged with respect to the Premises 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 Landlord and
Lender in form and substance reasonably satisfactory to Landlord and Lender and
(d) such other Indebtedness specifically permitted pursuant to this Lease. In no
event shall Permitted Indebtedness, together with all “Permitted Indebtedness”
of the tenants under the Other Operating Leases, but excluding for purposes of
this sentence the Indebtedness described in subclause (b) of the preceding
sentence (both here and in the Other Operating Leases), exceed the maximum
permitted amount of “Permitted Indebtedness (Operating Company)” under and as
defined in the Mortgage Loan Agreement.

“Person” means any individual, corporation, limited liability company, business
trust, association, company, partnership, joint venture, Governmental Authority
or other entity.

“Personal Property Lease or Financing” is defined in Section 1.3.

“PLGL” means Professional Liability and General Liability.

“Premises” means the [Casino Components], and the related Fixtures, such FF&E as
is owned by Landlord and the Leased Personal Property.

“Projections” means, as to any Person, such Person’s, forecasted consolidated
balance sheets, profit and loss statements, cash flow statements, capitalization
statements and budgets, all materially consistent with such Person’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

“Qualified Transferee” has the meaning given such term in the Mortgage Loan
Agreement.

 

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“Rating Agencies” shall mean each of S&P, Moody’s and Fitch, or any other
nationally recognized statistical rating agency which has been approved by
Mortgagee and that rates a securitization of the Mortgage Loan (or any component
thereof).

“Remedial Work” is defined in Section 18.8.

“Rents” shall mean, with respect to the Premises, 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 Tenant (from Subtenants or any space tenants, licensees
or occupants of any portion of the Premises) (or employees or agents of Tenant)
from any and all sources arising from or attributable to the Premises, and
proceeds, if any, from business interruption or other loss of income or
insurance, including, without limitation, all receipts, revenues and credit card
receipts collected from [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
Tenant (or by others, on behalf of Tenant) or the commercial spaces located in
the Buildings 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, whether paid or accruing before or after the filing by or against
Tenant of any petition for relief under the Bankruptcy Code.

“Restoration” is defined in Section 7.1.

“Retainage” is defined in Section 7.2.

“Revenue” shall mean all Rents and items of income or revenue (of any kind) from
the operation of the [Casino Components]. As more fully provided below, Tenant
shall cause all Revenue to be remitted into the Collection Bank Account.

“Securities” shall have the meaning specified in the Mortgage Loan Agreement.

“Settlement Discussion” is defined in Section 20.12(d).

“Shared Services Agreement” means that certain Second Amended and Restated
Shared Services Agreement, dated as of the date hereof, among HOC, Holdings,
Landlord and the other parties thereto.

“Sublease” and “Subleases” are defined in Section 9.7.

 

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“Subsidiary” means a Person of which an aggregate of more than fifty percent
(50%) or more of the capital stock or other ownership interests thereof is owned
of record or beneficially by such other Person, or by one or more Subsidiaries
of such other Person, or by such other Person and one or more Subsidiaries of
such Person, (a) if the holders of such capital stock or other ownership
interests (i) are ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or other individuals performing
similar functions) of such Person, even though the right so to vote has been
suspended by the happening of such a contingency, or (ii) are entitled, as such
holders, to vote for the election of a majority of the directors (or individuals
performing similar functions) of such Person, whether or not the right so to
vote exists by reason of the happening of a contingency, or (b) in the case of
capital stock or other ownership interests which are not issued by a
corporation, if such ownership interests constitute a majority voting interest.

“Subtenant” and “Subtenants” are defined in Section 9.4.

“Supplementary Rent” is defined in Section 2.2.

“Taking” means a taking or condemnation of the Premises (or any part thereof) or
any damage to the Premises (or any part thereof) related to the exercise of the
power of eminent domain and including a voluntary conveyance to any agency,
authority, public utility, Person, or corporate entity empowered to condemn
property in lieu of court proceedings.

“Tenant” is defined in the introductory paragraph to this Lease.

“Term” is defined in Article A, Section 2(a).

“Threshold Amount” shall have the meaning set forth in the definition of
Material Alteration, except that for purposes of Section 7.2 hereof, Threshold
Amount shall be defined solely by reference to clause (i) of such of such
definition.

“Transfer” is defined in Section 9.1.

“Transition Period” shall have the meaning set forth in the Management
Agreement.

“Transition Services” shall have the meaning set forth in the Management
Agreement.

“Work” is defined in Section 5.5.

“Working Capital Account” is defined in Section 2.4(h).

Principles of Construction. All references to sections and schedules are to
sections and schedules in or to this Lease 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
Lease shall refer to this Lease as a whole and not to any particular provision
of this Lease. 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.

 

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ARTICLE I

PREMISES AND TERM

Section 1.1 During the Term, Landlord, in consideration of the Operating Lease
Rents herein reserved and of the terms, provisions, covenants and agreements on
the part of Tenant to be kept, observed and performed, does hereby lease and
demise the Premises unto Tenant, and Tenant does hereby hire and take the
Premises from Landlord, subject to those matters affecting title to the Premises
as of the date hereof which are set forth on Schedule B to a policy or policies
of title insurance issued in favor of Landlord or Mortgagee concurrently with
the execution and delivery of this Lease, any other matters affecting title to
the Premises hereafter created by Tenant and such matters as are created by
Landlord and consented to by Tenant (to the extent such consent is required
hereunder), and all of the following, in effect as of the Commencement Date or
as hereafter in effect: all licenses, zoning laws, ordinances, regulations,
building codes and all other Legal Requirements.

Section 1.2 Tenant shall lease the Premises for the Term, unless sooner
terminated as hereinafter provided or pursuant to applicable law.

Section 1.3 This Lease and the “Premises” shall include the Leased Personal
Property and all of Tenant’s obligations under this Lease with respect to the
Premises (including, without limitation, the bond net lease provisions of
Section 2.3 below) shall apply with the same force and effect to the Leased
Personal Property. Upon any termination of the Lease, Landlord shall be entitled
to possession of the Leased Personal Property on the same basis as provided
herein with respect to the real property covered by this Lease. In the event
that any of the Leased Personal Property is subject to an underlying lease or
financing (collectively, “Personal Property Lease or Financing”), Tenant shall
be exclusively responsible for payment of all rent, principal and interest and
other charges and fees (including, without limitation, any and all penalties)
and performance of all obligations and requirements of such Personal Property
Lease or Financing. All such Leased Personal Property is provided “AS IS” and
Landlord makes no representations, warranties or assurances relating thereto, or
as to the completeness, condition, operation or suitability of the Leased
Personal Property. Any listing of Leased Personal Property provided by Landlord
to Tenant is for the benefit of Landlord only, to identify such property as
owned by Landlord and does not constitute a representation or warranty as to
existence or completeness of any item of Leased Personal Property. In the event
of any deficiency in the Leased Personal Property, or if any Leased Personal
Property is missing, or upon the termination of any Personal Property Lease or
Financing, this Lease shall continue in full force and effect and there shall be
no reduction of Operating Lease Rent or other obligations of Tenant hereunder.
In the event that any Leased Personal Property requires replacement,
maintenance, or upgrading, for any reason whatsoever, Landlord shall have no
obligations therefor, Tenant shall be required at its cost to replace the same
to the extent such replacement is required under the other provisions hereof
(including Section 5.2 hereof) and any replacement shall become Leased Personal
Property.

 

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ARTICLE II

BASE RENT; SUPPLEMENTARY RENT; COLLECTION BANK ACCOUNT AND DEPOSITS

Section 2.1 (a) Tenant shall pay to Landlord as Base Rent for the Premises
during the Term the amounts stated in Article A, Section 3. Base Rent shall be
payable in equal monthly installments in advance on the [        ] Business Day
of each and every month during the Term, subject to a seven-day grace period
(provided, however, that if the expiration of such grace period is not a
Business Day, then such grace period shall expire on the immediately preceding
Business Day), without previous demand, notice or presentment therefor and
without abatement, offset or deduction of any kind whatsoever, other than as
expressly provided for herein. Notwithstanding the foregoing, Tenant paid the
partial month’s installment of Base Rent (with respect to the remaining days of
the month in which the Commencement Date occurred) upon the Commencement Date of
this Lease. If Tenant fails to pay any installment of Base Rent on or before the
date when due hereunder, Tenant shall owe Landlord, in addition to the
installment of Base Rent, interest on such installment at the Default Rate and,
if and to the extent the same is due and payable by Landlord under the Mortgage
Loan Documents, a late payment charge. Landlord shall have the right to change
the payment date of the monthly installments of Base Rent, provided that in
doing so, Landlord shall not increase Tenant’s costs hereunder (other than the
direct costs of implementing such change, such as legal fees, which Tenant
hereby agrees to pay).

(b) As used herein the term “Lease Year” means a period of twelve (12) calendar
months commencing on the Commencement Date and ending on the day immediately
preceding the first (1st) anniversary of the Commencement Date (if the
Commencement Date occurs on the first (1st) day of a month) or the last day of
the month during which the first (1st) anniversary of the Commencement Date
occurs (if the Commencement Date occurs on a day other than the first (1st) day
of a month), and each successive twelve (12) month period thereafter during the
Term until the Expiration Date.

(c) Notwithstanding clauses (a) and (b) above, or anything else in this Lease to
the contrary, each payment of Base Rent in any month shall be made by Tenant on
a net basis with respect to Management Fees payable in respect of such month,
such that the payment of each monthly installment of Base Rent to Landlord shall
be reduced by the applicable monthly Management Fee, which Tenant shall pay to
Manager in accordance with the terms of the Management Agreement (or to
Alternate Manager in accordance with the terms of an Alternate Management
Agreement, if applicable) or, (i) prior to the effectiveness of the Management
Agreement or Alternate Management Agreement, as applicable and/or (ii) in the
circumstances described in Section 4.4, as applicable, shall be retained by
Tenant. For the avoidance of doubt, Management Fees owing and payable under the
Management Agreement are subject to the limitations and conditions set forth in
Section 5.1.22(u) of the Mortgage Loan Agreement and to the extent that the
payment of Management Fees are so limited (or are not permitted to be paid at
all) there will be no reduction of Base Rent for any month in respect of any
such Management Fees that are so limited (or are not permitted to be paid) in
such month; provided, however, with respect to any Subject Fees (as defined in
the Mortgage Loan Agreement) not paid to Manager under the Management Agreement
in any month as a result of the limitations in such Section

 

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5.1.22(u) of the Mortgage Loan Agreement, such Subject Fees will be included in
the determination of Management Fees as used in the foregoing sentence and will
reduce the Base Rent in such month so long as such Subject Fees are deposited by
Tenant into the Blocked Account (as defined in the Mortgage Loan Agreement)
pursuant to the terms of the Mortgage Loan Agreement (and which shall be applied
subject to and in accordance with the terms of the Mortgage Loan Agreement).

Section 2.2 Tenant shall also pay and discharge as supplementary rent (the
“Supplementary Rent”) all Impositions, insurance premiums with respect to
insurance required pursuant to the terms and conditions of Article VI, FF&E
expenditures and all interest and penalties that may accrue thereon in the event
of Tenant’s failure to pay such amounts when due, and all damages, costs and
expenses which Landlord may incur by reason of any Default of Tenant or failure
on Tenant’s part to comply with the terms of this Lease (which shall include
damages, costs and expenses incurred under the Loan Documents by Landlord or its
affiliates as borrowers thereunder), all of which Tenant hereby agrees to pay
within ten (10) days after written demand or as is otherwise provided herein.
Landlord shall have the right to require that reserves be established for the
foregoing amounts if and when required by any Mortgagee under the Mortgage Loan
Documents. Landlord shall provide Tenant with notice of the amounts of each such
escrow, reserve and other requirement on the Closing Date and at least fifteen
(15) days prior notice of any change in any such amounts together with copies of
any relevant notice from the Mortgagee and the relevant Mortgage Loan Documents.
Notwithstanding the foregoing, on the Commencement Date, Tenant shall pay an
amount (of which Landlord will advise Tenant in advance) with respect to such
escrows, reserves and other requirements attributable to the period, if any,
beginning on the Commencement Date and ending on the last day of the month
during which the Commencement Date occurs. Tenant shall also pay and discharge
when due as other rent (the “Other Rent”) all other amounts, liabilities and
obligations of whatsoever nature relating to the Premises, other than Base Rent
and Supplementary Rent, including, without limitation, those arising under this
Lease, or any Legal Requirements, easements, restrictions, or other similar
agreements affecting the Premises, charges for electricity, water, gas, steam
and other utilities of any kind, repair, service and maintenance or other
expenses relating to the use, operation or maintenance of the Premises, property
management fees and expenses, if any, as well as all reasonable out-of-pocket
costs and expenses incurred by Landlord in connection with the administration of
this Lease and the monitoring of Tenant’s performance hereunder, and all
interest and penalties that may accrue on any of the foregoing in the event of
Tenant’s failure to pay such amounts when due, and all damages, costs and
expenses which Landlord may incur by reason of any Default of Tenant or failure
on Tenant’s part to comply with the terms of this Lease (which shall include
damages, costs and expenses incurred under the Loan Documents by Landlord or its
affiliates as borrowers thereunder), all of which Tenant hereby agrees to pay
within ten (10) days after written demand or as is otherwise provided herein.
Upon any failure by Tenant to pay any of the Supplementary Rent or Other Rent,
such unpaid Supplementary Rent or Other Rent shall accrue interest at the
Default Rate and Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute, at law,
in equity or otherwise in the case of nonpayment of the Base Rent. The terms
Supplementary Rent and Other Rent shall be deemed rent for all purposes
hereunder (other than with respect to Tenant’s internal accounting procedures).

 

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Section 2.3 This Lease shall be deemed and construed to be a bond lease,
absolutely net to Landlord, and Tenant shall pay to Landlord, absolutely net
throughout the Term, the Operating Lease Rent, free of any charges, assessments,
impositions or deductions of any kind and without abatement, deduction or
set-off whatsoever, other than as expressly provided for herein. Under no
circumstances or conditions, whether now existing or hereafter arising, or
whether beyond the present contemplation of the parties, shall Landlord be
expected or required to make any payment of any kind whatsoever or be under any
other express or implied obligation or liability hereunder, except as herein
otherwise expressly set forth in Section 3.5, and Tenant hereby waives all Legal
Requirements to the contrary. Tenant shall pay all costs, expenses and charges
of every kind and nature relating to the Premises from and after the
Commencement Date, including, without limitation, all taxes (except for any
franchise, excise, corporate, estate, inheritance, succession or capital levy
tax of Landlord or any income profits or revenue tax upon the income of
Landlord), costs of improvements, maintenance, repairs, alterations, additions,
replacements, and insurance and other Impositions, except debt service on any
Mortgage or any other Indebtedness of Landlord (except to the extent the same is
a Personal Property Lease or Financing), which may arise or become due or
payable prior to, during or after (but attributable to a period falling prior to
or within) the Term. Except upon a termination of this Lease and Tenant’s
obligation to pay Operating Lease Rent under and subject to the terms and
conditions of Section 8.2 or 12.2 hereof, Tenant’s obligation to pay Operating
Lease Rent hereunder shall not terminate prior to the actual date contemplated
by Landlord and Tenant and specifically set forth in Article A, Section 2(c) for
the expiration of the Term notwithstanding the exercise by Landlord of any or
all of its rights under Article XII or otherwise, and the obligations of Tenant
hereunder shall not be affected by reason of: any damage to or destruction of
the Premises or any part thereof, any Taking of the Premises or any part thereof
or interest therein by condemnation or otherwise, any prohibition, interruption,
limitation, restriction or prevention of Tenant’s use, occupancy or enjoyment of
the Premises or any part thereof, or any interference with such use, occupancy
or enjoyment by any Person or for any reason, any matter affecting title to the
Premises, any eviction by paramount title or otherwise, any default by Landlord
hereunder, the impossibility, impracticability or illegality of performance by
Landlord, Tenant or both, any action of any Governmental Authority, Tenant’s
acquisition or ownership of all or part of the Premises (unless this Lease shall
be terminated by a writing signed by all Persons, including any Mortgagee,
having an interest in the Premises), any breach of warranty or
misrepresentation, or any other cause whether similar or dissimilar to the
foregoing and whether or not Tenant shall have notice or knowledge thereof and
whether or not such cause shall now be foreseeable. The parties intend that the
obligations of Tenant under this Lease shall be separate and independent
covenants and agreements and shall continue unaffected unless such obligations
have been modified or terminated pursuant to an express provision of this Lease.

Section 2.4 (a) Tenant acknowledges and agrees that (i) all of the interest of
Landlord in and to this Lease has been or will be collaterally assigned to
Mortgagee pursuant to the Mortgage and other Mortgage Loan Documents, (ii) under
the terms of the Loan Documents including the Collection Account Agreement to
which Tenant is a party, Tenant shall cause all Revenues from the Premises
(other than (x) each Gaming Operating Reserve, (y) amounts theretofore released
from a Collection Account in accordance with the provisions of the Mortgage Loan
Agreement and Collection Account Agreement, and (z) any amounts collected and
maintained in off-shore accounts that have been approved by Landlord and
Mortgagee (the

 

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“Off-Shore Accounts”)) to be wired daily to and deposited in the Collection
Accounts established by Tenant, and (iii) if Tenant collects or receives any
items of Revenue (excluding any such items of Revenue in Off-Shore Accounts but
including any such items of Revenue in Off-Shore Accounts to the extent Tenant
is entitled to withdraw the same from such Off-Shore Account), it will deposit
all such items of Revenue (net of amounts held to fund Gaming Operating
Reserves, and net of any amounts theretofore released from a Collection Account)
into the Collection Accounts (or any one of them) within three (3) Business Days
after receipt as security for its obligations to Landlord hereunder. Tenant
understands, acknowledges and agrees that Landlord’s interest in all amounts
deposited in the Collection Accounts, including the proceeds thereof, shall be
pledged by Landlord to Mortgagee to secure Landlord’s obligations to Mortgagee,
provided that except as otherwise provided in the immediately following
subparagraphs (b) and (c), all amounts so collected or received in the
Collection Accounts shall be transferred on each Business Day to (or as directed
by) Tenant for use or distribution by Tenant in its discretion free of any
rights or encumbrances of Mortgagee.

(b) Tenant understands, acknowledges and agrees that, upon the occurrence and
during the continuance of an Event of Default under (and as defined in) the
Mortgage Loan Documents or any of the Mezzanine Loan Documents, and provided
that no Event of Default shall have occurred and be continuing hereunder, (i) it
shall (or Landlord shall, or Mortgagee shall should Landlord fail to do so)
direct and cause Collection Bank to deposit directly into the Cash Management
Account all Operating Lease Rent payable under this Lease for the next thirty
(30) days, including the Monthly Tax and Insurance Amount, the Monthly Ground
Rent Amount and the Monthly FF&E Reserve Amount (as each such term is defined in
the Mortgage Loan Agreement), if any, due for such period (the amounts described
in the preceding sentence, collectively, the “Monthly Disbursements”) (it being
the intent and agreement that the Cash Management Account shall at all times
contain such amounts sufficient to cover the ensuing thirty (30) day period) and
Landlord shall have the right to apply the same to Tenant’s obligations
hereunder, and (ii) any amounts not so deposited into the Cash Management
Account shall be transferred on each Business Day thereafter to (or as directed
by) Tenant for use or distribution by Tenant in its discretion free of any
rights or encumbrances of Mortgagee. (Landlord acknowledges that disbursement of
all or a portion of the Monthly Disbursements to the Cash Management Account
(which shall include the Monthly Operating Lease Rent Amount) shall to the
extent of such disbursement, with respect to the month for which such
disbursement is made, satisfy Tenant’s payment obligations with respect to
Operating Lease Rent payable to Landlord under this Lease for such month.)

(c) Tenant understands, acknowledges and agrees that if an Event of Default
shall have occurred and be continuing hereunder, it shall (or Landlord shall, or
Mortgagee shall if Tenant or Landlord shall fail to do so) 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 up to the aggregate amount owed by Tenant hereunder,
including, without limitation, any damages pursuant to Section 12.2(a) hereof,
and thereafter (as well as pending the determination of such damages) Tenant
shall not receive any such monies except to the extent they exceed the aggregate
amount owed by Tenant hereunder (or pending such determination, such aggregate
amount estimated by Landlord and Mortgagee), including, without limitation, any
damages pursuant to Section 12.2(a) hereof), and Landlord shall have the right
to apply the same to Tenant’s obligations hereunder.

 

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(d) Tenant 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. The Collection Accounts shall be assigned the federal tax
identification number of Tenant, which is [            ]. Tenant shall provide
Landlord and Mortgagee, at any time upon request, with a Form W-8 or W-9 to
evidence that Tenant is not subject to any back-up withholding under the Code.
All costs and expenses for establishing and maintaining the Collection Accounts
shall be at Tenant’s sole cost and expense.

(e) On or before the thirtieth day following the execution and delivery hereof,
Tenant shall establish the Collection Accounts and represent and warrant to
Landlord that the same, which shall be listed by Tenant, constitutes any and all
accounts maintained by, or on behalf of Tenant or any other Person in any
jurisdiction that include funds arising out of, or are otherwise attributable
to, the Premises or relate to the operation and management of the Premises
(other than funds held in Off-Shore Accounts or funds held in accounts
(collectively, the “OC Accounts”) that contain exclusively amounts theretofore
released from Collection Accounts in accordance with the provisions of the
Mortgage Loan Agreement or otherwise containing exclusively amounts not
constituting Revenues from the Premises), identifying the bank, account name and
account number, together with a chart showing the usual and customary flow of
funds with respect to such Collection Accounts in the usual course of business.
The accounts so identified shall be the only accounts existing on such date
(other than the OC Accounts and the Off-Shore Accounts, if any) maintained by
Tenant; and Tenant shall maintain no accounts (other than the OC Accounts and
the Off-Shore Accounts, if any) that include funds arising out of, or are
otherwise attributable to, the Premises or relate to the operation, management,
use or occupancy of the Premises or any portion thereof, or otherwise. Tenant
may not, without the prior consent of Landlord and Mortgagee (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 and/or out of
such Collection Accounts in any material respect from that listed and described
in accordance with the prior provisions of this subsection (e), including,
without limitation, changing the source, type or currency of any payments
currently deposited and maintained in any such account.

(f) Concurrently with the establishment of the Collection Accounts, and from
time to time thereafter as shall be reasonable or necessary to ensure the
implementation of the provisions of Section 2.4(e), Tenant shall deliver
irrevocable written instructions to (i) each tenant under any Sublease at the
Premises, in form and substance reasonably acceptable to Landlord and Mortgagee,
directing each such tenant to deliver all Rents payable thereunder directly to
the Collection Account, and (ii) each of the credit card companies or credit
card clearing banks delivering Revenues, in form and substance reasonably
acceptable to Landlord and Mortgagee, directing each such credit card company or
credit card clearing bank to deliver all Revenues payable with respect to the
Premises directly to the Collection Accounts.

(g) Tenant shall 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 Mortgagee’s security
interest in the Collection Accounts.

 

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(h) Simultaneously herewith, Tenant has established a segregated Eligible
Account (as defined in the Mortgage Loan Agreement) (the “Working Capital
Account”) with Bank of America, N.A. Pursuant to the Working Capital Account
Agreement executed simultaneously herewith among Tenant, Landlord, Bank of
America, N.A. and Collateral Agent, Tenant has granted to Landlord a first
priority security interest in the Working Capital Account and all deposits at
any time contained therein and the proceeds thereof (and Landlord has granted to
Collateral Agent (for the benefit of Mortgagee) a first priority security
interest in all right, title and interest of Landlord in and to the Working
Capital Account and all deposits at any time contained therein and the proceeds
thereof). Tenant agrees that it will take all actions necessary to maintain in
favor of Landlord a perfected first priority security interest in the Working
Capital 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 Landlord’s, Mortgagee’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 Tenant. Tenant understands and agrees that the
Working Capital Account shall be under the sole dominion and control of
Collateral Agent (which may be exercised through the servicer designated under
the Working Capital Account); provided, however, that so long as no Event of
Default under the Mortgage Loan Documents or the Mezzanine Loan Documents
exists, Tenant may make withdrawals from the Working Capital Account at any time
and from time to time to fund ordinary course working capital needs. Tenant may
deposit into the applicable Working Capital Account from time to time during any
Excess Cash Flow Period (as such term is defined in the Note Sales Agreement)
cash to be reserved on account of its anticipated, ordinary course working
capital needs (in each case subject to the limitations and restrictions set
forth in the Mortgage Loan Agreement (and, upon repayment of the Mortgage Loan
in full, subject to the limitations and restrictions set forth in the loan
agreement governing the then most senior Mezzanine Loan)).

(i) Tenant 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 Tenant. Tenant shall provide Mortgagee, at any time
upon request of Mortgagee, with a Form W-8 or W-9 to evidence that Tenant is not
subject to any back-up withholding under the Code.

(j) Landlord and Tenant acknowledge and agree that the foregoing provisions of
this Section 2.4 shall be subject to the terms of the Loan Documents and that in
the event of any conflict between the terms hereof and Section 2.6 of the
Mortgage Loan Agreement that the Mortgage Loan Agreement shall govern.

Section 2.5 Federal Income Tax Allocation of Base Rent. Tenant and Landlord
agree and acknowledge that (a) the parties intend this Lease to be classified as
a “true lease” for Federal income tax purposes (as well as for all other
purposes), and (b) Base Rent for the Term is hereby specifically allocated for
Federal income tax purposes as “fixed rent” within the meaning of Treasury
Regulation Section 1.467-1(h)(3) for each annual period. Each of Tenant and
Landlord shall make all Federal income tax filings (and to the extent
appropriate,

 

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state and local income tax filings) on such basis, and shall diligently defend
such positions in the event of challenge by any tax authority. The allocation of
such allocated rent set forth in this Section 2.5 is intended to constitute a
specific allocation of rent under Treasury Regulation
Section 1.467-1(c)(2)(ii)(A)(2).

Section 2.6 Pledge of Collateral.

(a) In order to secure the prompt and complete payment and performance of
Tenant’s obligations under this Lease and the payment of the Operating Lease
Rent, Tenant does hereby irrevocably grant to Landlord and its successors and
assigns a security interest in all of Tenant’s right, title and interest in and
to the following property, rights and interests, whether now owned, or hereafter
acquired by Tenant, subject to Tenant’s right to use, replace, repair, alter,
upgrade, operate or benefit from the following so long as no Event of Default
has occurred and is continuing (collectively, the “Collateral”):

(i) Gaming Equipment. All Gaming Equipment (except that Landlord acknowledges
that the Gaming Equipment may be subject to a prior lien in favor of the lenders
under the Gaming Equipment Facility Agreement);

(ii) Subleases and Rents and Distributions. All Subleases and other agreements
affecting the use, enjoyment or occupancy of the Premises heretofore or
hereafter entered into, whether before or after the filing by or against Tenant
of any petition for relief under the Bankruptcy Code and all right, title and
interest of Tenant, its successors and assigns in and to all Rents, including
all cash or securities deposited thereunder to secure the performance by the
lessees of their obligations thereunder and all rents, moneys payable as damages
or in lieu of rent or rent equivalents, royalties, 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 Tenant or its agents or employees from
any and all sources arising from or attributable to the Premises, including,
without limitation, all proceeds from the sale or other disposition of the
Subleases and the right to receive and apply the Rents to the payment of the
Operating Lease Rent;

(iii) Condemnation Awards. All awards or payments, including interest thereon,
which may heretofore and hereafter be made with respect to the Premises, whether
from the exercise of the right of eminent domain (including but not limited to
any transfer made in lieu of or in anticipation of the exercise of the right),
or for a change of grade, or for any other injury to or decrease in the value of
the Premises, including any claim in respect thereof;

(iv) Insurance Proceeds. All proceeds in respect of the Premises under any
insurance policies covering the Premises, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Premises;

 

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(v) Tax Certiorari. All refunds, rebates or credits in connection with reduction
in real estate taxes and assessments charged against the Premises as a result of
tax certiorari or any applications or proceedings for reduction;

(vi) Rights. The right, in the name and on behalf of Tenant, to appear in and
defend any action or proceeding brought with respect to the Premises and to
commence any action or proceeding to protect the interest of Landlord in the
Premises;

(vii) Agreements; Permits. All agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications, and other documents
(including, the Shared Services Agreement pursuant to which HOC is “Service
Provider” and, to the extent assignable, Operating Permits), now or hereafter
entered into or issued, and all rights therein and thereto, respecting or
pertaining to the use, occupation, construction, management or operation of the
Premises and any part thereof and all right, title and interest of Tenant
therein and thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums payable to
Tenant thereunder (it being understood that, without affecting any other rights
of Landlord under licensing agreement it may possess, such pledge does not
include or relate to any of the foregoing that are used by substantially the
entire Harrah’s chain);

(viii) Intellectual Property. All Intellectual Property and general intangibles
relating to or used in connection with the operation of the Premises which are
now or hereafter owned by or licensed to Tenant, including pursuant to any IP
License (provided, for clarity, the foregoing shall not affect or prejudice the
terms of, nor change the scope of, nor alter the rights or obligations of any
party under, any IP License);

(ix) All Assets. All additional assets owned by Tenant whether currently owned
by Tenant or hereafter acquired;

(x) Collection Accounts. The Collection Accounts and all amounts from time to
time contained therein (unless and until released therefrom in accordance
herewith); and

(xi) Proceeds. All proceeds of any of the foregoing, including, without
limitation, proceeds of insurance and condemnation awards, whether cash,
liquidation or other claims or otherwise.

(b) This Lease is a security agreement with respect to the Collateral (including
a “security agreement” within the meaning of the Uniform Commercial Code to the
full extent that the foregoing may be subject to the Uniform Commercial Code).
If an Event of Default shall occur and be continuing, Landlord, in addition to
any other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right, subject to Gaming Laws, to
take possession of the Collateral or any part thereof, and to take such other
measures as Landlord may deem necessary for the care, protection and
preservation of the Collateral; provided, however (subject to the rights of the
lender under the Gaming Equipment Facility Agreement),

 

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with respect to any Gaming Equipment, Tenant, at Landlord’s option, either
(i) transfer title to such Gaming Equipment to Landlord or its designee (so long
as such transferee shall have obtained any necessary Gaming License to take
title to the same), or (ii) liquidate such Gaming Equipment, as directed by
Landlord and deliver the proceeds thereof to Landlord to be applied to the
payment of Tenant’s obligations and liabilities to Landlord from time to time in
accordance with the terms hereof. Any notice of sale, disposition or other
intended action by Landlord (or Mortgagee on behalf of Landlord) with respect to
the Collateral sent to Tenant in accordance with the provisions hereof at least
ten (10) business days prior to such action, shall, except as otherwise provided
by applicable law, constitute reasonable notice to Tenant. The proceeds of any
disposition of the Collateral, or any part thereof, may, except as otherwise
required by applicable law, be applied by Landlord (or Mortgagee on behalf of
Landlord) to the payment of the Operating Lease Rent in such priority and
proportions as Landlord (or Mortgagee on behalf of Landlord) in its discretion
shall deem proper.

(c) Tenant shall (i) at Tenant’s expense, from time to time, (x) cause
instruments creating a security interest in the Collateral and of further
assurance (including any UCC-1 financing statements perfecting Landlord’s
security interest in all Gaming Equipment) to be filed, registered or recorded
in such manner and in such place as may be required for purposes of the
creation, validity, enforceability or perfection of any security interest hereof
upon, and the interest of Landlord in the Collateral, (y) do, execute,
acknowledge and deliver all further acts, conveyances, assignments, notices of
assignments, transfers and assurances as Landlord or Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring and confirming unto Landlord the Collateral, (z) on demand, deliver
(and in the event it shall fail to so deliver, hereby authorizes Landlord or
Lender to file in the name of Tenant), one or more financing statements to
evidence more effectively the security interest of Landlord in the Collateral,
(ii) not change Tenant’s name or corporate, partnership or other structure
without notifying Landlord of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Tenant’s structure, without first obtaining the prior written consent of
Landlord and Lender; provided, that, Tenant is permitted to make such changes
otherwise permitted under Section 10.17 of the Mortgage Loan Agreement,
(iii) deliver to Landlord and Lender, prior to or contemporaneously with the
effective date of any such change, and hereby authorizes Landlord or Lender to
file, any financing statement or financing statement change required by Landlord
or Lender to establish or maintain the validity, perfection and priority of the
security interest granted herein, (iv) at the request of Landlord, execute a
certificate in form satisfactory to Landlord listing the trade names under which
Tenant intends to operate the Premises, and representing and warranting that
Tenant does business under no other trade name with respect to the Premises.

Section 2.7 Assignment of Operating Lease. Tenant hereby ratifies and confirms
the assignment of this Lease by Landlord to Mortgagee pursuant to the Mortgage
Loan Documents (including, specifically, the Assignment of Leases and Rents
delivered to the Mortgagee) as additional collateral security for the Mortgage
Loan.

 

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ARTICLE III

IMPOSITIONS

Section 3.1 From and after the Commencement Date and throughout the Term, Tenant
shall pay and discharge not later than ten (10) days before any fine, penalty,
interest or cost may be added thereto for the non-payment thereof, all taxes,
assessments, water rents, storm and sewer rents and charges, duties,
impositions, license and permit fees, assessments payable to any owner’s
association or similar entity, governmental levies and charges, charges for
public utilities of any kind (together with any interest or penalties imposed
upon the late payment thereof), which, pursuant to past, present or future Legal
Requirements, during, prior to or after (but attributable to a period falling
prior to or within) the Term, shall have been or shall be levied, charged,
assessed, imposed upon or grow or become due and payable out of or for or have
become a Lien on the Premises or any part thereof, any Buildings (including the
related Fixtures), the FF&E or any personal property (including, without
limitation, any Leased Personal Property) in or on the Premises, the Gaming
Equipment, the Operating Lease Rents or income payable by Tenant or on account
of any use of the Premises or such franchises as may be appurtenant to the use
and occupation of the Premises, as well as any sales, use, excise, commercial
rent, tangible personal property and similar taxes imposed by any Governmental
Authority or improvement district in connection with the use or operation by
Tenant of any of the Premises, the Fixtures, the FF&E and the Leased Personal
Property, and the Gaming Equipment, and any interest and penalties assessed in
connection therewith as a result of late payment or non-payment of any of the
foregoing or late filing or non-filing of any tax returns or reports due in
connection therewith (each of the foregoing being an “Imposition” and
collectively “Impositions”). Tenant, upon request from Landlord or Mortgagee,
shall submit to Landlord or Mortgagee the proper and sufficient receipts or
other evidence of payment and discharge of the same. The certificate, advice, or
bill of non-payment of any Imposition from the appropriate official designated
by Legal Requirement to make or issue the same or to receive payment of any
Imposition shall be prima facie evidence that such Imposition is due and unpaid
at the time of the making or issuance of such certificate, advice, or bill of
non-payment. If any Impositions are not paid when due under this Lease, Landlord
shall have the right, but shall not be obligated, to pay the same following
written notice to Tenant of such payment, provided Tenant does not contest the
same as herein provided. If Landlord shall make such payment, Landlord shall
thereupon be entitled to repayment by Tenant on demand as Other Rent hereunder.
[Tenant agrees that to the extent any Imposition, or other operating or capital
cost or expense hereunder, shall not be separately assessed against or
chargeable to the Premises, but rather is assessed or properly chargeable to all
of the Land and/or Improvements of which the Premises are part, or to the
Premises (or to a portion thereof) and another portion of the Land and
Improvements, then Tenant shall pay its allocable share of such Impositions
and/or other capital cost or expense, all as determined by Landlord and
Mortgagee, which determination (absent manifest error) shall be binding on
Tenant.]

Section 3.2 Tenant shall have the right to protest and contest any Impositions
imposed against the Premises or any part thereof. If Tenant so elects to
contest, Tenant shall, prior to the prosecution or defense of any such claim,
notify Landlord in writing of its decision to pursue such contest and, to the
extent procedurally required, or to prevent jeopardizing any license, permit or
certification, including, without limitation, any Gaming License, because of

 

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nonpayment thereof, Tenant shall pay the amount in question prior to initiating
the contest. Tenant’s right to contest is conditioned upon the following:
(i) such contest is done at Tenant’s sole cost and expense; (ii) nonpayment will
not subject the Premises nor any part thereof or interest therein to be in
imminent danger of being sold, forfeited, terminated, cancelled or lost;
(iii) such contest shall not subject Landlord or any Mortgagee to the risk of
any criminal or civil liability; (iv) Tenant shall provide such security as may
reasonably be required by Landlord or by Mortgagee under the terms of any
Mortgage or any Mortgage Loan Documents to ensure payment of such contested
Impositions, together with all interest and penalties thereon; (v) no Default or
Event of Default has occurred and remains uncured; (vi) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
applicable material other instrument to which Tenant is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all Legal Requirements; (vii) such contest is permitted under
the Mortgage or Mortgage Loan Documents in which case Tenant shall contest such
Imposition in accordance with the Mortgage or any other Mortgage Loan Documents;
(viii) Tenant shall promptly upon receipt of a final, non-appealable
determination thereof pay the amount of any such Imposition, together with all
costs, interest and penalties which may be payable in connection therewith; and
(ix) such proceeding shall suspend the collection of such contested Imposition
from the Premises. Landlord agrees to execute and deliver to Tenant any and all
documents reasonably required for such purpose and to cooperate with Tenant in
every reasonable respect in such contest, but without any cost or expense to
Landlord. If Landlord should actually receive proceeds of any such contest to
the extent Tenant had paid in advance the amount in question, Landlord shall
remit the same to Tenant. At the request of Landlord, or at Tenant’s own
initiative, Tenant may elect to take commercially reasonable steps to file and
enforce tax certiorari proceedings to reduce tax affecting the Premises, all at
Tenant’s own expense; provided, however, that if Tenant shall decline to take
such steps after a request by Landlord, Landlord may take such steps at
Landlord’s own expense.

Section 3.3 To the extent permitted by applicable law, Tenant shall have the
right to apply for the conversion of any Impositions to make the same payable in
annual installments on a straight-line basis (or more accelerated) over a period
of years (without significant incremental cost), and upon such conversion Tenant
shall pay and discharge said annual installments as they shall become due and
payable but in any event before delinquency. Tenant shall pay all such deferred
installments, and any additional amounts required in connection therewith, when
the same are due and payable, and in any event prior to the expiration or sooner
termination of the Term, notwithstanding that such installments shall not then
be due and payable; provided, however, that any Impositions (excluding any
Imposition converted by Tenant so as to be payable in annual installments as
aforesaid) relating to a fiscal period of the taxing authority, a part of which
is included in a period of time after the Expiration Date, shall (whether or not
such Impositions shall be assessed, levied, confirmed, imposed or become
payable, during the Term) be prorated between Landlord and Tenant as of the
Expiration Date, so that Landlord shall pay that portion of such Impositions
which relate to that part of such fiscal period included in the period of time
after the Expiration Date, and Tenant shall pay the remainder thereof.

Section 3.4 Tenant shall not be obligated to pay any franchise, excise,
corporate, estate, inheritance, succession or capital levy or tax of Landlord or
any income, profits or revenue tax upon the income of Landlord.

 

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Section 3.5 In the event that Landlord is required pursuant to the terms of any
Mortgage or any Mortgage Loan Documents to make monthly or other deposits for
Impositions to the Mortgagee, Tenant agrees that, within ten (10) days after the
first written demand made by Landlord, it shall: (i) deposit with Landlord or
Mortgagee, within ten (10) days after the first demand therefor and thereafter,
on the first day of each month, during the Term, an amount each month estimated
by Landlord or Mortgagee to be adequate to create a fund which, as each
succeeding installment of Impositions becomes due, will be sufficient, thirty
(30) days prior to such due date, to pay such installment in full. Landlord or
Mortgagee shall use reasonable efforts to cause the monthly deposits to be equal
in amount, but neither of them shall be liable in the event that such required
deposits are unequal. If at any time the amount of any Imposition is increased
or Landlord or Mortgagee believes that it will be, said monthly deposits shall
be increased within fifteen (15) Business Days after written demand by Landlord
or Mortgagee so that, thirty (30) days prior to the due date for each
installment of Impositions, there will be deposits on hand with Landlord or
Mortgagee sufficient to pay such installments in full. Landlord shall be
required to deposit or cause to be deposited any such amounts in an interest
bearing account or an account in which such amounts are invested in “Permitted
Investments”, as defined in the Mortgage Loan Documents, and any interest or
earnings thereon shall be for the benefit of Tenant. For the purpose of
determining whether Landlord or Mortgagee has on hand sufficient moneys to pay
any particular Imposition at least thirty (30) days prior to the due date
therefor, deposits for each category of Imposition shall be treated separately,
it being the intention that Landlord shall not be obligated to use moneys
deposited for the payment of an item not yet due and payable to the payment of
an item that is due and payable. Notwithstanding the foregoing, it is understood
and agreed that Landlord or Mortgagee, may, if an Event of Default hereunder or
under the Mortgage or any other Mortgage Loan Documents shall have occurred and
be continuing, use deposits made for any one item for the payment of the same or
any other item of Operating Lease Rent. If this Lease shall be terminated by
reason of any Event of Default, all deposits then held by Landlord shall be
applied by Landlord on account of any and all sums due under this Lease; if
there is a resulting deficiency, Tenant shall pay the same, and if there is a
surplus, Tenant shall be entitled to a refund of the surplus. Notwithstanding
the foregoing provisions of this Section 3.5, all provisions contained in the
Mortgage or the other Mortgage Loan Documents with regard to tax escrows and
reserves shall be deemed to be obligations of Tenant, and shall take precedence
over and be in lieu of any inconsistent provision in this Section 3.5.

Section 3.6 If Landlord ceases to have any interest in the Premises, Landlord
shall transfer to the Person who owns or acquires such interest in the Premises
from Landlord and is the transferee of this Lease, the deposits made pursuant to
Section 3.5 hereof relating to the Premises covered by this Lease, subject,
however, to the provisions thereof. Upon such transfer of the Premises and the
deposits, the transferor shall be deemed to be released from all liability with
respect thereto and Tenant agrees to look to the transferee solely with respect
thereto, and the provisions hereof shall apply to each successive transfer of
the said deposits.

Section 3.7 The provisions of this Article III shall survive the expiration or
earlier termination of this Lease.

 

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ARTICLE IV

USE AND OPERATION OF PREMISES; DELEGATION TO MANAGER;

MANAGEMENT AGREEMENT; TRANSITION SERVICES; MANAGEMENT

Section 4.1 The Premises may be used and occupied only for the purposes set
forth in Article A, Section 4. Tenant shall not create or suffer to exist any
material public or private nuisance, hazardous or illegal condition or waste on
or with respect to the Premises. For purposes of this Article IV, “waste” as
used herein, includes, but is not limited to, loss of any material Gaming
License unless same is no longer required or is adequately replaced. This
Article IV shall survive the expiration or earlier termination of this Lease.

Section 4.2 Notwithstanding anything in this Lease to the contrary, Tenant shall
have the right to, and may at its election, delegate some or all of its rights
in connection with the management and operation of the Premises under this Lease
to Manager or an Alternate Manager; provided, that (i) no such delegation shall
relieve Tenant of any responsibility or obligation to Landlord hereunder and
(ii) Tenant shall cause Manager or any Alternate Manager to operate and maintain
the Premises in accordance with the requirements and restrictions to which
Tenant is subject hereunder (including Sections 20.1 and 20.10) and at the
standards and otherwise in the manner set forth in the Management Agreement.

Section 4.3 In no event shall Landlord or Tenant amend, modify, supplement or
waive (or consent to, acquiesce in or permit any such amendment, modification,
supplement or waiver of) any right under or other provision of the Management
Agreement without the prior written approval of Mortgagee and each Mezzanine
Lender. In no event shall Landlord or Tenant consent to or acquiesce in an
assignment by Manager of its rights, obligations or duties under the Management
Agreement without the prior written approval of Mortgagee and each Mezzanine
Lender (unless such assignment by Manager is permitted in the Management
Agreement without the prior written approval of Mortgagee or the Mezzanine
Lenders). Neither Landlord nor Tenant shall permit, consent to or acquiesce in
any cancellation, termination or surrender of the Management Agreement without
the prior written approval of Mortgagee and each Mezzanine Lender.

Section 4.4 Notwithstanding anything in this Lease to the contrary, if Manager
shall fail to perform its obligations under the Management Agreement (or if the
Management Agreement is terminated for any reason prior to the termination of
this Lease), Tenant agrees that it shall perform all of the duties and
obligations of Manager under and pursuant to the terms of the Management
Agreement (including performing Diligence Activities and providing Transition
Services) as though the Management Agreement were still in effect, provided,
however, that, in such case, Tenant (rather than Manager) shall be entitled to
the payment (whether by Landlord (or its successors and assigns) or from monies
in the Collection Account) of the fees and expenses that would have been paid to
Manager in the amounts and in accordance with the terms of the Management
Agreement. For the avoidance of doubt, Tenant hereby confirms that (i) if
Manager shall fail for any reason to perform the Diligence Activities, following
the occurrence of any Mortgage Loan Default (as defined in the Management
Agreement), Tenant will undertake to perform (and thereafter perform) the
Diligence Activities and (ii) if Manager shall fail for any reason to provide
the Transition Services, following the Transition Period

 

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Commencement Date (as such term is defined in the Management Agreement), then
Tenant shall provide such services for the Transition Period. For the avoidance
of doubt, during the pendency of the Transition Period and/or during any period
in which this Lease is in effect but the Management Agreement is terminated for
any reason, (i) the Operating Fees, Reimbursable Expenses and other amounts
payable to Manager under the Management Agreement (provided that during the
Transition Period the duties and obligations of Manager, including the
Transition Services, are being performed by Tenant, rather than Manager,
hereunder) shall continue to be paid (as though the Management Agreement were
still in effect) but to Tenant, rather than Manager, (ii) the charges for shared
services payable to HOC shall continue to be paid pursuant to the Shared
Services Agreement, and (iii) this Lease shall not terminate during the
Transition Period.

Section 4.5 Tenant confirms and agrees that, notwithstanding its entering into
the Management Agreement, it will continue to own and/or lease all Gaming
Equipment and other assets required to operate the Premises (and will not
transfer or assign any Gaming Equipment or such other assets to Manager).

ARTICLE V

CONDITION OF PREMISES, ALTERATIONS AND REPAIRS

Section 5.1 The parties acknowledge that Tenant has examined the Premises, is
familiar with the physical condition, expenses, operation and maintenance,
zoning, Legal Requirements, status of title and use that may be made of the
Premises and every other matter or thing affecting or related to the Premises,
and is leasing the same in its “As Is” condition. Landlord has not made and does
not make any representations or warranties whatsoever with respect to the
Premises or otherwise with respect to this Lease, express or implied, including
any warranty regarding the suitability of the Premises for their intended
commercial purposes or that the same is in compliance, as of the date hereof or
at any subsequent time, with Legal Requirements. Tenant assumes all risks
resulting from any defects (patent or latent) in the Premises or from any
failure of the same to comply with any Legal Requirement or the uses or purposes
for which the same may be occupied.

Section 5.2 At Tenant’s sole cost and expense, whether or not Tenant is in
occupancy of all of the Buildings, Tenant shall maintain and keep all of the
Buildings on the Premises (including, without limitation, the FF&E and
Equipment), and the Gaming Equipment, and the adjoining sidewalks, curbs and
common areas, if any, clean and in substantially the same level of condition and
repair as on the Closing Date in all material respects, except for ordinary wear
and tear. Tenant shall, at its sole cost and expense, maintain, repair and
replace all of the FF&E, and all Gaming Equipment, necessary or appropriate for
the use, operation, maintenance and repair of the Premises in the manner
required hereunder. Tenant shall cause any replacements of, and additions or
improvements to, FF&E immediately to be acquired in the name, and as the
property, of Landlord (as owner and not as a secured party), subject only to
Tenant’s rights hereunder as lessee thereof. All repairs made by Tenant shall be
made in compliance with all Legal Requirements. Landlord shall not be required
to furnish any services or facilities or to maintain or make any repairs or
alterations to the Premises, and Tenant hereby assumes the full and sole
responsibility for the condition, operation, repair, replacement,

 

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maintenance and management of the Premises and all costs and expenses incidental
thereto, including adequate security for each of the Buildings, whether or not
Tenant is then occupying each of the Buildings. Tenant shall, at its sole cost
and expense, repair, replace and maintain the roof in good condition.
Notwithstanding the foregoing standards of maintaining the Premises, if any
Legal Requirement or the Mortgage Loan Agreement mandates a higher standard,
then Tenant shall be obligated to cause the Premises to comply with such higher
standard.

Section 5.3 Landlord shall not be responsible for the cost of any alterations or
replacements of or maintenance or repairs to the Premises of any nature
whatsoever, structural or non-structural, ordinary or extraordinary, foreseen or
unforeseen, whether or not now in the contemplation of the parties. To the
extent not prohibited by applicable law, Tenant hereby waives and releases all
rights now or hereafter conferred by any Legal Requirements or otherwise which
would have the effect of limiting or modifying any of the provisions of this
Article V.

Section 5.4 Tenant shall have the right at any time and from time to time during
the Term to make, at its sole cost and expense, changes, alterations, additions
or improvements (collectively, “Alterations”) in or to the Premises, subject,
however, in the case of any Material Alteration, to the prior written consent of
Landlord and such oversight and insurance requirements as Landlord shall
reasonably require. In addition, Tenant shall comply with any requirements
specified in the Mortgage Loan Documents for the performance of Alterations and
Work (including provision of a completion guaranty or other collateral to the
extent required thereunder and the submission of plans to Mortgagee to the
extent required thereunder). Notwithstanding any provision hereof to the
contrary, without Landlord’s and Mortgagee’s consent, not to be unreasonably
withheld or delayed, in no event shall Tenant close or shutter, or undertake or
permit any Tenant or other Person to undertake an Alteration or any Work, that
alone or together with other Alterations or Work then being undertaken, that
closes or shutters, at any one time, more than ten percent (10%) of the
income-generating space of the Premises.

Section 5.5 Tenant agrees that all Alterations, repairs, Restoration and other
work which Tenant shall be required or permitted to do under the provisions of
this Lease (each hereinafter called the “Work”) shall be at Tenant’s sole cost
and expense and (i) performed in a good, workmanlike manner, and in accordance
with all Legal Requirements, as well as any plans and specifications therefor
which shall have been approved by Landlord (if such approval is required
hereunder), and (ii) commenced and completed reasonably promptly.

Section 5.6 Following the delivery of prior reasonable notice, any material Work
shall be subject to inspection at reasonable times during normal business hours
and without disruption to the business of Tenant, by Landlord, its architect and
Mortgagee (to the extent Mortgagee has such right under the Mortgage Loan
Documents), or their duly authorized representatives, and if Landlord’s
architect or Mortgagee upon any such inspection shall be of the reasonable
opinion that the Work is not being performed substantially in accordance with
the provisions of this Article V or the plans and specifications, or that any of
the materials or workmanship are not of good quality or are unsound or improper,
Tenant shall, upon notice of same from Landlord, correct any such failure and
shall immediately replace any unsound or improper materials or workmanship.

 

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Section 5.7 All Fixtures, structures and other improvements and all FF&E shall
immediately upon their installation or placement on or within the Premises,
become the property of Landlord, without the need for any further instrument
(but at Landlord’s or Mortgagee’s request, Tenant shall confirm the same from
time to time in a writing reasonably satisfactory to the requesting party), and
shall remain upon and be surrendered with the Premises (unless, in the case of
Gaming Equipment, the same was purchased by Tenant, in which event Tenant shall
remove such Gaming Equipment from the Premises promptly following such
surrender, unless an Event of Default has occurred and is continuing hereunder,
in which case the same shall be held by Landlord as collateral for Tenant’s
obligations hereunder). All other property permitted or required to be removed
by Tenant at the end of the Term remaining in the Premises after Tenant’s
removal shall be deemed abandoned and may, at the election of Landlord, either
be retained as Landlord’s property or may be removed from the Premises by
Landlord at Tenant’s expense. Tenant shall be responsible for, and shall
reimburse Landlord within ten (10) days after written demand therefor, any
damage to the Premises caused in whole or in part by the removal or demolition
of any property which Tenant is required to remove pursuant to this Section 5.7
or which Tenant elects under the provisions of this Lease to remove. The
provisions of this Section 5.7 shall survive the expiration or earlier
termination of the Term.

Section 5.8 Notwithstanding any other provision of this Lease, Tenant shall be
exclusively responsible at its own expense for determination and assurance that
the condition of the Premises and all repairs, Alterations and Work are in
compliance with all Legal Requirements or have been waived by the appropriate
Governmental Authorities and for obtaining any approvals or consents of
Governmental Authorities required in connection with any Alterations or Work.

Section 5.9 Notwithstanding the foregoing provisions of Sections 5.4, 5.5 and
5.6, all provisions contained in the Mortgage or any other Mortgage Loan
Document relating to the obligations of Landlord with regard to Alterations,
Work, the Threshold Amount shall be deemed to be obligations of Tenant hereunder
and shall take precedence over and be in lieu of any inconsistent provisions in
Sections 5.4, 5.5 and 5.6.

ARTICLE VI

INSURANCE

Section 6.1 Throughout the Term, Tenant shall, at its own cost and expense,
provide and keep in force for the benefit of Landlord, Tenant and any Mortgagee,
such insurance as shall be reasonably acceptable to Landlord, it being agreed
that such insurance shall in any event comply with the requirements specified in
the Mortgage Loan Documents and that all provisions contained in the Mortgage
Loan Documents relating to the obligations of Landlord with regard to insurance
shall be deemed to be obligations of Tenant hereunder, including with respect to
the provision of insurance certificates evidencing any or all of the required
insurance coverage.

Section 6.2 If at any time Mortgagee is not in receipt of written evidence that
all insurance policies required under the Mortgage Loan Documents are in full
force and effect, Landlord and Mortgagee shall have the right, without notice to
Tenant, to take such action as

 

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Landlord and Mortgagee deems necessary to protect its interest in the Premises,
including, without limitation, the obtaining of insurance coverage consistent
with the coverage required hereunder. All premiums incurred by Landlord and/or
Mortgagee in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Tenant to Landlord and/or Mortgagee (as
applicable) upon demand and, until paid, shall bear interest at the Default
Rate.

ARTICLE VII

DAMAGE OR DESTRUCTION

Section 7.1 If the Premises or any Building or any part thereof shall be damaged
or destroyed by fire or other casualty (including any casualty for which
insurance was not obtained or obtainable) of any kind or nature, ordinary or
extra-ordinary, foreseen or unforeseen, so long as no Event of Default has
occurred and is continuing (a) Landlord shall pay over to Tenant, upon the terms
set forth in Section 7.2, any moneys which may be recovered by Landlord from
property insurance, (b) this Lease shall be unaffected thereby and shall
continue in full force and effect, and (c) Tenant shall, utilizing such
insurance proceeds and such additional funds as may be required, at Tenant’s
sole cost and expense, expeditiously and in a good and workmanlike manner, cause
such damage or destruction to be remedied or repaired (the “Restoration”) by
restoring the Premises to substantially the same condition and configuration
immediately prior to such damage or destruction. All Restoration work shall be
performed in accordance with the provisions of this Lease, including, without
limitation, the provisions of Section 5.4 and 5.5 hereof. Tenant hereby waives
the provisions of any Legal Requirement to the contrary and agrees that the
provisions of this Article VII shall govern and control in lieu thereof. If
Tenant shall fail or neglect to restore the Premises with reasonable diligence,
or having so commenced such Restoration, shall fail to complete the same with
reasonable diligence, or if prior to the completion of any such Restoration by
Tenant, this Lease shall expire or be terminated for any reason, Landlord shall
have the right, but not the obligation, to complete such Restoration at Tenant’s
cost and expense and the cost thereof shall be payable within five (5) days
after written demand as Other Rent, together with interest thereon from the date
of demand until paid at the Default Rate. In addition, if Landlord so completes
the Restoration as provided hereunder, Landlord shall be entitled to a
reasonable supervisory fee from Tenant to compensate Landlord for administering
the Restoration.

Section 7.2 Subject to the provisions of this Article VII, unless Landlord, the
insurance carrier, or any Mortgagee elects in their discretion to perform the
Restoration (being under no obligation to do so) and so long as no Event of
Default has occurred and is continuing, Landlord shall pay over to Tenant from
time to time, upon the following terms, any moneys which may be received by
Landlord pursuant to the Mortgage Loan Documents from property insurance
provided by Tenant but, in no event, to any extent or in any sum exceeding the
amount actually collected by Landlord upon the loss; provided, however, that
Landlord, before paying such moneys over to Tenant, shall be entitled to
reimburse or pay itself or Mortgagee therefrom to the extent, if any, of (a) the
expenses paid or incurred by Landlord or Mortgagee in the collection of such
moneys, and (b) any other amounts then outstanding and owing to Landlord under
this Lease. Landlord shall pay to Tenant, as herein provided, the aforesaid
insurance proceeds which may be received by Landlord for the purpose of
Restoration to be used by

 

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Tenant to restore the Premises to a value which shall be not less than a value
substantially similar to the value of the Premises prior to such fire or other
casualty. Prior to making any Restoration, Tenant shall furnish Landlord with an
estimate of the cost of such Restoration, prepared by a licensed third party
architect or contractor selected by Tenant and reasonably approved by Landlord.
Such insurance moneys shall be paid (i) to Tenant in a lump sum if the cost of
such Restoration is less than the Threshold Amount and (ii) if the cost of such
Restoration is equal to or greater than the Threshold Amount, in accordance with
Section 7.2 and 7.3 to Tenant (or, at Landlord’s option, directly to the party
to whom such payment is due) from time to time thereafter in installments as the
Restoration progresses, within five (5) Business Days after submission by Tenant
to Landlord showing the cost of labor and material incorporated in the
Restoration, or incorporated therein since the last previous submission
(assuming such proceeds are available from the insurer). If any vendor’s,
mechanic’s, laborer’s, or materialman’s Lien is filed against the Premises or
any part thereof, or if any public improvement Lien is created or permitted to
be created by Tenant and is filed against Landlord, or any assets of, or funds
appropriated to, Landlord, Tenant shall not be entitled to receive any further
installment until such Lien is satisfied or otherwise discharged, unless such
Lien is contested by Tenant in good faith and, if required by applicable law,
Tenant has obtained and delivered a bond issued by a surety, in an amount and in
form otherwise satisfactory to Landlord in its reasonable discretion. The amount
of any installment to be paid to Tenant shall be such proportion of the total
insurance moneys received by Landlord pursuant to the Mortgage Loan Documents as
the cost of labor and materials theretofore incorporated by Tenant in the
Restoration bears to the total estimated cost of the Restoration by Tenant, less
(1) all payments theretofore made to Tenant out of said insurance proceeds, and
(2) ten percent (10%) of the amount so determined, until fifty percent (50%) of
the Restoration has been completed (and five percent (5%) thereafter) (the
“Retainage”). Notwithstanding the foregoing, Landlord shall not withhold the
Retainage from any installment provided (I) such installment constitutes the
final payment due a contractor or materialman, or (II) the contractor is bonded
and Tenant furnishes to Landlord payment and performance bonds and labor and
material bonds of Tenant’s contractor complying with the Legal Requirements and
otherwise satisfactory to Landlord in its reasonable discretion, naming Landlord
as co-obligee, in which event Landlord shall withhold from such installment the
same percentage withheld by Tenant pursuant to the construction contract. Upon
completion of and payment for the Restoration by Tenant, including reimbursement
to Tenant of the Retainage or other amount, as applicable, the balance of any
and all insurance proceeds held by Landlord shall be paid to Tenant. In the
event that the insurance proceeds are insufficient for the purpose of paying for
the Restoration, Tenant shall nevertheless be required to make the Restoration
and pay any additional sums required for the Restoration in accordance with the
provisions of Section 7.4 hereof. Notwithstanding the foregoing, if Landlord
makes the Restoration at Tenant’s expense, as provided in Section 7.1 hereof,
then Landlord shall use any amounts held by Landlord to pay for the cost of such
Restoration.

Section 7.3 The following shall be conditions precedent to each payment made to
Tenant (or to any other party) as provided in Section 7.2 above:

(a) there shall be submitted to Landlord the certificate of the aforesaid
architect or contractor stating (i) that the sum then requested to be withdrawn
either has been paid by Tenant and/or is justly due to contractors,
subcontractors, materialmen, engineers, architects or other Persons (whose names
and addresses shall be stated) who have rendered or

 

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furnished certain services or materials for the work and giving a brief
description of such services and materials and the principal subdivisions or
categories thereof and the several amounts so paid or due to each of such
Persons in respect thereof, and stating in reasonable detail the progress of the
work up to the date of said certificate, (ii) that no part of such expenditures
has been or is being made the basis, in any previous or then pending request,
for the withdrawal of insurance money or has been made out of the proceeds of
insurance received by Tenant, (iii) that the sum then requested does not exceed
the value of the services and materials described in the certificate, and
(iv) that the balance of any insurance proceeds held by Landlord, together with
such other sums, if any, which Tenant has made or will (for which evidence of
Tenant’s intention and ability shall be to Landlord’s satisfaction in its sole
and absolute discretion) make available for the Restoration in accordance with
Section 7.4 hereof and to Landlord’s satisfaction (in its sole and absolute
discretion) will be sufficient upon completion of the Restoration to pay for the
same in full, and stating in reasonable detail an estimate of the cost of such
completion;

(b) there shall be furnished to Landlord an official search, or a certificate of
a title insurance company satisfactory to Landlord in its sole and absolute
discretion, or other evidence satisfactory to Landlord in its sole and absolute
discretion, showing that there has not been filed any vendor’s, mechanic’s,
laborer’s or materialman’s statutory or other similar Lien affecting the
Premises or any part thereof, or any public improvement Lien created or
permitted to be created by Tenant affecting Landlord, or the assets of, or funds
appropriated to, Landlord, which has not been discharged of record, except such
as will be discharged upon payment of the amount then requested to be withdrawn,
or unless any such Lien is contested by Tenant in good faith and Tenant has
obtained and delivered a bond issued by a surety, in an amount and in form
otherwise satisfactory to Landlord in its sole and absolute discretion; and

(c) at the time of making such payment, no Default shall have occurred and be
continuing.

Section 7.4 If the estimated cost of any Restoration determined as provided in
Section 7.2 hereof exceeds the net insurance proceeds, then, prior to the
commencement of any Restoration, Tenant hereby covenants to deposit with
Landlord, a bond, cash, completion guaranty or other security satisfactory to
Landlord (in its sole and absolute discretion) in the amount of such excess, to
be held and applied by Landlord in accordance with the provisions of Section 7.2
hereof, as security for the completion of the work, free of public improvement,
vendors’, mechanics’, laborers’ or materialmen’s statutory or other similar
Liens.

Section 7.5 As material consideration to Landlord for its agreement to enter
into this Lease, the parties agree that this Lease shall not terminate or be
forfeited or be affected in any manner, and there shall be no reduction or
abatement of the Operating Lease Rent payable hereunder, by reason of damage to
or total, substantial or partial destruction of the Premises or any part thereof
or by reason of the untenantability of the same or any part thereof, for or due
to any damage or destruction of the Premises from any cause whatsoever, and,
notwithstanding any Legal Requirements, present or future, Tenant waives any and
all rights to quit or surrender the Premises or any part thereof on account of
any damage or destruction of the Premises. Tenant expressly agrees that its
obligations hereunder, including the payment of Operating Lease Rent payable by
Tenant hereunder, shall continue as though the Premises had not been damaged or
destroyed and without abatement, suspension, diminution or reduction of any
kind.

 

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Section 7.6 Notwithstanding the foregoing provisions of this Article VII, all
provisions contained in the Mortgage or any other Mortgage Loan Document with
regard to Restoration of the Premises or the related obligations of Landlord
shall take precedence over and be in lieu of any inconsistent provisions in this
Article VII and, with respect to such obligations, shall be deemed to be
obligations of Tenant hereunder.

ARTICLE VIII

CONDEMNATION

Section 8.1 Tenant, immediately upon obtaining knowledge of the institution of
any proceeding for a Taking, shall notify Landlord and Mortgagee thereof and
Landlord and Mortgagee shall be entitled to participate in any Taking
proceeding. Subject to the provisions of this Article VIII, Tenant hereby
irrevocably assigns to Mortgagee or to Landlord, in that order, any award or
payment to which Tenant is or may be entitled by reason of any Taking, whether
the same shall be paid or payable for Tenant’s leasehold interest hereunder or
otherwise.

Section 8.2 If the whole of the Premises shall be permanently subject to a
Taking, then on the earlier of the date of the vesting of title to the Premises
or the date of taking of possession of the Premises (the “Ending Date”), this
Lease shall terminate, all Operating Lease Rent required to be paid by Tenant
under this Lease shall be pro-rated up to such date, and any and all awards in
connection with such condemnation shall be applied (i) first to pay the
outstanding amount owed to Mortgagee under the Mortgage Loan Documents and the
holder of the Mezzanine Loan under the Mezzanine Loan Documents, (i) second, to
Tenant, up to the amount of any and all awards on account of Gaming Equipment,
moving expenses and any award or payment on account of the Lease being deemed by
the applicable condemning authority to be a below market lease to the economic
benefit of Tenant, and (iii) third, any remaining amounts to Landlord. Upon such
termination, this Lease shall be of no further force and effect, except that any
obligation or liability of either party, actual or contingent, under this Lease
which has accrued on or prior to the Ending Date shall survive and any
prepayment of Operating Lease Rent shall be prorated between the parties.

Section 8.3 In the event of a permanent partial Taking of one or more of the
Building(s), in which the portion of the Premises taken is such that Tenant may
continue to operate at the Premises, this Lease shall be unaffected by such
Taking, and Tenant shall, continue to pay the Base Rent, Supplementary Rent and
Other Rent pursuant to Article II, and the following shall apply:

(a) Landlord shall be entitled to receive the entire award in any proceeding
with respect to such Taking without deduction therefrom for any estate vested in
Tenant by this Lease and Tenant shall receive no part of such award;

(b) Notwithstanding the foregoing, in the event this Section 8.3 is applicable,
Landlord shall pay over to Tenant from time to time any moneys which may be
received by Landlord pursuant to the Mortgage Loan Documents on account of the
exercise of the power of eminent domain with respect to the Premises, which
(x) are necessary for Tenant to repair and restore such Building(s) such that
the remaining portion of the Building(s) may continue to be

 

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operated and (y) represent an award for the loss of Gaming Equipment, moving
expenses and interruption of or damage to Tenant’s business; provided, however,
that Landlord, before paying such moneys over to Tenant, shall be entitled to
reimburse or pay itself therefrom to the extent, if any, of (i) the reasonable
expenses paid or incurred by Landlord in the collection of such moneys, and
(ii) any other amounts then outstanding and owing to Landlord under this Lease.
Such moneys shall be paid over to Tenant on the terms and subject to the
conditions set forth in Article VII, as if, for this purpose, such moneys were
insurance proceeds resulting from casualty to the Premises. Tenant agrees to
undertake such Restoration on such terms and subject to such conditions to the
extent of the availability of such proceeds and such additional funds as are
necessary to complete the Restoration at Tenant’s own cost and expense.

Section 8.4 If only unimproved land shall be the subject of a Taking and
Sections 8.2 and 8.3 do not apply, this Lease shall be unaffected by such
Taking, and Tenant shall continue to pay the Base Rent, Supplementary Rent and
Other Rent pursuant to Article II, and Landlord shall be entitled to receive the
entire award in any proceeding with respect to such Taking without deduction
therefrom for any estate vested in Tenant by this Lease and Tenant shall receive
no part of such award.

Section 8.5 If the use or occupancy of all or any part of the Premises shall be
the subject of a temporary Taking during the Term of this Lease, Tenant shall be
entitled, except as hereinafter set forth, to receive that portion of the award
for such temporary Taking which represents compensation for the use and
occupancy of the Premises and, if so awarded, for the temporary Taking of Gaming
Equipment and for moving expenses, and that portion which represents
reimbursement for the cost of Restoration of the Premises. This Lease shall be
and remain unaffected by such temporary Taking and Tenant shall be responsible
for all obligations hereunder not affected by such temporary Taking and shall
continue to pay in full when due the Base Rent, Supplementary Rent and Other
Rent pursuant to the provisions of this Lease. If the period of temporary use or
occupancy shall extend beyond the Expiration Date, that part of the award which
represents compensation for the use or occupancy of the Premises (or a part
thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive so much thereof as represents the period to and including the Expiration
Date and Landlord shall receive so much as represents the period subsequent to
the Expiration Date and Landlord shall be entitled to receive that portion which
represents reimbursement for the cost of Restoration of the Premises. All moneys
received by Tenant as, or as part of, an award for temporary use and occupancy
for a period beyond the date to which the sums to be paid by Tenant hereunder
have been paid by Tenant shall be received, held and applied by Tenant as a
trust fund for payment of all sums payable by Tenant hereunder.

Section 8.6 Each party agrees to execute and deliver to each other and to
applicable Governmental Authorities all documents and instruments that may be
required to effectuate the provisions of this Article VIII.

Section 8.7 Notwithstanding the foregoing provisions of this Article VIII, all
provisions contained in the Mortgage or any other Mortgage Loan Document with
regard to a taking of the Premises or the related obligations of Landlord shall
take precedence over and be in lieu of any inconsistent provisions in this
Article VIII and, with respect to such obligations, shall be deemed to be
obligations of Tenant hereunder.

 

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ARTICLE IX

ASSIGNMENT AND SUBLETTING

Section 9.1 Tenant shall not directly or indirectly (i) sell, assign, mortgage,
convey, alienate, sublease or otherwise transfer, directly or indirectly, by
operation of law or otherwise, this Lease, all or any portion of Tenant’s estate
or interest in this Lease or the Premises, except as permitted in the Mortgage
Loan Documents, (ii) permit any assignment of this Lease or any estate or
interest therein by operation of law, (iii) grant any Sublease, (iv) permit the
use of the Premises or any part thereof by any parties other than Tenant and its
guests, (v) mortgage, encumber, pledge, grant a security interest in,
collaterally assign or conditionally transfer this Lease or any Leased Personal
Property incorporated in or used in connection with the Premises or any part
thereof or any Subleases or any of the rents, issues and profits from a Sublease
operator or any other commercial sublessee or Tenant’s estate or interest in the
Premises or (vi) sell, convey or transfer, directly or indirectly, by operation
of law or otherwise, any capital stock, membership interests, partnership
interests, trust units, or any other direct or indirect equity interest in
Tenant, in each case if same would result in Tenant no longer being directly or
indirectly at least 50% owned and controlled by Qualified Transferees (each of
the foregoing, a “Transfer”), without Landlord’s and Mortgagee’s prior written
consent, except to the extent such Transfer is permitted under the Mortgage Loan
Documents, which consent may be granted or withheld in Landlord’s and
Mortgagee’s sole and absolute discretion. For the avoidance of doubt, the
foregoing shall not prohibit or restrict Tenant’s right to delegate some or all
of its rights in connection with the management or operation of the Premises
pursuant to Section 4.2. Landlord and Tenant agree that any transactions whereby
Tenant continues to be at least 50% owned and controlled by Holdings (provided
there shall have been no Change in Control in Holdings) and/or other Qualified
Transferees shall be permitted, provided that immediately prior to such
Transfer, no Event of Default shall have occurred and be continuing and no Event
of Default and subsequent to such Transfer, the beneficial ownership of Landlord
and Tenant will be substantially identical. For purposes of this Article IX, the
terms “control”, “controls” or “controlled by” shall mean possession, direct or
indirect, of the power to direct or to cause the direction of, the management
and policies of any Person or entity, whether through the ownership of voting
securities, or partnership, membership or other equity interests, by contract or
otherwise. Any attempted Transfer in violation of the terms and covenants of
this Section 9.1 shall be void. Further, a Change in Control shall be deemed a
Transfer hereunder and, unless clauses (ii) through (v) of Section 5.2.10(b) of
the Mortgage Loan Agreement shall be satisfied, the same shall be prohibited and
an Event of Default hereunder (and for the sake of clarity, nothing contained
elsewhere in this Article IX or this Lease shall be deemed to limit or qualify
the above terms of this sentence).

If Landlord consents in writing to a Transfer, (1) Tenant shall nevertheless at
all times remain fully responsible and liable for payment of the Operating Lease
Rent and for compliance with all of Tenant’s other duties, obligations and
covenants under this Lease, (2) Tenant shall give prior written notice of such
Transfer to Landlord and each Mortgagee, (3) any transferee of Tenant’s interest
under this Lease shall be required to execute and deliver an assumption of all
obligations of Tenant hereunder that are applicable to such Transfer, pursuant
to an instrument satisfactory to Landlord, and (4) any such Transfer shall be
conditioned upon obtaining and securing (A) all necessary Gaming Licenses and
other approvals and consents of Governmental Authorities and (B) if required
under the Mortgage Loan Documents, the consent of any Mortgagee, which consent
may be withheld in Mortgagee’s sole discretion.

 

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Section 9.2 With respect to any Transfer requiring Landlord’s and any
Mortgagee’s consent to a Transfer, Landlord and such Mortgagee shall be given
not less than twenty (20) days’ advance written notice of the proposed Transfer,
which notice shall be delivered to Landlord and such Mortgagee together with
(i) a true and complete copy of the proposed instrument(s) of the Transfer, and
(ii) such other information and documents as Landlord or such Mortgagee may
request in its respective sole and absolute discretion. Tenant shall pay, on
demand, Landlord’s and such Mortgagee’s reasonable costs and expenses in
connection with their consideration of whether to grant any such consent to a
Transfer (but no fee in excess of $750 shall be charged in connection therewith
except as set forth in the Mortgage Loan Agreement). No Transfer may be
consummated during the continuance of an Event of Default.

Section 9.3 Any consent by Landlord and Mortgagee under this Article IX shall
apply only to the specific transaction thereby authorized and shall not relieve
Tenant from the requirement of obtaining the prior written consent of Landlord
and Mortgagee to any further Transfer of this Lease. No Transfer of all or any
portion of this Lease shall release or relieve the original named Tenant from
any obligations of Tenant hereunder unless otherwise agreed by Landlord and
Mortgagee.

Section 9.4 If Landlord consents in writing to a Transfer involving a sublease,
license, concession or other right of occupancy of all or any portion of the
Premises (a “Sublease”), Tenant shall cause each subtenant, licensee,
concessionaire and holder of such right of occupancy (each a “Subtenant” and
collectively, the “Subtenants”) to comply with its obligations under its
Sublease, and Tenant shall diligently enforce all of its rights thereunder in
accordance with the terms of such Sublease and this Lease.

Section 9.5 The fact that a violation or breach of any of the terms, provisions
or conditions of this Lease results from or is caused by an act or omission by
any of the Subtenants shall not relieve Tenant of Tenant’s obligation to cure
the same. Tenant shall take all necessary steps to prevent any such violation or
breach.

Section 9.6 If this Lease is assigned, or if the Premises or any part thereof is
subleased, licensed or occupied by anybody other than Tenant, Landlord may,
after an Event of Default by Tenant, and in addition to any other remedies
herein provided or provided by applicable law, collect all rent becoming due to
Tenant directly from the Subtenants, and apply the net amount collected to the
Operating Lease Rent herein reserved and all other sums due to Landlord by
Tenant hereunder, but no such assignment, sublease, license, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
Subtenant as tenant, or a release of Tenant from the further performance by
Tenant of the terms, covenants, and conditions on the part of Tenant to be
observed or performed hereunder. Tenant hereby authorizes and directs any such
Subtenant to make such payments of rent directly to Landlord, or into any
collection account and/or cash management system required by any Mortgagee upon
receipt of notice from Landlord or the Mortgagee, and each Sublease will contain
this provision.

 

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No direct collection by Landlord from any such Subtenant shall be construed to
constitute a novation or a release of Tenant from the further performance of its
obligations hereunder. After any assignment, subletting, license or occupancy or
other Transfer, Tenant’s liability hereunder shall continue; provided that
Tenant shall not be responsible for any liability arising as the result of any
subsequent modification or amendment of this Lease by Landlord and any assignee
of Tenant.

Section 9.7 To secure the prompt and full payment by Tenant of the Operating
Lease Rent and the faithful performance by Tenant of all the other terms and
conditions herein contained on its part to be kept and performed, Tenant hereby
assigns, transfers and sets over unto Landlord and its successors and assigns,
subject to the conditions hereinafter set forth, all of Tenant’s right, title
and interest in and to all permitted subleases, assignments, licenses and
occupancy agreements (each a “Sublease” and collectively, the “Subleases”) and
hereby confers upon Landlord and its successors and assigns, and their
respective agents and representatives, a right of entry (subject to prior
notice) in, and sufficient possession of, the Premises to permit and insure the
collection by Landlord of the rentals and other sums payable under the
Subleases, and further agrees that the exercise of said right of entry and
qualified possession by Landlord shall not constitute an eviction of Tenant from
the Premises or any portion thereof and that should said right of entry and
possession be denied Landlord, its agent or representative, Landlord, in the
exercise of said right, may use all requisite force to gain and enjoy the same
without responsibility or liability to Tenant, its servants, employees, guests
or invitees, or any Person whomsoever; provided, however, that such assignment
shall become operative and effective only if (a) an Event of Default shall occur
and be continuing or (b) this Lease and the Term shall be cancelled or
terminated pursuant to the terms, covenants and conditions hereof or (c) there
occurs repossession under a dispossess warrant or other re-entry or repossession
by Landlord under the provisions hereof or (d) a receiver for the Premises is
appointed, and then only as to such of the Subleases that Landlord may elect to
take over and assume. At any time and from time to time within ten (10) days
after Landlord’s written demand, Tenant promptly shall deliver to Landlord a
schedule of all Subleases, setting forth the names of all Subtenants, with a
photostatic copy of each of the Subleases, certifying that the same constitute
all of the Subleases and that the copies are true and complete. Upon reasonable
request of Landlord, Tenant shall permit Landlord and its agents and
representatives to inspect all Subleases affecting the Premises. Tenant
covenants that each Sublease shall provide that the Subtenant thereunder shall
be required from time to time, upon request of Landlord or Tenant, to execute,
acknowledge and deliver, to and for the benefit of Landlord, an estoppel
certificate confirming with respect to such Sublease the information set forth
in Section 14.1 hereof.

Section 9.8 Tenant covenants and agrees that all Subleases hereafter entered
into affecting the Premises shall provide that (a) they are subject and
subordinate to this Lease in all respects (or such Sublease shall be subject and
subordinate to this Lease by operation of law), (b) the term thereof shall not
end less than one (1) day prior to the Expiration Date hereof, unless Landlord
shall consent otherwise, which consent may be withheld in Landlord’s sole and
absolute discretion, (c) the Subtenants will not pay rent or other sums under
the Subleases with Tenant for more than one (1) month in advance, (d) the
Subtenants shall give to Landlord at the address and otherwise in the manner
specified in Section 21.8 hereof, a copy of any notice of default by Tenant as
the landlord under the Subleases at the same time as, and whenever, any such
notice of default shall be given by the Subtenants to Tenant, (e) in the event
of the

 

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termination or expiration of this Lease prior to the Expiration Date hereof, any
such Subtenant, at Landlord’s election, shall be obligated to attorn to and
recognize Landlord as the lessor under such Sublease, in which event such
Sublease shall continue in full force and effect as a direct lease between
Landlord and the Subtenant upon all the terms and conditions of such Sublease,
except as hereinafter provided. Any attornment required by Landlord of such
Subtenant shall be effective and self-operative as of the date of any such
termination or expiration of this Lease without the execution of any further
instrument; provided, however, that such Subtenant shall agree, upon the request
of Landlord, to execute and deliver any such instruments in recordable form and
otherwise in form and substance satisfactory to Landlord in its sole and
absolute discretion to evidence such attornment. With respect to any attornment
required by Landlord of any Subtenant hereunder, (i) at the option of Landlord,
Landlord shall recognize all rights and obligations of Tenant as the lessor
under such Sublease and the Subtenant thereunder shall be obligated to Landlord
to perform all of the obligations of the Subtenant under such Sublease and
(ii) Landlord shall have no liability, prior to its becoming lessor under such
Sublease, to such Subtenant nor shall the performance by such Subtenant of its
obligations under the Sublease, whether prior to or after any such attornment,
be subject to any defense, counterclaim or setoff by reason of any default by
Tenant in the performance of any obligation to be performed by Tenant as lessor
under such Sublease, nor shall Landlord be bound by any prepayment of more than
one (1) month’s rent or any security deposit unless such prepayment shall have
been expressly approved in writing by Landlord and Mortgagee or such deposit was
received by Landlord. Landlord shall not unreasonably refuse a request by Tenant
to enter into a subordination, non-disturbance and attornment agreement with any
Subtenant. The provisions of this Section 9.8 shall survive the expiration or
earlier termination of the Term.

Section 9.9 If Tenant assumes this Lease and proposes to assign the same
pursuant to the Bankruptcy Code to any Person who shall have made a bona fide
offer to accept an assignment of this Lease on terms acceptable to Tenant, then
notice of such proposed assignment shall be given to Landlord by Tenant no later
than fifteen (15) days after receipt of such offer by Tenant, but in any event
no later than ten (10) days prior to the date that Tenant shall file any
application or motion with a court of competent jurisdiction for authority and
approval to enter into such assumption and assignment. Such notice shall set
forth (a) the name and address of the assignee, (b) all of the terms and
conditions of such offer, and (c) the proposal for providing adequate assurance
of future performance by such Person under the Lease, including, without
limitation, the assurance referred to in Section 365 of the Bankruptcy Code. Any
Person to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed without further act or deed to have assumed all
of the obligations arising under this Lease from and after the date of such
assignment. Any such assignee shall execute and deliver to Landlord upon demand
an instrument confirming such assumption.

Section 9.10 The term “adequate assurance of future performance” as used in this
Lease shall mean (in addition to the assurances called for in Bankruptcy Code
Section 365(1)) that any proposed assignee shall, if determined by the
Bankruptcy Court to be appropriate under the circumstances (a) deposit with
Landlord on the assumption of this Lease an amount equal to the greater of
(i) two (2) times the then monthly Base Rent, Supplementary Rent and Other Rent
or (ii) such other amount deemed by the Bankruptcy Court to be reasonably
necessary for the adequate protection of Landlord under the circumstances, as
security for the faithful performance and observance by such assignee of the
terms and obligations of this Lease,

 

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(b) furnish Landlord with financial statements of such assignee for the prior
three (3) fiscal years, as finally determined after an audit and certified as
correct by a certified public accountant, which financial statements shall show
a net worth at least equal to the amount of the deposit referenced in (a) above,
(c) grant to Landlord a security interest in such property of the proposed
assignee as Landlord shall deem necessary to secure such assignee’s future
performance under this Lease, and (d) provide such other information or take
such action as Landlord, in its reasonable judgment, shall determine is
necessary to provide adequate assurance of the performance by such assignee of
its obligations under the Lease.

Section 9.11 If, at any time after Tenant may have assigned Tenant’s interest in
this Lease in a proceeding of the type described in Section 12.1(i) or (j), this
Lease shall be disaffirmed or rejected in any proceeding of the type described
in Section 12.1(i) or (j) hereof, or in any similar proceeding, or in the event
of termination of this Lease by reason of any such proceeding or by reason of
lapse of time following notice of termination given pursuant to Article XII
based upon any of the events of default set forth in said Section 12.1(i) or
(j), Tenant, upon request of Landlord given within thirty (30) days next
following any such disaffirmance, rejection or termination (and actual notice
thereof to Landlord in the event of a disaffirmance or rejection or in the event
of termination other than by act of Landlord), shall (a) pay to Landlord all
Base Rent, Supplementary Rent and Other Rent due and owing by the assignee to
Landlord under this Lease to and including the date of such disaffirmance,
rejection or termination, and (b) as “tenant”, enter into a new lease with
Landlord for a term commencing on the effective date of such disaffirmance,
rejection or termination and ending on the expiration date of the Term, unless
sooner terminated as in such lease provided, at the same Base Rent,
Supplementary Rent and Other Rent upon the then executory terms, covenants and
conditions as are contained in this Lease, except that (i) Tenant’s rights under
the new lease shall be subject to the possessory rights, if any, of the assignee
under this Lease and the possessory rights of any Person claiming through or
under such assignee or by virtue of any applicable law, (ii) such new lease
shall require all defaults existing under this Lease to be cured by Tenant with
due diligence, and (iii) such new lease shall require Tenant to pay all Base
Rent, Supplementary Rent and Other Rent reserved in this Lease which, had this
Lease not been so disaffirmed, rejected or terminated, would have accrued under
the provisions of this Lease after the date of such disaffirmance, rejection or
termination with respect to any period prior thereto. If Tenant shall default in
its obligation to enter into said new lease for a period of ten (10) days next
following Landlord’s request therefor, then in addition to all other rights and
remedies by reason of such default, either at law or in equity, Landlord shall
have the same rights and remedies against Tenant as if Tenant had entered into
such new lease and such new lease had thereafter been terminated as of the
commencement date thereof by reason of Tenant’s default thereunder.

Section 9.12 (a) Licenses, certificates or permits held in the name of Tenant or
an agent or representative of Tenant, which relate to the operation of the
Premises, or the name of the Premises or the operations at the Premises, as then
known to the general public (but excluding the items excluded in clauses
(vii) and (viii) of Section 2.6(a)) shall upon Landlord’s written request upon
an Event of Default, be assigned by Tenant to a replacement licensed operator of
the Premises and/or a subsequent lessee identified by Landlord, except to the
extent prohibited by applicable law or by the terms of such licenses,
certificates or permits. If Tenant fails to make or refuses to recognize the
assignment of any such licenses, permits or certificates, this provision of this
Lease shall constitute an act of assignment to the replacement licensed operator
and/or lessee identified by Landlord except to the extent such assignment is
prohibited by Legal Requirement or the terms of such licenses, certificates or
permits.

 

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(b) Tenant shall not and shall not allow any Person to abandon or surrender any
material licenses, permits, certificates or authorizations required for or which
relate to the operation of the Premises as casino and/or gaming operations
without prior notice to, and receipt of written approval from, Landlord. Tenant
shall not and shall not allow any Person to act or fail to act in any manner
which will cause any material licenses, permits or certificates relating to the
Premises, or the operation, use or maintenance thereof, to be revoked or not
renewed by any Governmental Authority having jurisdiction thereof.

(c) Tenant shall not file bankruptcy, become insolvent, permit itself to become
subject to any action seeking the appointment of a trustee, receiver,
liquidator, custodian or similar official of Tenant or a substantial part of its
assets, permit itself to become subject to any action of involuntary
receivership, fail to pay its debts as they become due, or take any corporate
action to authorize any of the foregoing without the prior written consent of
Landlord. Tenant shall not take any steps or act in a manner that could
reasonably be expected to have an adverse effect on Tenant’s Gaming License or
that would prevent it from operating under such Gaming License at the Premises.

Section 9.13 The provisions of Sections 9.7, 9.8, 9.9, 9.10, 9.11 and 9.12
hereof shall survive the expiration or earlier termination of this Lease.

Section 9.14 Notwithstanding the foregoing provisions of this Article IX, all
provisions contained in the Mortgage or any other Mortgage Loan Document in
respect of assignments, Subleases and transfers of this Lease or the interest in
Tenant shall take precedence over and be in lieu of any inconsistent provision
provided for in this Article IX.

ARTICLE X

SUBORDINATION

Section 10.1 This Lease shall be subject and subordinate in all respects to all
Mortgages now or hereafter in effect. At any Mortgagee’s direction, Tenant shall
attorn to the Mortgagee, or any successor-in-interest to Landlord or the
Mortgagee, including without limitation, any such party which takes title by
foreclosure, power of sale, deed in lieu of foreclosure, pursuant to a
proceeding in bankruptcy or alternative procedure, or any right or remedy at law
or in equity. The transfer of the title to the Premises, any part thereof or any
underlying lease to any Mortgagee, or any successor in interest to Landlord or
Mortgagee by foreclosure, power of sale, deed in lieu of foreclosure, pursuant
to a proceeding in bankruptcy or any alternative procedure, or any right or
remedy at law or in equity shall not be considered a default or breach by
Landlord of this Lease, which shall survive and remain in full force and effect.
This Section 10.1 shall be self-operative and no further instrument of
subordination shall be required to make the interest of any Mortgagee superior
to the interest of Tenant hereunder. Notwithstanding the previous sentence,
however, Tenant shall, together with the Mortgagee, execute and deliver promptly
any certificate or agreement that Landlord and any Mortgagee may reasonably
request in confirmation of such subordination, and Tenant grants to Landlord an

 

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irrevocable power of attorney coupled with an interest for the purpose of
executing and delivering any such certificate or agreement for or on behalf of
Tenant. In addition, Tenant agrees to provide all surveys, certifications,
documents, agreements, instruments, reports and other assurances as Mortgagee
may reasonably require Landlord to cause Tenant to deliver pursuant to the
Mortgage Loan Documents. Upon any foreclosure of a Mortgage, the grant of any
deed-in-lieu of foreclosure or any transfer pursuant to a proceeding in
bankruptcy or otherwise, neither the Mortgagee nor anyone claiming by, through
or under such Mortgagee shall be:

(a) liable for any act or omission of any prior Landlord (including, without
limitation, the then defaulting Landlord);

(b) subject to any defense or offsets which Tenant may have against any prior
Landlord (including, without limitation, the then defaulting Landlord) which
arise prior to the date such Mortgagee (or someone acquiring at a foreclosure
sale related to the Mortgagee’s Mortgage) acquires title to the Premises or any
part thereof or interest therein;

(c) bound by any payment of Operating Lease Rent which Tenant might have paid
for more than the current month to any prior Landlord (including, without
limitation, the then defaulting Landlord);

(d) bound by any obligation to make any payment to Tenant which was required to
be made prior to the time such Mortgagee or Landlord succeeded to any prior
Landlord’s interest other than deposits and reserves received by such Mortgagee;

(e) bound by any obligation to perform any work or to make improvements to the
Premises;

(f) bound by any modification, amendment or supplement to this Lease made
without the prior written consent of the Mortgagee; or

(g) bound by any security deposit for Tenant’s obligations under this Lease
unless such deposit is actually received by Mortgagee.

If required by any Mortgagee, Tenant promptly shall join in any subordination
and attornment agreement to indicate its concurrence with the provisions thereof
and its agreement, in the event of a foreclosure of any Mortgage. Tenant shall
promptly so accept, execute and deliver any subordination and attornment
agreement proposed by any Mortgagee which conforms with the provisions of this
Section 10.1. Any subordination and attornment agreement may also contain other
terms and conditions as may otherwise be required by any Mortgagee or Landlord
which do not increase Tenant’s monetary obligations or materially and adversely
affect the rights or obligations of Tenant under this Lease.

Section 10.2 (a) Tenant hereby agrees to give to any Mortgagee copies of all
notices given by Tenant of default by Landlord under this Lease at the same time
and in the same manner as, and whenever, Tenant shall give any such notice of
default to Landlord, and the same shall not be effective as against Landlord
until so given to Mortgagee. Such Mortgagee shall have the right to remedy any
default by Landlord under this Lease, or to cause any default of

 

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Landlord under this Lease to be remedied, and for such purpose Tenant hereby
grants such Mortgagee such period of time as may be reasonable to enable such
Mortgagee to remedy, or cause to be remedied, any such default in addition to
the period given to Landlord for remedying, or causing to be remedied, any such
default. Tenant shall accept performance by such Mortgagee of any term,
covenant, condition or agreement to be performed by Landlord under this Lease
with the same force and effect as though performed by Landlord. No default by
Landlord under this Lease shall exist or shall be deemed to exist (i) as long as
such Mortgagee, in good faith, shall have commenced to cure such default and
shall be prosecuting the same to completion with reasonable diligence, subject
to Force Majeure, or (ii) if possession of the Premises or control of Landlord
is required in order to cure such default, or if such default is not reasonably
susceptible of being cured by such Mortgagee, as long as such Mortgagee, in good
faith, shall have notified Tenant that such Mortgagee intends to institute
proceedings under the applicable Loan Documents, and, thereafter, as long as
such proceedings shall have been instituted and shall prosecute the same with
reasonable diligence and, after having obtained possession, prosecutes the cure
to completion with reasonable diligence (other than those not reasonably
susceptible of cure by Mortgagee). This Lease shall not be modified or amended,
or terminated, without Mortgagee’s prior written consent in each instance, which
consent, in the case of non-material amendments or modifications, shall not be
unreasonably withheld or delayed (it being agreed, however, that Mortgagee’s
refusal to consent to any proposed amendment or modification that would be
contrary to the terms of the Mortgage Loan Documents shall not be unreasonable).
In the event of the termination of this Lease by reason of any default by
Landlord hereunder or for any other reason whatsoever except the expiration
thereof, upon such Mortgagee’s written request, given within thirty (30) days
after any such termination, Tenant, within fifteen (15) days after receipt of
such request, shall execute and deliver to such Mortgagee or its designee or
nominee a new lease of the Premises for the remainder of the Term of this Lease
upon all of the terms, covenants and conditions of this Lease. Neither such
Mortgagee nor its designee or nominee shall otherwise become liable under this
Lease unless and until such Mortgagee, or its designee or nominee becomes, and
then only for so long as such Mortgagee, or its designee or nominee remains, the
fee owner of the Premises. Mortgagee shall have the right, without Tenant’s
consent and without liability to Tenant for any claim for damages or any other
relief therefor or in connection therewith, to foreclose the Mortgage or accept
a deed in lieu of foreclosure of such Mortgage, and in doing so, whether or not
the same would occur by operation of law, terminate this Lease and evict Tenant
from the Premises, provided, however, Landlord (or Mortgagee on behalf of
Landlord) shall have the right at the time of such foreclosure or deed in lieu,
to elect not to terminate this Lease at such time and shall, in such event,
nevertheless retain the unilateral right at any time thereafter, on thirty
(30) days’ notice to Tenant, to terminate this Lease and evict Tenant from the
Premises, without liability to Tenant for any claim for damages or any other
relief therefor or in connection therewith. For the avoidance of doubt, the
foregoing is subject to the last paragraph of Section 12.2.

(b) In the event of any act or omission of Landlord which would give Tenant the
right, immediately or after lapse of a period of time, to cancel or terminate
this Lease, or to claim a partial or total eviction, Tenant shall not exercise
such right (i) until it has given written notice of such act or omission to each
Mortgagee, and (ii) unless such act or omission shall be one which is not
capable of being remedied by Landlord or such Mortgagee within a reasonable
period of time, until a reasonable period for remedying such act or omission
shall have elapsed

 

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following the giving of such notice and following the time when such Mortgagee
shall have become entitled under the Mortgage Loan Documents to remedy the same
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy).

Section 10.3 Landlord and Tenant agree, for the benefit of the Lenders, to
implement the lockbox arrangement described herein, in the Collection Account
Agreement and in the Mortgage Loan Agreement.

Section 10.4 Tenant shall have the exclusive obligation to satisfy, pay and
provide at its own expense, as Supplementary Rent, requirements for any
Impositions, insurance premiums and FF&E reserves set forth in the Mortgage Loan
Documents. Landlord agrees to withdraw funds from the FF&E Reserve Account, the
Blocked Account (as defined in the Mortgage Loan Agreement) and the Working
Capital Account as and when requested by Tenant, in accordance with the
requirements set forth in the Mortgage Loan Documents, provided Tenant delivers
to Landlord such receipts and other materials as are necessary in order for
Landlord to satisfy the conditions to such release set forth in the Mortgage
Loan Documents. Landlord agrees that disbursements from such reserves and
escrows received by Landlord from the Mortgagee shall be paid to Tenant. Tenant
shall use the funds from such reserves and escrows solely for the purposes set
forth in and subject to the conditions set forth in the Mortgage Loan Documents.
Notwithstanding the foregoing, (a) Tenant’s obligation to purchase FF&E and
other Equipment in accordance with Section 5.2 hereof shall not be relieved or
otherwise affected by Landlord’s failure (whether or not excused under the
Mortgage Loan Documents) to provide funds to such FF&E Reserve Account or to
disburse the same to Tenant, and (b) all FF&E and Equipment, immediately upon
the acquisition thereof, shall and is intended to be the sole and exclusive
property of Landlord, subject only to the terms of this Lease allowing Tenant to
use the same until this Lease shall expire or terminate, and Tenant shall keep
the same free and clear of all Liens.

Section 10.5 Intentionally Omitted.

Section 10.6 Tenant hereby acknowledges that on and as of the date of this
Lease: (a) Collateral Agent is a Mortgagee and holds a first Mortgage on the
Premises; (b) Landlord has provided to Tenant and Tenant has received copies of,
and has reviewed, the Mortgage Loan Documents and the Mezzanine Loan Documents;
(c) Tenant shall observe and perform, on a timely basis, to the extent
applicable to Tenant, or the Premises, each term and condition under the Loan
Documents, and any other Loan Documents which are hereafter delivered to Tenant;
and (d) to the extent that the representations and warranties set forth in the
Loan Documents and such other Loan Documents which are hereafter delivered to
Tenant pertain to the Premises (or the use, operation or occupancy thereof),
Legal Requirements, Gaming Licenses, Operating Permits, Subleases, Rents or
Tenant, Tenant agrees that each of such representations and warranties is hereby
incorporated into this Lease by reference as if set forth herein at length such
that Tenant hereby represents and warrants to Landlord each and every such
representation and warranty.

 

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ARTICLE XI

OBLIGATIONS OF TENANT

Section 11.1 Tenant shall promptly comply in all material respects with all
Legal Requirements with respect to the Premises (or any part thereof) and/or the
use and occupation thereof by Tenant, whether any of the same relate to or
require (i) structural changes to or in and about the Premises, or (ii) changes
or requirements incident to or as the result of any use or occupation thereof or
otherwise, and subject to Article VII, Tenant shall so perform and comply,
whether or not such Legal Requirements shall now exist or shall hereafter be
enacted or promulgated and whether or not the same may be said to be within the
present contemplation of the parties hereto. The foregoing shall include,
without limitation, present and future compliance with the provisions of the
Americans with Disabilities Act. In addition, Tenant will comply with the
applicable provisions of ERISA and of the regulations and published
interpretations thereunder and shall furnish to Landlord and Mortgagee promptly
after any officer of Tenant either knows, or has a reasonable basis to know,
notice that any violation or other reportable event (including the events set
forth in Section 4043(b) of ERISA) has occurred.

Section 11.2 Tenant agrees to give Landlord notice of any notice, assessment,
claim, demand, communication, violation, summons, complaint, investigation,
termination, suspension, or revocation made, issued or adopted by any of the
Governmental Authorities (including, without limitation, the Gaming Authorities)
hereinbefore mentioned affecting in a material adverse manner (i) the Premises,
(ii) the use, maintenance, occupancy, repair or restoration thereof or (iii) the
financial condition of Tenant, a copy of which is served upon or received by
Tenant, or a copy of which is posted on, or fastened or attached to the
Premises, or otherwise brought to the attention of Tenant, by mailing within
five (5) Business Days after such service, receipt, posting, fastening or
attaching or after the same otherwise comes to the attention of Tenant, a copy
of each and every one thereof to Landlord and Mortgagee. At the same time,
Tenant will inform Landlord as to the Work which Tenant proposes to do or take
in order to comply therewith. Notwithstanding the foregoing, however, if such
Work would require any Alterations which would, in Landlord’s opinion, reduce
the value of the Premises or change the general character, design or use of any
of the Buildings or other improvements thereon, and if Tenant does not desire to
contest the same, Tenant shall, if Landlord so requests, defer compliance
therewith in order that Landlord may, if Landlord wishes, contest or seek
modification of or other relief with respect to such Legal Requirements, so long
as Tenant is not put in violation of any Legal Requirements, but nothing herein
shall relieve Tenant of the duty and obligation, at Tenant’s expense, to comply
with such Legal Requirements, or such Legal Requirements as modified, whenever
Landlord shall so direct.

Section 11.3 Tenant shall defend, protect, indemnify and save harmless Landlord,
Lender (which, for purposes of determining “Indemnified Parties”, shall include
any noteholder in respect of the applicable Loan Documents and any servicer on
behalf of any such noteholder), each of their respective Affiliates, any
partners, members or managers thereof, any partners, members or managers of any
such partners, members or managers, and any partners, members, managers,
officers, stockholders, trustees, directors or employees of any of the foregoing
and any successors and/or assigns of any of the foregoing (each an “Indemnified
Party” and collectively, “Indemnified Parties”), from and against and shall
reimburse such

 

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parties for (a) any and all liabilities, obligations, losses, penalties, costs,
charges, judgments, claims, causes of actions, suits, damages, fees and expenses
(including attorneys’ fees and expenses) (collectively, “Claims”) (1) arising
from or under this Lease or Tenant’s use, occupancy and operations of, in or
about the Premises during the Term, (2) arising from the ownership, operation
[(whether as a casino, or any ancillary uses, as permitted hereunder)],
maintenance, management, use, regulation, development, expansion or construction
of the Premises, including any of the foregoing in relation to the Gaming
Equipment, (3) arising from working capital or other operating liabilities
relating to the Premises (or the use thereof) covered by this Lease, including
without limitation, any employment or labor matters of any kind (including any
matters relating to collective bargaining agreements or pension liability and
related matters, if applicable), Claims of Governmental Authorities, employee
Claims, payroll and payroll overhead Claims, benefit program Claims, and other
Claims relating to the liabilities of the Premises (or the use thereof), in each
case which are attributable to occurrences during or prior to the Term that the
Premises is leased by Tenant or (4) which may be imposed upon or incurred or
paid by or asserted against the Indemnified Parties by reason of or in
connection with (i) any accident, injury, death or damage to any Person or
property occurring in, on or about the Premises or any portion thereof or any
adjacent street, alley, sidewalk, curb, or passageway; (ii) any changes,
alterations, repairs and anything done in, on or about the Premises or any part
thereof in connection with such changes, alterations and repairs; (iii) the use,
non-use, occupation, condition, operation, maintenance or management of the
Premises or any part thereof, or any adjacent street, alley, sidewalk, curb, or
passageway; (iv) any negligent act or omission on the part of Tenant, any
Subtenants or any of Tenant’s or Subtenant’s agents, contractors, servants,
employees, space tenants, licensees, assignees, or subtenants; (v) the
performance of any labor or services or the furnishing of any materials or other
property in respect of the Premises or any part thereof; (vi) any violation by
Tenant (or by any agent, contractor or Subtenant then upon or using the
Premises) of any provision of this Lease including, but not limited to,
Article VII hereof, or any breach or violation of any Legal Requirement
(including, without limitation, any Gaming Law) by Tenant or its agents,
concessionaires, contractors, Subtenants, servants, vendors, materialmen or
suppliers; or (vii) the condition of the Premises, or of any buildings or other
structures now or hereafter situated thereon, or the fixtures or personal
property thereon or therein, to the extent such events described in the
foregoing clauses (i) through (vii) occur during or prior to the Term; and
(b) all costs, expenses and liabilities incurred, including actual, customary
and reasonable attorney’s fees and disbursements through and including appellate
proceedings, in or in connection with any of such Claims; provided that in no
event shall any Indemnified Party be indemnified for any Claim arising from its
gross negligence, willful misconduct, illegal acts or fraud and in no event
shall Tenant have any liability under this Section 11.3 to any Indemnified Party
in respect of any consequential or punitive damages or diminution of value. If
any action or proceeding shall be brought against any of the Indemnified Parties
by reason of any such Claims, Tenant, upon notice from any of the Indemnified
Parties, shall resist and defend such action or proceeding, at its sole cost and
expense by counsel to be selected by Tenant but otherwise satisfactory to such
Indemnified Party in its reasonable discretion. Tenant or its counsel shall keep
each Indemnified Party fully apprised at all times of the status of such
defense. If Tenant shall fail to defend such action or proceeding, such an
Indemnified Party may retain its own attorneys to defend or assist in defending
any such claim, action or proceeding, and Tenant shall pay the actual, customary
and reasonable fees and disbursements of such attorneys. The terms and
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Section 11.3 shall not in any way be affected by the absence of insurance
covering such occurrence or claim or by the failure or refusal of any insurance
company to perform any obligation on its part. The provisions of this
Section 11.3 shall survive the expiration or earlier termination of this Lease.
Tenant shall not enter into any settlement of a Claim which would impose a
monetary liability on, or require an admission of liability, fault or other
responsibility by, any Indemnified Party without the written consent of such
Indemnified Party. Any insurance proceeds actually received by an Indemnified
Party shall be credited against the indemnification otherwise to be provided
herein. An Indemnified Party shall give prompt written notice to Tenant of any
Claim for which it seeks indemnification hereunder, but delay in providing such
notice shall not relieve Tenant of its indemnification obligations, except to
the extent such delay materially prejudiced Tenant’s ability to defend such
Claim. Nothing contained herein shall be construed to create a benefit for a
third party except for Lenders and for other Indemnified Parties.

Section 11.4 If at any time prior to or during the Term (or within the statutory
period thereafter if attributable to Tenant), any mechanic’s or other Lien or
order for payment of money, which shall have been either created by, caused
(directly or indirectly) by, or suffered against Tenant or any Person claiming
by, through or under Tenant (or any predecessor-in-interest to Tenant), shall be
filed against the Premises or any part thereof, Tenant, at its sole cost and
expense, shall cause the same to be discharged by payment, bonding or otherwise,
within sixty (60) days after Tenant receives notice of the filing thereof unless
(i) such Lien or order is contested by Tenant in good faith and (ii) Tenant
provides sufficient security or evidence of financial ability, in each case to
the satisfaction of Landlord and Mortgagee (in their respective sole and
absolute discretion), to pay the amount of such Lien or order; provided that, if
the Lien or order in question is the responsibility of a Subtenant under its
Sublease and no other material default under such Sublease (after applicable
notice and grace) has occurred and in continuing, then Tenant shall be deemed to
satisfy the requirement set forth in clause (i) above so long as it is
diligently enforcing its rights under such Sublease against such Subtenant.
Tenant shall, upon notice and request in writing by Landlord or Mortgagee,
defend for Landlord and Mortgagee, at Tenant’s sole cost and expense, any action
or proceeding which may be brought on or for the enforcement of any such Lien or
order for payment of money, and will pay any damages and satisfy and discharge
any judgment entered in such action or proceeding and save harmless Landlord and
Mortgagee from any liability, claim or damage resulting therefrom. In default of
Tenant’s procuring the discharge of any such Lien as aforesaid Landlord and
Mortgagee may, without notice, and without prejudice to its other remedies
hereunder, procure the discharge thereof by bonding or payment or otherwise, and
all cost and expense which Landlord and Mortgagee shall incur shall be paid by
Tenant to Landlord or Mortgagee, as applicable, as Other Rent forthwith.

Section 11.5 Landlord shall not under any circumstances be liable to pay for any
work, labor or services rendered or materials furnished to or for the account of
Tenant upon or in connection with the Premises, and no mechanic’s or other Lien
for such work, labor or services or material furnished shall, under any
circumstances, attach to or affect the reversionary interest of Landlord in and
to the Premises or any alterations, repairs, or improvements to be erected or
made thereon. Nothing contained in this Lease shall be deemed or construed in
any way as constituting the request or consent of Landlord, either express or
implied, to any contractor, subcontractor, laborer or materialman for the
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materials for any specific improvement, alteration to or repair of the Premises
or any part thereof, nor as giving Tenant any right, power or authority to
contract for or permit the rendering of any services or the furnishing of any
materials on behalf of Landlord that would give rise to the filing of any Lien
against the Premises. [Pursuant to Section 108.234 of Nevada Revised Statutes
(“NRS”), Landlord hereby informs Tenant that Tenant must comply with the
requirements of NRS § 108.2403 & NRS § 108.2407. Tenant shall take all actions
necessary under Nevada law to ensure that no liens encumbering Landlord’s
interest in the Premises arise as a result of Tenant’s Work, which actions shall
include, without limitation, the recording of a notice of posted security in the
Official Records of Clark County, Nevada, in accordance with NRS § 108.2403, and
either (i) establish a construction disbursement account pursuant to NRS §
108.2403(1)(b)(1), or (ii) furnish and record, in accordance with NRS §
108.2403(1)(b)(2), a surety bond for the prime contract for Tenant’s Work at the
Premises that meets the requirements of NRS § 108.2415. Tenant shall notify
Landlord of the name and address of Tenant’s prime contractor who will be
performing Work on behalf of Tenant as soon as it is known. Tenant shall notify
Landlord immediately upon the signing of any contract with the prime contractor
for the construction, alteration or repair of any portion of the Premises.
Tenant may not enter the Premises to begin Work or any portion thereof on the
Premises until Tenant has delivered evidence satisfactory to Landlord that
Tenant has complied with the terms of this Section 11.5. Failure by Tenant to
comply with the terms of this Section 11.5 shall permit Landlord to declare
Tenant in default of this Lease.]

Section 11.6 Neither Landlord nor its agents shall be liable for any loss of or
damage to the property of Tenant or others by reason of casualty, theft or
otherwise, or due to any interruption or failure of any services or use or the
operation or management of the Premises, or due to any building on the Premises
being defective or improperly constructed, or being or becoming out of repair,
or for any injury or damage to Persons or property resulting from any cause of
whatsoever nature (nor shall such party be liable for any such loss which is
caused by or arises from the negligence of Landlord or its agents).

Section 11.7 Landlord shall not be required to furnish to Tenant any facilities
or services of any kind whatsoever, including, but not limited to, water, steam,
heat, gas, oil, hot water, and/or electricity, all of which Tenant represents
and warrants that Tenant has obtained from the public utility supplying the
same, at Tenant’s sole cost and expense. Upon Tenant’s written request, however,
Landlord agrees to cooperate with Tenant (at no cost to Landlord) with respect
to such services.

Section 11.8 Tenant will qualify to do business and remain in good standing
under the laws of each jurisdiction (including, without limitation, under any
all Gaming Laws, if applicable, and Legal Requirements) as and to the extent
required for the use, ownership, lease, operation, maintenance or repair of the
Premises.

 

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ARTICLE XII

DEFAULT BY TENANT; REMEDIES

Section 12.1 Each of the following shall be deemed an event of default (an
“Event of Default”) and a breach of this Lease by Tenant:

(a) The failure of Tenant to pay when due, any portion of any installment of
Base Rent due from Tenant under this Lease on the date such payment is due (it
being understood that, with respect to any monthly installment of Base Rent, and
provided no other Event of Default shall exist, Tenant shall not be in default
under this subparagraph (a) if, on the date such payment is due, there is
transferred from the Collection Account to the Cash Management Account the
monthly installment of Base Rent due from Tenant under this Lease);

(b) The failure of Tenant to pay when due, any portion of any installment or
amount of Supplementary Rent due from Tenant under this Lease on the date such
payment is due (it being understood that, with respect to any installment or
amount of Supplementary Rent due, and provided no other Event of Default shall
exist, Tenant shall not be in default under this subparagraph (b) if, on the
date such payment or amount is due, there is transferred from the Collection
Account to the Cash Management Account the installment or amount of
Supplementary Rent due from Tenant under this Lease);

(c) The failure of Tenant to pay any portion of any amount of Other Rent due
from Tenant under this Lease on the date which is ten days after any such
payment is due (it being understood that, with respect to any installment or
amount of Other Rent due, and provided no other Event of Default shall exist,
Tenant shall not be in default under this subparagraph (c) if, on the date such
payment or amount is due (or on the date which is ten days after any such
payment is due), there is transferred from the Collection Account to the Cash
Management Account the installment or amount of Other Rent due from Tenant under
this Lease);

(d) The failure to keep the insurance policies required hereunder in full force
and effect; the failure to deliver a certificate of insurance with respect to
the insurance policies required hereunder within two (2) Business Days after a
request by Landlord or any Mortgagee; and the failure to deliver certified
copies of the insurance policies required hereunder within fifteen (15) days
after a request by Landlord or Mortgagee, all in accordance with Article VI;

(e) The failure of Tenant or Lease Guarantor to comply with or observe any of
the other material provisions, agreements, conditions, covenants or terms
contained in this Lease or the Operating Lease Guaranty, respectively, for
thirty (30) days after written notice by Landlord or Mortgagee to Tenant or
Lease Guarantor describing such default with reasonable specificity, or if such
default is a non-monetary default and of such a nature that it cannot be
completely remedied within said thirty (30) day period, the failure of Tenant or
Lease Guarantor to commence the cure of such default within such thirty (30) day
period and thereafter diligently prosecute and complete the cure within 120 days
after the original written notice of default by Landlord or Mortgagee to Tenant
or Lease Guarantor;

(f) A Transfer in respect of Tenant or the Premises or this Lease without strict
compliance with Article IX of this Lease; or Tenant shall incur any Indebtedness
other than Permitted Indebtedness;

(g) The (i) initiation of any proceeding whereupon the estate or interest of
Tenant in the Premises, or any portion thereof, or in this Lease is levied upon
or attached, or (ii) taking of Tenant’s leasehold estate by execution or other
process of law other than as provided in Article VIII, which proceeding or
taking, as the case may be, is not vacated, discharged, dismissed or otherwise
reversed within thirty (30) days thereafter;

 

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(h) An Event of Default under (and as defined in) any of the Other Operating
Leases;

(i) (i) Tenant shall commence any case, proceeding or other action (A) under any
existing or future Legal Requirement relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to Tenant, or seeking to adjudicate Tenant a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation, dissolution,
composition or other relief with respect to Tenant or Tenant’s debts, or
(B) seeking appointment of a receiver, trustee, custodian or other similar
official for Tenant or for all or any substantial part of Tenant’s property; or
(ii) Tenant shall become insolvent or make a general assignment for the benefit
of Tenant’s creditors or shall make a transfer in fraud of creditors; or
(iii) there shall be commenced against Tenant any case, proceeding or other
action of a nature referred to in clause (i) above (including involuntary
bankruptcy) or seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of Tenant’s property,
which case, proceeding or other action (A) results in the entry of an order for
relief or (B) remains undismissed, undischarged or unbonded for a period of
ninety (90) days; or (iv) Tenant shall take any action consenting to or
approving of any of the acts set forth in clause (i) or (ii) above; or
(v) Tenant shall generally not, or shall be unable to, pay Tenant’s debts as
they become due or shall admit in writing Tenant’s inability to pay Tenant’s
debts;

(j) (i) Lease Guarantor shall commence any case, proceeding or other action
(A) under any existing or future Legal Requirement relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to Lease Guarantor, or seeking to adjudicate Lease
Guarantor a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with respect
to Lease Guarantor or Lease Guarantor’s debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for Tenant or for all or
any substantial part of Lease Guarantor’s property; or (ii) Lease Guarantor
shall become insolvent or make a general assignment for the benefit of Lease
Guarantor’s creditors or shall make a transfer in fraud of creditors; or
(iii) there shall be commenced against Lease Guarantor any case, proceeding or
other action of a nature referred to in clause (i) above (including involuntary
bankruptcy) or seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of Lease Guarantor’s
property, which case, proceeding or other action (A) results in the entry of an
order for relief or (B) remains undismissed, undischarged or unbonded for a
period of ninety (90) days; or (iv) Lease Guarantor shall take any action
consenting to or approving of any of the acts set forth in clause (i) or
(ii) above; or (v) Lease Guarantor shall generally not, or shall be unable to,
pay Lease Guarantor’s debts as they become due or shall admit in writing Lease
Guarantor’s inability to pay Lease Guarantor’s debts;

(k) If Tenant is a corporation (or partnership or limited liability company) and
shall cease to exist as a corporation (or partnership or limited liability
company) in good standing in the state of its incorporation (or formation)
(unless Tenant simultaneously becomes incorporated (or formed) and in good
standing in another state) or if Tenant is a partnership or limited liability
company or other entity and Tenant shall be dissolved or otherwise liquidated,

 

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then if Tenant does not completely remedy such default immediately (or if
Tenant’s only knowledge of such default is by receipt of written notice of such
default, then within the thirty (30) day period following receipt of such
written notice); provided that, Tenant is permitted to make such changes
otherwise permitted under Section 10.17 of the Mortgage Loan Agreement;

(l) If Lease Guarantor is a corporation (or partnership or limited liability
company) and shall cease to exist as a corporation (or partnership or limited
liability company) in good standing in the state of its incorporation (or
formation) (unless Lease Guarantor simultaneously becomes incorporated (or
formed) and in good standing in another state) or if Lease Guarantor is a
partnership or limited liability company or other entity and Lease Guarantor
shall be dissolved or otherwise liquidated, then if Lease Guarantor does not
completely remedy such default immediately (or if Lease Guarantor’s only
knowledge of such default is by receipt of written notice of such default, then
within the thirty (30) day period following receipt of such written notice);

(m) Tenant fails to execute any certificate or agreement that Landlord or
Mortgagee may reasonably request confirming the subordination required pursuant
to Article X or estoppel certificate required pursuant to Article XIV within ten
(10) days after Tenant’s receipt thereof;

(n) Any permanent revocation, termination, suspension or other loss of any
Gaming License relating to the Premises (or the use or operation thereof as a
casino) or the taking of any action by a Governmental Authority requiring the
suspension, closure or inability to operate the Premises (or portions thereof)
as a casino or gaming operation or in the ordinary course of business (provided,
however, that in the case of a suspension or other action which is temporary and
not irrevocable, and which does not require a closure of the Premises, Tenant
shall have failed to fully cure the applicable violations and restore full use
of the Gaming License within one hundred twenty (120) days after the action was
initially taken or, if shorter, the time for cure set by the Governmental
Authority);

(o) Any permanent suspension, debarment or disqualification of Tenant from being
a casino and gaming operator or holder of any Gaming License;

(p) Any material representation or warranty made by Tenant herein or in any
report, certificate, financial statement or other instrument, agreement or
document furnished to Landlord or Lender shall have been materially false or
misleading in any material respect as of the date such representation or
warranty was made and if susceptible to cure is not cured within the time
periods set forth in clause (e) of this Section; and

(q) Any material representation or warranty made by Lease Guarantor in the
Operating Lease Guaranty or in any report, certificate, financial statement or
other instrument, agreement or document furnished to Landlord or Lender shall
have been materially false or misleading in any material respect as of the date
such representation or warranty was made and if susceptible to cure is not cured
within the time periods set forth in clause (e) of this Section.

 

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Section 12.2 Upon the occurrence of an Event of Default, Landlord may, at any
time thereafter, without limiting Landlord in the exercise of any right or
remedy at law or in equity that Landlord may have by reason of such Event of
Default, at its option pursue any one or more of the following remedies without
any further notice or demand whatsoever, in each case, to the extent permitted
by applicable law (provided that any notice required as specified in this
Section 12.2 must be joined in, and the exercise of any remedies as described in
this Section 12.2 must be approved, by Mortgagee):

(a) Terminate this Lease by issuing written notice of termination to Tenant, in
which event Tenant shall immediately surrender the Premises to Landlord, but if
Tenant shall fail to do so, Landlord may without notice and without prejudice to
any other remedy Landlord may have, but, subject to Legal Requirements,
including, without limitation, any requirement that the occupant needs to be the
holder of a Gaming License, peaceably enter upon and take possession of the
Premises and expel or remove Tenant and its effects without being liable to
prosecution or any claim for damages therefor, and upon any such termination,
Tenant agrees that in addition to its liability for the payment of arrearages of
Operating Lease Rent due and owing by Tenant to Landlord under this Lease upon
such termination, Tenant shall be liable to Landlord for damages. Tenant shall
pay to Landlord as damages on the same days as the Operating Lease Rent are due
hereunder, the total amount of such Operating Lease Rent payments plus a
reimbursement for all unamortized tenant allowances and concessions, less such
part, if any, of such payments that Landlord shall have been able to collect
from a new tenant upon reletting; provided, however, that Landlord shall have no
obligation to Tenant to relet the Premises so as to mitigate the amount for
which Tenant is liable unless required by applicable law. Landlord shall have
the right at any time to demand final settlement. Upon demand for a final
settlement, Landlord shall have the right to receive, and Tenant hereby agrees
to pay, as damages for Tenant’s breach, the total rental provided for in this
Lease for the remainder of the Term discounted to present value using a discount
rate equal to United States Treasury Securities having comparable maturities to
such rental payments plus 3.0%.

(b) Enter upon and take possession of the Premises without terminating this
Lease and expel or remove Tenant and its effects therefrom without being liable
to prosecution or any claim for damages therefor, and Landlord may relet the
Premises for the account of Tenant. Tenant shall pay to Landlord all arrearages
of Base Rent, Supplementary Rent and Other Rent due and owing by Tenant to
Landlord, and Tenant shall also pay to Landlord during each month of the
unexpired Term the installments of Base Rent and other sums due hereunder, less
such part, if any, that Landlord shall have been able to collect from a new
tenant upon reletting; provided, however, that Landlord shall have no obligation
to this Tenant to relet the Premises so as to mitigate the amount for which
Tenant is liable unless required by applicable law. In the event Landlord
exercises the rights and remedies afforded to it under this Section 12.2(b) and
then subsequently elects to terminate this Lease, Tenant shall be liable to
Landlord for damages as set forth in Section 12.2(a) above and Landlord shall
have the right at any time to demand final settlement as provided therein.

(c) To the extent permitted by applicable law, cause the transfer of Gaming
Licenses and other [Operating Permits] relating to the Premises and the
operation and management of the Premises and leasing of the Premises to any
replacement operator, manager or tenant of the Premises identified by Landlord,
and after such replacement operator, manager or tenant obtains all appropriate
Gaming Licenses, Tenant shall cooperate with Landlord to (i) transfer all books
and records [to the extent relating solely] to the Premises and used in

 

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connection with the operation of the Premises, and (ii) continue to perform the
Diligence Activities and provide Transition Services during the Transition
Period as required by Section 4.4 to the replacement operator, manager or tenant
so as to provide continuation of [casino operations] and minimize disruption.

(d) Enforce, by all legal suits and other means, its rights hereunder, including
the collection of Operating Lease Rent and all other sums payable by (or to be
collected from) Tenant hereunder, without re-entering or resuming possession of
the Premises and without terminating this Lease.

(e) Do whatever Tenant is obligated to do by the provisions of this Lease, may
peaceably enter the Premises in order to accomplish this purpose and may make
any reasonable expenditure or incur any reasonable obligation for the payment of
money in connection therewith, including, without limitation, reasonable
attorneys’ fees and expenses. Tenant agrees to reimburse Landlord immediately
upon demand for any expenses which Landlord may incur in its actions pursuant to
this Section 12.2(e), with interest thereon at the Default Rate from the date of
demand until paid and such amount shall be deemed to be Other Rent hereunder.

(f) To the extent permitted by Legal Requirements (including Gaming Licenses),
and in coordination with a transition to a replacement facility operator or
manager: peaceably enter upon the Premises and change, alter, or modify the door
locks on all entry doors of the Premises, and permanently or temporarily exclude
Tenant, and its agents, employees, representatives and invitees, from the
Premises. In the event that Landlord either permanently excludes Tenant from the
Premises or terminates this Lease on account of Tenant’s default, Landlord shall
not be obligated thereafter to provide Tenant with a key to the Premises at any
time, regardless of any amounts subsequently paid by Tenant. If Landlord elects
to exclude Tenant from the Premises temporarily without permanently repossessing
the Premises or terminating this Lease, then Landlord shall not be obligated to
provide Tenant with a key to reenter the Premises until such time as all
delinquent rent and other amounts due under this Lease have been paid in full
and all other defaults, if any, have been cured and Tenant shall have given
Landlord evidence reasonably satisfactory to Landlord that Tenant has the
ability to comply with its remaining obligations under this Lease; and if
Landlord temporarily excludes Tenant from the Premises, Landlord shall have the
right thereafter to permanently exclude Tenant from the Premises or terminate
this Lease at any time before Tenant pays all delinquent rent, cures all other
defaults and furnishes such evidence to Landlord. A key to the Premises will be
furnished to Tenant only during Landlord’s normal business hours. Landlord’s
exclusion of Tenant from the Premises shall not constitute a permanent exclusion
of Tenant from the Premises or a termination of this Lease unless Landlord so
notifies Tenant in writing. Landlord shall not be obligated to place a written
notice on the Premises on the front door thereof explaining Landlord’s action or
stating the name, address or telephone number of any individual or company from
which a new key may be obtained. In the event Landlord permanently or
temporarily excludes Tenant from the Premises or terminates this Lease, and
Tenant owns property that has been left in the Premises but which is not subject
to any statutory or contractual Lien or security interest held by Landlord as
security for Tenant’s obligations, Tenant shall have the right to promptly so
notify Landlord in writing, specifying the items of property not covered by any
such Lien or security interest and which Tenant desires to retrieve from the
Premises.

 

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Landlord shall have the right to either (i) escort Tenant to the Premises to
allow Tenant to retrieve Tenant’s property not covered by any such Lien or
security interest, or (ii) remove such property itself and make it available to
Tenant at a time and place designated by Landlord. In the event Landlord elects
to remove such property itself as provided in the immediately preceding clause
(ii), Landlord shall not be obligated to remove such property or deliver it to
Tenant unless Tenant shall pay to Landlord, in advance, an amount of cash equal
to the amount that Landlord estimates Landlord will be required to reasonably
expend in order to remove such property and make it available to Tenant,
including all reasonable moving or storage charges theretofore or thereafter
incurred by Landlord with respect to such property. If Tenant pays such
estimated amount to Landlord and the actual amount incurred by Landlord differs
from the estimated amount, Tenant shall pay any additional amounts to Landlord
on demand or Landlord shall refund any excess amounts paid by Tenant to Tenant
on demand.

(g) Terminate Tenant’s rights under any one or more of Sections 3.2, 3.3, 7.1
and 7.2.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided or any other remedies provided by law or
equity. Exercise of such remedies shall be in compliance with the requirements
of Gaming Licenses, Gaming Laws and Governmental Authorities, and in
coordination with a transition to a replacement facility operator or manager.
[Notwithstanding the foregoing, or anything else herein, with respect to Gaming
Licenses, Gaming Laws or related Governmental Authorities of the State of New
Jersey, no such Gaming Licenses, Gaming Laws or Governmental Authorities shall
affect the rights or remedies of Landlord under this Lease, except to the extent
of the enforcement of remedies relating to the control of casino operations in
New Jersey.] Any entry by Landlord upon the Premises may be by use of a master
or duplicate key or electronic pass card or any locksmith’s entry procedure or
other means. Any reletting by Landlord (if any) shall be without notice to
Tenant, and if Landlord has not terminated this Lease, the reletting may be in
the name of Tenant or Landlord, as Landlord shall elect. Any reletting shall be
for such term or terms (which may be greater or less than the period which, in
the absence of a termination of this Lease, would otherwise constitute the
balance of the Term) and on such terms and conditions (which may include free
rent, rental concessions or tenant inducements of any nature) as Landlord in its
sole and absolute discretion may determine, and Landlord may collect and receive
any rents payable by reason of such reletting. In the event of any reletting,
Tenant shall pay to Landlord on demand the reasonable cost of renovating,
repairing and altering the Premises for a new tenant or tenants, and the cost of
advertisements, brokerage fees, reasonable attorney’s fees and other costs and
expenses incurred by Landlord in connection with such reletting (consistent with
local market conditions). In the event any rentals actually collected by
Landlord upon any such reletting for any calendar month are in excess of the
amount of rental payable by Tenant under this Lease for the same calendar month,
the amount of such excess shall belong solely to Landlord and Tenant shall have
no right with respect thereto. In the event it is necessary for Landlord to
institute suit against Tenant in order to collect the rental due hereunder or
any deficiency between the rental provided for by this Lease for a calendar
month and the rental actually collected by Landlord for such calendar month,
Landlord shall have the right to allow such deficiency to accumulate and to
bring an action upon several or all of such rental deficiencies at one time. No
suit shall prejudice in any way the right of Landlord to bring a similar action
for any subsequent rental deficiency or deficiencies.

 

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Notwithstanding the foregoing, or anything else in this Lease to the contrary,
if any Transition Period (as defined in the Management Agreement) shall exist,
this Lease shall not terminate prior to the expiration or earlier termination of
such Transition Period.

Section 12.3 Subject to the terms of Section 12.2 above, upon the exercise by
Landlord of any of the remedies contained in this Lease, at law or in equity, no
re-entry or taking possession of the Premises by Landlord shall be construed as
an election on its part to terminate this Lease, unless a written notice of such
intention be given to Tenant by Landlord and Mortgagee. Notwithstanding any such
reletting or re-entry to take possession, Landlord may at any time thereafter
elect to terminate this Lease for a previous then continuing uncured default. No
act or thing done by Landlord or its agents during the term hereby granted shall
be deemed an acceptance of a surrender of the Premises, and no agreement to
accept a surrender of the Premises shall be valid unless the same be made in
writing by Landlord and Mortgagee.

Section 12.4 No taking of possession of and/or reletting the Premises, or any
part thereof, shall relieve Tenant of its liabilities and obligations hereunder,
all of which shall survive such expiration, termination, repossession or
reletting.

Section 12.5 To the extent not prohibited by applicable law, Tenant hereby
waives and releases all rights now or hereafter conferred by statute or
otherwise which would have the effect of limiting or modifying any of the
provisions of this Article XII. Tenant shall execute, acknowledge and deliver
any instruments which Landlord may request, whether before or after the
occurrence of an Event of Default, evidencing such waiver or release.

Section 12.6 To the extent permitted by applicable law, the Operating Lease Rent
payable by Tenant hereunder and each and every installment thereof, and all
costs, actual, customary and reasonable attorneys’ fees and disbursements and
other expenses which may be incurred by Landlord in enforcing the provisions of
this Lease on account of any delinquency of Tenant in carrying out the
provisions of this Lease shall be and they hereby are declared to constitute a
valid Lien upon the interest of Tenant in this Lease and in the Premises.

Section 12.7 Suit or suits for the recovery of damages, or for a sum equal to
any installment or installments of Operating Lease Rent payable hereunder or any
deficiencies or other sums payable by Tenant to Landlord pursuant to this
Article XII, may be brought by Landlord from time to time at Landlord’s
election, and nothing herein contained shall be deemed to require Landlord to
await the date whereon this Lease or the Term would have expired by limitation
had there been no Event of Default by Tenant and termination.

Section 12.8 Nothing contained in this Article XII shall limit or prejudice the
right of Landlord to prove and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization or dissolution proceeding an amount
equal to the maximum allowed by Legal Requirement governing such proceeding and
in effect at the time when such damages are to be proved, whether or not such
amount shall be greater than, equal to or less than the amount of the damages
referred to in any of the preceding Sections of this Article XII.

 

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Section 12.9 Except as otherwise expressly provided herein or as prohibited by
applicable law, Tenant hereby expressly waives the service of any notice of
intention to re-enter provided for in any statute, or of the institution of
legal proceedings to that end, and Tenant, for and on behalf of itself and all
Persons claiming through or under Tenant, also waives any and all right of
redemption provided by any Legal Requirement or statute now in force or
hereafter enacted or otherwise, or re-entry or repossession or to restore the
operation of this Lease in case Tenant shall be dispossessed by a judgment or by
warrant of any court or judge or in case of re-entry or repossession by Landlord
or in case of any expiration or termination of this Lease.

Section 12.10 No failure by Landlord to insist upon the strict performance of
any covenant, agreement, term or condition of this Lease or to exercise any
right or remedy consequent upon a breach thereof, or receipt or acceptance of
Operating Lease Rent with knowledge of or during the continuance of any such
breach, shall constitute a waiver or relinquishment of any such breach or of
such covenant, agreement, term or condition. No covenant, agreement, term or
condition of this Lease to be performed or complied with by Tenant, and no
breach thereof, shall be waived, altered or modified except by a written
instrument executed by Landlord. No waiver of any breach shall affect or alter
this Lease, but each and every covenant, agreement, term and condition of this
Lease shall continue in full force and effect with respect to any other then
existing or subsequent breach thereof.

Section 12.11 In the event of any breach by Tenant of any of the covenants,
agreements, terms or conditions contained in this Lease, Landlord shall be
entitled to a decree compelling performance of any of the provisions hereof and
the restraint by injunction of the violation or attempted or threatened
violation of any of the terms, covenants and conditions of this Lease, and shall
have the right to invoke any rights and remedies allowed at law or in equity or
by statute or otherwise as though re-entry, summary proceedings, and other
remedies were not provided for in this Lease. The rights granted to Landlord in
this Lease shall be cumulative of every other right or remedy which Landlord may
otherwise have at law, in equity or otherwise, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.

Section 12.12 Tenant shall pay to Landlord and each other Indemnified Party all
reasonable costs and expenses, including, without limitation, reasonable
attorneys’ fees and disbursements, incurred by such Indemnified Party in any
action or proceeding to which such Indemnified Party may be made a party by
reason of any act or omission of Tenant. Tenant also shall pay to Landlord and
each other Indemnified Party all reasonable costs and expenses, including,
without limitation, actual, customary and reasonable attorneys’ fees and
disbursements, incurred by Landlord and any Lender in enforcing any of the
covenants and provisions of this Lease and incurred in any action brought by
Landlord or such Lender against Tenant on account of the provisions hereof, and
all such costs, expenses and attorneys’ fees and disbursements may be included
in and form a part of any judgment entered in any proceeding brought by Landlord
or such Lender against Tenant on or under this Lease; provided, however, that
Tenant shall only be obligated to pay to the extent that Landlord or such Lender
is successful in such action. All of the sums paid or obligations incurred by
Landlord or such Lender as aforesaid, with interest (at the Default Rate) and
costs, shall be paid by Tenant to Landlord or such Lender, as applicable, on
demand.

 

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Section 12.13 If Tenant shall fail to pay any installment of Base Rent,
Supplementary Rent or Other Rent when such payment is due, Tenant shall pay to
Landlord, in addition to such payment of Base Rent, Supplementary Rent or Other
Rent, as the case may be, interest on the amount unpaid at the Default Rate
(which for all purposes hereunder where such rate is specified shall remain the
applicable interest rate even after a judgment against Tenant), computed from
the date such payment was due to and including the date of payment, as well as
any late payment charge due under the Loan Documents.

ARTICLE XIII

NO WAIVER

Section 13.1 No receipt of moneys by Landlord from Tenant after the termination
or cancellation of this Lease or termination of Tenant’s right to possess the
Premises (or after the giving of any notice of the termination of this Lease or
Tenant’s right to possess the Premises) shall reinstate, continue or extend the
Term, or affect any notice theretofore given to Tenant, or affect or otherwise
operate as a waiver of the right of Landlord to enforce the payment of Base
Rent, Supplementary Rent or Other Rent then due, or thereafter falling due, or
operate as a waiver of the right of Landlord to recover possession of the
Premises by proper suit, action, proceeding or remedy; it being agreed that,
after the service of notice to terminate or cancel this Lease or Tenant’s right
to possess the Premises, or the commencement of suit, action or summary
proceedings, or any other remedy, or after a final order or judgment for the
possession of the Premises, Landlord may demand, receive and collect any moneys
due, or thereafter falling due, without, in any manner whatsoever, affecting
such notice, proceeding, suit, action, order or judgment; and any and all such
moneys collected shall be deemed to be payments on account of the use and
occupation of the Premises or, at the election of Landlord, on account of
Tenant’s liability hereunder. The acceptance of any check or payment bearing or
accompanied by any endorsement, legend or statements shall not, of itself,
constitute any change in or termination of this Lease.

Section 13.2 The failure of Landlord to enforce any agreement, condition,
covenant or term, by reason of its breach by Tenant shall not be deemed to void,
waive or affect the right of Landlord to enforce the same agreement, condition,
covenant or term on the occasion of a subsequent default or breach. No surrender
of the Premises by Tenant (prior to any termination of this Lease) shall be
valid unless consented to in writing by Landlord and Lender.

ARTICLE XIV

ESTOPPEL CERTIFICATE; CONSENT

Section 14.1 Tenant agrees that it shall, at any time and from time to time, but
no more than quarterly unless an Event of Default shall be continuing, upon not
less than ten (10) days’ prior notice by Landlord or any Lender, execute,
acknowledge and deliver to the person requesting the same a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect (or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the modifications), (ii) the Base Rent, Supplementary
Rent and Other Rent payable and the dates to which the Base Rent, Supplementary
Rent and Other Rent have been paid, (iii) the amount of Base Rent actually paid
on the last date such Base Rent was paid,

 

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(iv) the amount of Management Fees subtracted from Base Rent on the last date
such Base Rent was paid, (v) the date through which Management Fees have been
paid in full, (vi) that the address for notices to be sent to Tenant is as set
forth in this Lease, (vii) whether to Tenant’s actual knowledge, Landlord is in
default in keeping, observing or performing any term, covenant, agreement,
provision, condition or limitation contained in this Lease and, if in default,
specifying each default, (viii) the Commencement Date and Expiration Date,
(ix) that Tenant is in possession of the Premises, and (x) any other matters
reasonably requested by Landlord or Lender, as applicable, it being intended
that any such statement delivered pursuant to this Article XIV may be relied
upon by Landlord and any prospective purchaser of the Premises, Lender and
prospective Lender.

Section 14.2 Landlord has secured financing of its interest in the Premises by,
among other things, assigning Landlord’s interest in this Lease and the sums
payable thereunder and hereunder to Mortgagee. Tenant hereby consents to such
assignment and, without further consideration, agrees to execute and deliver
documents and certificates reasonably requested by Mortgagee to evidence same
and provide additional information and take such other actions as may be
necessary to consummate the purposes under the Loan Documents; provided,
however, that the result of the foregoing actions shall not put Tenant in a
materially worse position or increase Tenant’s costs hereunder (other than the
direct costs of implementing such changes, such as legal fees, which Tenant
hereby agrees to pay).

ARTICLE XV

QUIET ENJOYMENT

Section 15.1 Tenant, upon the payment of the Operating Lease Rents herein
reserved and upon the due performance and observance of all the covenants,
conditions and agreements herein contained on Tenant’s part to be performed and
observed, including without limitation, the maintenance by Tenant of all
necessary Gaming Licenses required for the operation of the Premises in good
standing and the compliance by Tenant with all Legal Requirements, shall and may
at all times during the Term peaceably and quietly have, hold and enjoy the
Premises without or hindrance of and from any Person claiming by, through or
under Landlord, subject, nevertheless, to the terms and provisions of this
Lease, including the provisions of Section 10.2.

ARTICLE XVI

SURRENDER

Section 16.1 Tenant shall, on the last day of the Term, or upon the sooner
termination of the Term, (i) quit and surrender to Landlord the Premises
(including the Leased Personal Property) vacant (subject to the below terms of
this Section 16.1), and in the same level of condition and repair as on the
Closing Date, reasonable wear and tear excepted, or in such higher level of
condition as required pursuant to the other terms hereof, and (ii) remove or

 

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demolish all of the Gaming Equipment which Landlord shall have elected to cause
Tenant to remove pursuant to and in accordance with Section 5.7 hereof;
provided, however, that at the termination of this Lease, Tenant shall allow the
successor tenant to use the Gaming Equipment for a reasonable period of time
until such successor tenant is able to acquire replacements therefor, as long as
(if no Event of Default shall have been continuing as of the termination of the
Term) the successor tenant shall pay Tenant the reasonable rental value for such
use; provided, however, that Tenant shall not be required to allow any successor
tenant to use the Gaming Equipment if such successor tenant does not hold the
applicable Gaming License or, to the extent that the Gaming Equipment is leased
from a third-party, such third-party does not consent to such use by such
successor tenant. Upon termination of this Lease, Landlord may, to the extent
permitted by applicable law, cause the transfer of the operation and management
of the Premises and leasing of the Premises to any replacement operator, manager
or tenant of the Premises designated by Landlord, and after such replacement
operator, manager or tenant obtains all appropriate Gaming Licenses, Tenant
shall cooperate with Landlord to transfer all books and records relating to the
Premises and shall provide (and shall cooperate with Landlord in providing) all
Transition Services during the Transition Period as required by Section 4.4 to
the new Casino operator or manager so as to provide continuation of Casino
operations and minimize disruption. Tenant’s obligation to observe and perform
this covenant shall survive the expiration or earlier termination of the Term.
In the event that Tenant fails to surrender the Premises as aforesaid, Landlord
shall have the right to exercise the applicable remedies upon the occurrence of
an Event of Default. Tenant shall have the right, as long as it is not in
default under this Lease, upon the expiration of the Term (but subject to the
temporary use by the successor tenant referred to above), to remove from the
Premises all of the Gaming Equipment, provided that Tenant shall at its own cost
and expense reasonably restore and repair any damage to the Premises caused by
the removal of the Gaming Equipment. Such removal shall be done upon advance
notice, at a mutually convenient time approved by Landlord and without
disruption of the successor tenant’s business operations. The term “reasonable
wear and tear” as used herein shall not be construed as permitting any missing
items or components of any item of Leased Personal Property. Upon surrender,
Tenant shall provide any additional documentation reasonably requested by
Landlord relating to redelivery of or Landlord’s interest in each item of Leased
Personal Property.

Section 16.2 Upon the expiration of the Term, all Base Rent, Supplementary Rent
(subject to Section 3.3) and Other Rent payable by Tenant under this Lease shall
be apportioned to the date of expiration.

Section 16.3 Tenant acknowledges that possession of the Premises must be
surrendered to Landlord at the expiration or sooner termination of the term of
this Lease. The parties recognize and agree that the damage to Landlord
resulting from any failure by Tenant to timely surrender possession of the
Premises as aforesaid will be extremely substantial, will exceed the amount of
the Base Rent, Supplementary Rent and Other Rent theretofore payable hereunder,
and will be impossible to accurately measure. Tenant therefore agrees that if
possession of the Premises is not surrendered to Landlord upon the expiration or
sooner termination of the term of this Lease, then Tenant shall pay to Landlord,
as liquidated damages for each month and for each portion of any month during
which Tenant holds over in the Premises after the expiration or sooner
termination of the term of this Lease, a sum equal to the higher of the then
fair market rental value of the Premises, determined taking into account the

 

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effect of all material factors reasonably relevant to such determination and as
approved by Mortgagee, or two (2) times the aggregate of the Base Rent,
Supplementary Rent and Other Rent which was payable under this Lease with
respect to the last month of the term hereof. Nothing herein contained shall be
deemed to permit Tenant to retain possession of the Premises after the
expiration or sooner termination of the Term of this Lease; and in the event of
any unauthorized holding over, Tenant shall indemnify each of the Indemnified
Parties against all claims for damages by any other lessee or prospective lessee
to whom Landlord may have leased all or any part of the Premises effective
before or after the expiration or termination of the Term of this Lease. If
Tenant holds over in possession after the expiration or termination of the term
of the Lease, such holding over shall not be deemed to extend the term or renew
this Lease, but the tenancy thereafter shall continue as a tenancy from month to
month upon the terms and conditions of this Lease at the Base Rent,
Supplementary Rent and Other Rent as herein increased. Tenant hereby waives the
benefit of any Legal Requirement which would contravene or limit the provisions
set forth in this Section 16.4. This provision shall survive the expiration or
earlier termination of this Lease.

ARTICLE XVII

ACCESS

Section 17.1 Subject to Gaming Laws, Landlord shall at all times during the Term
have the right and privilege to enter the Premises upon prior notice during
business hours and in compliance with reasonable security requirements of Tenant
(except in the case of an emergency) for the purpose of inspecting the same or
for the purpose of showing the same to prospective purchasers or Mortgagees
thereof. Landlord shall also have the right and privilege at all times during
the Term to post notices of nonresponsibility for work performed by or on behalf
of Tenant and, during the last one (1) year of the Term, Landlord shall have the
right and privilege, to enter the Premises at reasonable times during business
hours for the purpose of exhibiting the same to prospective new tenants.

Section 17.2 Subject to Gaming Laws, Landlord and Mortgagee shall at all times
during the Term have the right to enter the Premises or any part thereof for the
purpose of making such repairs or Alterations therein as Landlord deems
necessary or advisable following the failure of Tenant to make any such repairs
or Alterations beyond any applicable notice and cure period, but such right of
access shall not be construed as obligating Landlord to make any repairs to or
replacements to the Premises or as obligating Landlord to make any inspection or
examination of the Buildings. In the event of an emergency, subject to Gaming
Laws, Landlord shall have the right to enter the Premises or any part thereof.

ARTICLE XVIII

ENVIRONMENTAL MATTERS

Section 18.1 Tenant will not use, generate, treat, hold, possess, refine,
handle, abate, remove, control, manage, manufacture, produce, store, release,
discharge or dispose of in, on, under, from or about the Premises or transfer or
transport to or from the Premises any

 

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Hazardous Substance and will not allow or suffer any other Person or entity to
do so (except for non-material quantities of substances which are customarily
used in the ordinary operation of a casino resort in compliance with
Environmental Laws and for which Tenant has obtained any necessary permits,
collectively, “Immaterial Use”).

Section 18.2 Tenant shall keep and maintain the Premises in compliance with, and
shall not cause, permit or suffer the Premises to be in violation of any
Environmental Law.

Section 18.3 Tenant shall cause the Premises to be kept free and clear of all
Liens and other encumbrances imposed pursuant to any applicable Environmental
Law, whether due to any act or omission of Tenant or any other Person.

Section 18.4 Tenant shall give prompt written notice to Landlord of:

(a) any use, generation, manufacture, production, storage, release, discharge or
disposal of any Hazardous Substance in, on, under, from or about the Premises or
the migration thereof to or from other property, in each case, during or prior
to the Term (other than Immaterial Use);

(b) the commencement, institution or threat of any proceeding, inquiry or action
by or written notice from any Governmental Authority with respect to the use or
presence of any Hazardous Substance in, on, under, from or about the Premises or
the migration thereof from or to other property, in each case, during or prior
to the Term;

(c) all claims made or threatened by any third party against Tenant or the
Premises relating to any damage, contribution, cost recovery, compensation, loss
or injury resulting from any Hazardous Substance, in each case, during or prior
to the Term;

(d) any occurrence or condition on the Premises, in each case, during the Term,
that could cause the Premises or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use under any
Environmental Law; and

(e) any claims for the incurrence of expense by any Governmental Authority or
others in connection with the assessment, containment or removal of any
Hazardous Substance located on, under, from or about the Premises, in each case,
during or prior to the Term.

Landlord shall give prompt written notice to Tenant of any of the facts, events
or circumstances set forth in (ii) and (iii) above, including all claims under
Environmental Laws commenced or threatened against Landlord with respect to the
Premises during the Term.

Section 18.5 Landlord and Mortgagee shall have the right, but not the
obligation, to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Premises in connection with
any Environmental Law. In the event that Tenant refuses or fails to defend any
such legal proceedings or actions concerning matters for which Tenant has
primary responsibility under this Article XVIII, Landlord and Mortgagee shall
have the right, but not the obligation to defend proceedings or actions using
counsel chosen by Landlord or Mortgagee, as applicable, and Tenant shall
reimburse Landlord and Mortgagee for its actual, customary and reasonable
attorney’s fees incurred in connection with such defense.

 

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Section 18.6 Without Landlord’s and Mortgagee’s prior written consent, which
consent shall not be unreasonably withheld or delayed, Tenant shall not take any
remedial action in response to the presence of any Hazardous Substance in, on,
under, from or about the Premises, nor enter into any settlement, consent or
compromise which might, in Landlord’s or Mortgagee’s judgment, impair the value
of, respectively, Landlord’s or Mortgagee’s interest in the Premises; provided,
however, that such prior consent shall not be necessary if the presence of
Hazardous Substance in, on, under, from or about the Premises either poses an
immediate threat to the health, safety or welfare of any individual or is of
such a nature that an immediate remedial response is necessary and it is not
reasonably practical or possible to obtain such consent before taking such
action. In such event Tenant shall notify Landlord and Mortgagee as soon as
practicable of any action so taken. Such consent shall not be withheld, where
such consent is required hereunder, if a particular remedial action is ordered
by a court or any Governmental Authority of competent jurisdiction.

Section 18.7 (a) Tenant shall protect, indemnify, defend, release and hold
harmless each of the Indemnified Parties from and against any and all claim,
loss, damage, cost, expense, liability, fines, penalties, charges,
administrative and judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind (including, without limitation,
reasonable attorneys’ fees and costs but excluding consequential damages,
punitive damages and diminution in value) directly or indirectly arising out of
or attributable to, in whole or in part, (i) the breach of any of the covenants,
representations and warranties of this Article XVIII by Tenant, or (ii) the use,
generation, manufacture, production, storage, release, threatened release,
discharge, preservation, treatment, holding, processing, refining, controlling,
management, abatement, removal or disposal of a Hazardous Substance in, on,
under, from or about the Premises (whether arising during or prior to the Term)
or (iii) any violation or liability under any Environmental Law arising from any
other activity carried on or undertaken on the Premises by Tenant or any
employees, agents, contractors or subcontractors of Tenant or any third Persons
occupying or present on the Premises (whether arising during or prior to the
Term), including, without limitation: (A) the costs of any required or necessary
repair, cleanup or detoxification of the Premises and the preparation and
implementation of any closure, remedial or other required plans including,
without limitation: (1) the costs of removal or remedial action incurred by any
Governmental Authority, or response costs incurred by any other Person, or
damages from injury to, destruction of, or loss of natural resources, including
the costs of assessing such injury, destruction or loss, incurred pursuant to
any Environmental Law; (2) the clean-up costs, fines, damages or penalties
incurred pursuant to the provisions of any Legal Requirements; and (3) the cost
and expenses of abatement, correction or clean-up, fines, damages, response
costs or penalties which arise from the provisions of any other Legal
Requirements; and (B) liability for personal injury or property damage,
including damages assessed for the maintenance of the public or private
nuisance, response costs or for the carrying on of an abnormally dangerous
activity; provided, however, in no event shall Tenant have any liability under
this Section 18.7 to any Indemnified Party for such Indemnified Party’s gross
negligence, willful misconduct or fraud.

 

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This indemnity is intended to be operable under 42 U.S.C. Section 9607(e)(1),
and any successor section thereof and shall survive expiration or earlier
termination of this Lease and any transfer of all or a portion of the Premises
by Tenant.

(b) The foregoing indemnity shall in no manner be construed to limit or
adversely affect Landlord’s rights under this Article XVIII, including, without
limitation, Landlord’s rights to approve any Remedial Work or the contractors
and consulting engineers retained in connection therewith.

Section 18.8 In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature (the
“Remedial Work”) is required by any Legal Requirement, or by any Governmental
Authority, Tenant shall within thirty (30) days after written demand for
performance thereof by Landlord (or such shorter period of time as may be
required under any Legal Requirement or material agreement), commence to
perform, or cause to be commenced, and thereafter diligently prosecute to
completion within such period of time as may be required under any Legal
Requirement or agreement (or as otherwise required by Landlord), all such
Remedial Work at Tenant’s sole expense in accordance with the requirements of
any applicable Legal Requirement or Governmental Authority, including or
Environmental Law. All such Remedial Work shall be performed by one or more
contractors, approved in advance in writing by Landlord and Mortgagee, which
approval shall not be unreasonably withheld or delayed, and under the
supervision of a consulting engineer approved in advance in writing by Landlord
and Mortgagee, which approval shall not be unreasonably withheld or delayed. All
costs and expenses of such Remedial Work shall be paid by Tenant, including,
without limitation, the charges of such contractor(s) and/or the consulting
engineer, and Landlord’s and Mortgagee’s actual, customary and reasonable
attorneys’ fees and costs incurred in connection with monitoring or review of
such Remedial Work. In the event Tenant shall fail to timely commence, or cause
to be commenced, or fail to complete such Remedial Work within the time required
above, Landlord may, but shall not be required to, cause such Remedial Work to
be performed and all reasonable costs and expenses thereof incurred in
connection therewith shall be paid by Tenant to Landlord promptly upon demand,
together with interest at the Default Rate from the date the same was expended
and until paid (and be included in, and form a part of, Operating Lease Rent).

Section 18.9 In the event that Landlord believes that there may be a violation
or threatened violation by Tenant of any Environmental Law or a violation or
threatened violation by Tenant of any covenant under this Article XVIII,
Landlord and Mortgagee each is authorized, but not obligated, by itself, its
agents, employees or workmen to enter at any reasonable time following notice,
so long as such entry does not unduly interfere with Tenant’s normal conduct of
business, and is in compliance with Gaming Laws, upon any part of the Premises
for the purposes of inspecting the same for Hazardous Substances and Tenant’s
compliance with this Article XVIII, and such inspections may include, without
limitation, soil borings. If such inspection reveals any violation of
Environmental Law or violation by Tenant of any covenant under this
Article XVIII, Tenant agrees to pay to Landlord, within ten (10) days after
Landlord’s written demand, all actual, customary and reasonable expenses, costs
or other amounts incurred by Landlord or Mortgagee in performing any inspection
for the purposes set forth in this Section 18.9.

 

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Section 18.10 All costs and expenses reasonably incurred by Landlord under this
Article XVIII shall be immediately due and payable as Other Rent within ten
(10) days after written demand and shall bear interest at the Default Rate from
the date of notice of such payment by Landlord and the expiration of any grace
period provided herein until repaid.

Section 18.11 “Environmental Law” and “Environmental Laws” shall mean
respectively any one or more Legal Requirements pertaining to health, industrial
hygiene, hazardous waste or the environmental conditions in, on, under, from or
about the Premises or any part thereof, including, without limitation, the laws
listed in the definition of Hazardous Substances below, and the rules and
regulations promulgated thereunder; in each case as the same may have been and
hereafter may be supplemented, modified, amended, restated or replaced from time
to time.

Section 18.12 “Hazardous Substance” and “Hazardous Substances” shall mean,
respectively, any one or more element, compound, chemical mixture, contaminant,
pollutant, material, waste or other substance which is defined, determined or
identified as a “hazardous substance”, “hazardous waste”, “hazardous material”,
“toxic substance” or “toxic material” under any Legal Requirement, including,
without limitation, the following: (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified in scattered sections of 26
U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. § 9601 et. seq.); (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et. seq.); (iii) the
Hazardous Materials Transportation Act (49 U.S.C. § 1801 et. seq.); (vi) the
Toxic Substances Control Act (15 U.S.C. § 2601 et. seq.); (v) the Clean Water
Act (33 U.S.C. § 1251 et. seq.); (vi) the Clean Air Act (42 U.S.C. § 7401 et.
seq.) ; (vii) the Safe Drinking Water Act (21 U.S.C. § 349; 42 U.S.C. § 201 and
§ 300f et. seq.); (viii) the National Environmental Policy Act of 1969 (42
U.S.C. § 3421); (ix) the Fungicide and Rodenticide Act; (x) Endangered Species
Act; (xi) Federal Insecticide Act; (xii) the Superfund Amendment and
Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29
U.S.C., 33 U.S.C. and 42 U.S.C.); and (xiii) Title III of the Superfund
Amendment and Reauthorization Act (40 U.S.C. § 1101 et. seq.).

Section 18.13 All representations, warranties, covenants and indemnities of
Tenant in this Article XVIII shall continue to be binding upon Tenant, and its
successors and assigns, after the expiration or earlier termination of this
Lease for a period of two years (except that any claims brought prior to the
expiration of such period shall survive until resolved).

Section 18.14 Notwithstanding the foregoing provisions of this Article XVIII,
the obligations of Landlord contained in the Mortgage Loan Documents with regard
to environmental matters shall be deemed to be obligations of Tenant, and shall
take precedence over and be in lieu of any inconsistent provisions in this
Article XVIII.

ARTICLE XIX

FINANCIAL AND REGULATORY REPORTING COVENANTS

Section 19.1 (a) Tenant acknowledges that Landlord and, to the extent set forth
in the Mortgagee Loan Documents, Mortgagee (at its cost and expense) shall have
the right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office of
Tenant or any other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Landlord or Mortgagee shall desire.

 

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(b) Tenant shall deliver to Landlord the annual and quarterly financial
statements and other reports and information required to be delivered by
Landlord to Mortgagee pursuant to Section 5.1.11 of the Mortgage Loan Agreement,
in each case in the form and within the time periods specified therein. Tenant
hereby consents to Landlord’s delivery of such statements, reports and
information to Mortgagee pursuant to the Mortgage Loan Agreement and to the
mezzanine lenders under the Mezzanine Loan Documents. Tenant acknowledges that
although Tenant is not a party to the Mortgage Loan Documents or Mezzanine Loan
Documents, the Mortgagee and mezzanine lenders have a legitimate interest in
receiving and reviewing such statements, reports and information.

(c) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Tenant shall submit to Landlord and Mortgagee an Annual
Budget not later than the commencement of such period or Fiscal Year in form
reasonably satisfactory to Mortgagee.

(d) Any reports, statements or other information required to be delivered under
this Lease shall be delivered (i) in paper form or (ii) if requested by Landlord
and within the capabilities of Tenant’s data systems without change or
modification thereto, in electronic form and prepared using a Microsoft Word,
Access or Excel for Windows or WordPerfect for Windows files (which files may be
prepared using a spreadsheet program and saved as word processing files). Tenant
agrees that each Lender may disclose information regarding the Premises (and the
use and operation thereof) as provided to Mortgagee pursuant to this Section in
connection with the securitization or syndication to such parties requesting
such information in connection therewith.

Section 19.2 Notwithstanding the foregoing provisions of this Article XIX, all
provisions contained in the Loan Documents with regard financial and other
covenants with respect to Tenant, the Premises and the use and operation thereof
shall be deemed to be obligations of Tenant, and shall take precedence over and
be in lieu of any inconsistent provisions in this Article XIX.

ARTICLE XX

LICENSED CASINO OPERATIONS

Section 20.1 Tenant shall operate the Premises in a manner that is substantially
consistent with its current operation. Landlord is merely the owner of the real
property which is the subject of this Lease and shall have no liability in
connection with the operation of the Premises or the provision of gaming
services from or at or near the Premises. Tenant shall have the exclusive
responsibility as the operator, licensee and provider of the Premises,
independent and separate from Landlord: (i) for securing and maintaining in full
force and effect all material Gaming Licenses relating to such Premises and
services; (ii) for compliance in all material respects with all Legal
Requirements including without limitation all Gaming Licenses, and

 

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(iii) for all computer systems, software, record keeping, data bases and privacy
requirements relating to the Premises and the use and operation thereof that,
under Legal Requirements, must be held by the holder of the Gaming Licenses, all
of which shall be provided at Tenant’s own expense.

Section 20.2 For purposes of satisfying the requirements of any Loan Documents
or any refinancing, sale or appraisal process, Landlord and Mortgagee shall have
the right (but not the obligation) to conduct such inspections, audits,
visitations and quality control reviews, of the Premises and services provided
by Tenant from or at the Premises as Landlord and Mortgagee may reasonably
desire, and for such purposes Tenant shall provide to Landlord and its
representatives, and Mortgagee and its representatives, access to Tenant’s books
and records relating to the Premises and the use and operation thereof and
services during normal business hours upon reasonable notice. No such
inspection, audit, visitation or quality control review conducted by Landlord or
its representatives or Mortgagee or its representatives or any report resulting
therefrom shall modify or reduce in any way Tenant’s obligations under this
Lease or as the exclusive operator, licensee and provider of the Premises.

Section 20.3 Landlord and Tenant shall be independent contractors and nothing in
this Lease shall be construed as creating a partnership, joint venture,
employment, agency, license or franchise relationship. Tenant shall not have any
authority to create any obligation binding upon Landlord.

Section 20.4 All employees, contractors, consultants, professionals and
providers relating to the Premises and the use and operation thereof, and
relating to [gaming] services provided from or at the Premises, shall (as
between Tenant and Landlord) be deemed to be employees or contractors of Tenant
and not of Landlord.

Section 20.5 Tenant shall have exclusive responsibility for all of the on-site
employees, contractors and consultants of or working in connection with the
Premises and the use and operation thereof, and shall indemnify each of the
Indemnified Parties for all Claims by such employees, contractors and
consultants which may be hired or retained by Tenant, in each case during the
Term.

Section 20.6 Tenant shall have the exclusive obligation to obtain and provide at
its own expense all deposits, bonds, insurance, letters of credit, working
capital, cash collateral, reserves, and other financial requirements of Gaming
Laws to operate and provide gaming services at the Premises.

Section 20.7 Other than pursuant to Section 4.2, Tenant shall not enter into any
transaction other than in the ordinary course of its business and in material
compliance with Legal Requirements and on terms not materially less favorable to
Tenant than those it would obtain in a comparable arms length transaction with a
Person or entity not an Affiliate.

Section 20.8 Other than pursuant to Section 4.2, Tenant shall not, without
Landlord and Mortgagee’s prior written consent, assign or transfer, or delegate
any responsibilities with respect to any Gaming License or Operating Permit,
except (in connection with such delegation) in a manner that would not have a
Material Adverse Effect.

 

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Section 20.9 Tenant shall not assign, transfer, or pledge as collateral security
any of its interest in any Gaming Licenses pertaining to Tenant or the Premises
without Landlord’s and Mortgagee’s prior written consent, which consent may be
granted or refused in Landlord’s and Mortgagee’s sole discretion. Tenant shall
hold such Gaming Licenses free from restrictions or known conflicts that would
materially impair the use or operation of the Premises as intended.

Section 20.10 Tenant shall cause the Premises to be operated, in all material
respects, in accordance with all applicable Legal Requirements, including Gaming
Laws, and all Gaming Licenses and other Operating Permits. Tenant shall post all
required bonds, if any, with any Gaming Authority as and in the amounts required
under all applicable Legal Requirements (and shall, if Landlord or Mortgagee
makes a request therefor, promptly provide Landlord or Mortgagee with copies of
all bonds reasonably requested by such party).

Section 20.11 Tenant shall make all filings required under the Gaming Laws, or
in connection with any Gaming Licenses or Operating Permits, and shall deliver
to Landlord and Mortgagee copies of such filings as such party may reasonably
request. Tenant will 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.

Section 20.12 (a) Tenant shall deliver to Landlord and Mortgagee such evidence
of compliance with Legal Requirements, including Gaming Laws, as any such party
may reasonably request. Tenant shall immediately deliver to Landlord and
Mortgagee any material notice of non-compliance or violation of any Legal
Requirement or of any material inquiry or investigation commenced by the Gaming
Authorities in connection with the Premises, in each case that might have a
Material Adverse Effect. Tenant shall immediately notify Landlord and Mortgagee
if it believes that any material license, including any material Gaming License,
is in imminent danger of being revoked or suspended, or that any material action
is pending, being considered or being, or could be, taken to revoke or suspend
Tenant’s material licenses, including the material Gaming Licenses, or to fine,
penalize or impose remedies upon Tenant, 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 Tenant, in each case if same
could reasonably be expected to have a Material Adverse Effect. Tenant shall
immediately deliver to Landlord and Mortgagee any notice received by Tenant
alleging or relating to the non-compliance by Tenant with any material Legal
Requirements, including material Gaming Laws, if same is reasonably likely to
result in a Material Adverse Effect.

(b) Tenant shall furnish to Landlord and Mortgagee, promptly after receipt
thereof, notices regarding or correspondence or materials filed in connection
with any actions, suits, and proceedings before any Governmental Authority or
arbitrator that would be reasonably expected to have a material adverse effect
on Tenant or the Premises.

(c) Tenant shall furnish to Landlord and Mortgagee, promptly after receipt by
Tenant of the notice of commencement thereof, notice of (i) any audit,
investigation, claim, proceeding, settlement, judgment, consent order, (ii) any
suspension, debarment or disqualification of Tenant or any of Tenant’s
Affiliates or Subsidiaries from being a holder of any Gaming License, or
(iii) any suspension, termination, or revocation of any Gaming License of
Tenant, in each case if same is reasonably likely to result in a material
adverse effect on Tenant or the Premises.

 

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(d) Tenant shall provide Landlord and Mortgagee reasonable notice of any and all
material settlement discussions and/or negotiations between representatives of
Tenant and any Governmental Authority, including without limitation,
negotiations with respect to any material Claim, settlement agreement, consent
order or corporate integrity agreement between Tenant and/or its Affiliates and
any Governmental Authority (“Settlement Discussions”). In connection with
material Settlement Discussions, (i) Tenant shall timely provide Landlord and
Mortgagee with copies of any and all documents that Tenant intends to submit, or
that Tenant receives, in connection with any Settlement Discussions, and
(ii) Tenant shall advise Landlord and Mortgagee as to the status of such
Settlement Discussions.

(e) No receipts of any such notice under this Section shall impose any
obligation on Landlord or Mortgagee to take any action or to enforce its rights
hereunder or otherwise remedy the circumstances leading to such notice.

Section 20.13 Subject in each case to Force Majeure, Tenant shall cause 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 Lease with respect to the performance of any such alterations or repairs).
Tenant shall cause the Premises to be at all times operated, managed and
maintained, at all times and in the manner and accordance with the standards
required pursuant to this Lease and all applicable material Legal Requirements.

Section 20.14 If Landlord shall be in default under this Lease, then (subject to
any applicable Legal Requirements) Mortgagee shall have the right (but not the
obligation), to cause the default or defaults under this Lease to be remedied
and otherwise exercise any and all rights of Landlord under this Lease, as may
be necessary to prevent or cure any default provided such actions are necessary
to protect Mortgagee’s interest under the Mortgage Loan Documents, and Mortgagee
shall have the right to enter all or any portion of the affected Premises at
such times and in such manner as Mortgagee deems necessary, to prevent or to
cure any such default. The actions or payments of Mortgagee to cure any default
by Landlord under this Lease shall not remove or waive, as between Landlord and
Mortgagee, any default that may occur or occurred under the Mortgage Loan
Documents by virtue of such default by Landlord under this Lease.

Section 20.15 Tenant shall notify Mortgagee promptly in writing of (i) the
occurrence, to Tenant’s knowledge, of any material default by any party to this
Lease, (ii) the occurrence, to Tenant’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 this Lease, and (iii) the receipt by Tenant of any
notice (written or otherwise) from any party under this Lease noting or claiming
the occurrence of any default by Tenant under this Lease.

Section 20.16 Tenant shall (subject to any applicable Legal Requirements)
promptly execute, acknowledge and deliver to Mortgagee such instruments as may
reasonably be required to permit Mortgagee to cure any default under this Lease
or permit Mortgagee to take such other action required to enable Mortgagee to
cure or remedy the matter in default and preserve the security interest of
Mortgagee under the Mortgage Loan Documents with respect to the Premises.

 

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Section 20.17 Tenant possesses 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
its business and the use, occupation and operation of the Premises
(collectively, “Operating Permits”); each such Operating Permit is and will be
in full force and effect (unless, in the case of any one Operating Permit, such
Operating Permit is no longer necessary or advisable for the conduct of Tenant’s
business); Tenant 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 restriction thereon.

Section 20.18 Tenant hereby represents and warrants as follows:

(a) Each Gaming License is in full force and effect (except for such Gaming
Licenses as are no longer necessary or advisable for the conduct of Tenant’s
business); Tenant 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 Tenant are in
compliance in all material respects with all such Gaming Licenses (to the extent
required by applicable law), and no event (including, without limitation, any
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;

(b) Tenant reasonably believes that Tenant will be able to maintain in effect
all Gaming Licenses necessary for the lawful conduct of its 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;

(c) Tenant is not in default in any material respect under, or in violation in
any material respect of, any such 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 such Gaming License)
unless such Gaming License is no longer necessary or advisable for the conduct
of Tenant’s business;

(d) Tenant has not received any notice of any violation of applicable Legal
Requirements which has caused or would reasonably be expected to cause any such
Gaming License to be suspended, forfeited, modified in any manner that would
have a material adverse effect on Tenant or the Premises or the business
conducted thereat, not renewed, rescinded or revoked;

(e) 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 such Gaming License; and

 

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(f) The continuation, validity and effectiveness of all Gaming Licenses will not
be adversely affected by the transactions contemplated by this Lease.

Section 20.19 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,
threatened against Tenant or 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 Tenant that is
reasonably likely to have a material adverse effect on Tenant or the Premises.

Section 20.20 Neither the execution, delivery or performance of any of the Loan
Documents (nor the Securitization or any participations in the Mortgage Loan, or
the creation or sale of any of the Mezzanine Loans) will (i) require the consent
of any Gaming Authority, other than those obtained or made prior to the date
hereof (and except as disclosed in an opinion of counsel delivered concurrently
herewith to Lender), 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.

Section 20.21 Tenant is not a party to or otherwise bound by any agreements with
Persons or organizations, which deviate in any material adverse respect from, or
which conflict with, any Legal Requirements. All records of Tenant at the
Premises are true, complete, and correct in all material respects.

Section 20.22 (i) Tenant has not pledged any of its receivables as collateral
security for a loan or other Indebtedness and (ii) Tenant has no Indebtedness
other than Permitted Indebtedness. Tenant will incur no Indebtedness other than
Permitted Indebtedness.

Section 20.23 Except as has been disclosed to Landlord and Mortgagee, Tenant is
not a party to any collective bargaining agreement or other labor contract
applicable to Persons employed by it at the Premises and there are no threatened
or pending labor disputes at or relating to the Premises.

Section 20.24 Tenant owns and possesses or licenses (as the case may be) all
Intellectual Property as Tenant considers necessary for the conduct of its
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 (i) materially and adversely affect the value of the
Premises, (ii) impair the use and operation of the Premises or (iii) impair
Tenant’s or Lease Guarantor’s ability to pay its and their obligations (under
this Lease, the Operating Lease Guaranty and otherwise) in a timely manner. All
of the above-described property is either leased or licensed from Landlord or is
described in the exclusions contained in clauses (vii) and (viii) of
Section 2.6(a) hereof.

Section 20.25 The Premises and the use thereof complies in all material respects
with all material Legal Requirements including, without limitation, local,
state, and federal building codes, fire codes, and other similar regulatory
requirements.

 

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Section 20.26 Any existing material agreement relating to the management or
operation of the Premises is in full force and effect and is not in default by
Tenant or, to Tenant’s actual knowledge, any other party thereto.

Section 20.27 The parties acknowledge that Tenant and Tenant’s Affiliates, which
are experienced operators of gaming and casino facilities similar to the
operations conducted at the Premises, have conducted all of their own due
diligence, examination and inspection regarding the Premises (and the use
thereof) and are entirely familiar with all business, financial, liability,
physical premises, operational and regulatory aspects, and every other matter or
thing affecting or related to the gaming business operated at the Premises, and
that Tenant is leasing the same in its “As Is” condition. Landlord has not made
and does not make any representations or warranties whatsoever with respect to
the gaming business conducted at and from the Premises or otherwise with respect
to this Lease, express or implied, and Tenant is not relying on Landlord or its
Affiliates in connection with any decision to enter into this Lease. Tenant
assumes all risks resulting from any defects (patent or latent) in the Premises
or from any failure of the same to comply with any Legal Requirement with
respect to the Premises or the uses or purposes for which the same may be
occupied.

Section 20.28 Notwithstanding the foregoing provisions of this Article XX, all
Mortgage Loan Documents imposing on Landlord or Tenant obligations with respect
to the use, management, operation of or reporting requirements with respect to
the Premises or the other matters covered by this Article XX (including, without
limitation, all of the covenants set forth in Section 5.1.22 of the Mortgage
Loan Agreement) shall be deemed to be obligations of Tenant, to be performed by
Tenant (as if each reference to Borrower made in such provisions were a
reference to Tenant), and shall take precedence over and be in lieu of any
inconsistent provisions in this Article XX.

ARTICLE XXI

MISCELLANEOUS PROVISIONS

Section 21.1 IT IS MUTUALLY AGREED BY AND BETWEEN LANDLORD AND TENANT THAT THE
RESPECTIVE PARTIES SHALL AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR
DAMAGE EXCLUDING ANY CLAIM FOR PERSONAL INJURY OR PROPERTY DAMAGE.

Section 21.2 With the prior written consent of Landlord, which will not be
unreasonably withheld or delayed, Tenant may place one or more signs on the
Premises to indicate the nature of the business of Tenant and such parties. Any
sign shall be lawful under Legal Requirements. Landlord hereby approves the
signage currently placed on the Premises.

 

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Section 21.3 (a) The term “Landlord” as used herein shall mean only the owner or
the mortgagee in possession for the time being of the Premises, so that in the
event of any sale, transfer or conveyance of the Premises Landlord shall be and
hereby is entirely freed and relieved of all agreements, covenants and
obligations of Landlord thereafter accruing hereunder and it shall be deemed and
construed without further agreement between the parties or their successors in
interest or between the parties and the purchaser, transferee or grantee at any
such sale, transfer conveyance that such purchaser, transferee or grantee has
assumed and agreed to carry out any and all agreements, covenants and
obligations of Landlord hereunder.

(b) The term “Tenant” as used herein shall mean the tenant named herein, and
from and after any valid and approved Transfer in whole of said Tenant’s
interest under this Lease pursuant to the provisions of Article IX, shall mean
only the assignee or transferee thereof; but the foregoing shall not release the
assignor or transferor from liability under this Lease.

(c) The words “enter”, “re-enter”, “entry” and “re-entry” as used in this Lease
shall not be restricted to their technical legal meaning.

(d) The use herein of the neuter pronoun in any reference to Landlord or Tenant
shall be deemed to include any individual Landlord or Tenant, and the use herein
of the words “successor and assigns” or “successors or assigns” of Landlord,
Tenant or Lender shall be deemed to include the heirs, executors,
administrators, representatives and assigns of any individual Landlord, Tenant
or Lender.

Section 21.4 The headings herein are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope or intent of
this Lease nor in any way affect this Lease.

Section 21.5 Tenant hereby acknowledges, assumes, ratifies and affirms each of
the representations and warranties made by Borrower in the Mortgage Loan
Documents with respect to Tenant or Lease Guarantor, including those set forth
in Article IV, as if the same were set forth fully herein as the representations
and warranties made by Tenant herein.

Section 21.6 (a) This Lease contains the entire agreement between the parties
and may not be extended, renewed, restated, terminated or otherwise modified in
any material manner except by an instrument in writing executed by the party
against whom enforcement of any such modification is sought and with the prior
written consent of any Mortgagee pursuant to the Mortgage or any other Mortgage
Loan Document. Any such modification shall not be effective until it is
consented to in writing by the Mortgagee. All prior understandings and
agreements between the parties and all prior working drafts of this Lease are
merged in this Lease, which alone expresses the agreement of the parties. The
parties agree that no inferences shall be drawn from matters deleted from any
working drafts of this Lease.

(b) Tenant agrees that Tenant will not, without the prior written consent of
Landlord and Mortgagee (which, in the case of non-material amendments,
modifications or supplements, shall not be unreasonably withheld or delayed),
(i) amend, restate, supplement or modify this Lease including changing,
modifying or deferring any rental payments, or modifying the definition of the
Term or the Premises contained in this Lease, (ii) terminate, cancel or
surrender the term of this Lease except as expressly permitted by the provisions
of this Lease, or enter into any agreement with Landlord to do so, or (iii) pay
any installment of Base Rent more than one (1) month in advance of the due date
thereof or otherwise than in the manner provided for in this Lease.

 

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(c) Any modification of this Lease in violation of this Section 21.6 shall be
void ab initio.

Section 21.7 The agreements, terms, covenants and conditions herein shall bind
and inure to the benefit of Landlord and Tenant and their respective heirs,
personal representatives and, except as is otherwise provided herein, their
permitted successors and permitted assigns. The agreements, terms, covenants and
conditions herein shall inure to the benefit of each Lender, its successors,
participants and assigns.

Section 21.8 Notice whenever provided for herein shall be in writing and shall
be given either by personal delivery, overnight express mail or by certified or
registered mail, return receipt requested, addressed as follows:

 

If to Landlord:   

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, New York 10036

Attention: Greg Ezring, Esq.

Facsimile No. (212) 326-2061

 

and

 

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 Tenant:   

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: Chief Financial Officer

Facsimile No. (702) 407-6081

 

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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, New York 10036

Attention: Greg Ezring, Esq.

Facsimile No. (212) 326-2061

 

and

 

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 Mortgagee:   

Bank of America, N.A., as collateral agent for the Lenders

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

   and   

Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

Attention: William McInerney

Facsimile No. (212) 504-6666

or to such other or additional Persons or at such other addresses as may be
designated from time to time by written notice from either party to the other
(or from Mortgagee to Landlord and Tenant). Notices shall be deemed given
(i) when delivered personally if delivered on a Business

 

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Day (or if the same is not a Business Day, then the next Business Day after
delivery), (ii) three (3) Business Days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
requested or (iii) if delivery is made by Federal Express or a similar,
nationally recognized overnight courier service for 9:00 a.m. delivery, then on
the date of delivery (or if the same is not a Business Day, then the next
Business Day after delivery), if properly sent and addressed in accordance with
the terms of this Section 21.8. The foregoing provisions of this Section 21.8
are subject to the provisions of Section 10.2.

Section 21.9 If any provision of this Lease shall be invalid or unenforceable,
the remainder of the provisions of this Lease shall not be affected thereby and
each and every provision of this Lease shall be enforceable to the fullest
extent permitted by applicable law.

Section 21.10 Landlord and Tenant each represent and warrant to the other party
that such party has not dealt with any real estate broker in connection with
this Lease and Landlord and Tenant agree to indemnify the other party and save
the other party harmless from any and all claims for brokerage commissions by
any other Person, firm, corporation or other entity claiming through such party
to have brought about this Lease transaction. The provisions of this
Section 21.10 shall survive the expiration or earlier termination of this Lease.

Section 21.11 Tenant is and shall be in exclusive control and possession of the
Premises (except as expressly permitted hereunder) and Tenant shall operate the
Premises for their intended purposes at Tenant’s sole and absolute discretion
without control, interference or direction from Landlord or agents of Landlord
(except as expressly set forth to the contrary in this Lease), and Landlord
shall not, in any event whatsoever, be liable for any injury or damage to any
property or to any Person happening in, on or about the Premises, nor for any
injury or damage to any property of Tenant, or of any other Person or Persons
contained therein unless the same is caused by Landlord’s gross negligence or
willful misconduct. The provisions hereof, including without limitation
Article XVII, permitting Landlord to enter and inspect the Premises are made for
the purpose of enabling Landlord to be informed as to whether Tenant is
complying with the agreements, terms, covenants and conditions hereof, and if
Landlord so desires, to do such acts as Tenant shall fail to do. Tenant agrees
to look solely to Landlord’s interests in the Premises for recovery of any
judgment from Landlord and in no event shall Landlord (or its partners,
shareholders, members, managers, officers, directors or Affiliates) ever be
personally liable for any such judgment.

Section 21.12 [Reserved].

Section 21.13 The parties took equal part in drafting this Lease and no rule of
construction that would cause any of the terms hereof to be construed against
the drafter shall be applicable to the interpretation of this Lease.

Section 21.14 Time is strictly of the essence with respect to each and every
term and provision of this Lease.

Section 21.15 Except for the provisions of Article VII, the time within which
either party hereto shall be required to perform any act under this Lease, other
than the payment of money, shall be extended by a period of time equal to the
number of days during which

 

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performance of such act is delayed by strikes, lockouts, acts of God,
governmental restrictions, failure or inability to secure materials or labor by
reason of priority or similar regulation or order of any Governmental Authority,
enemy action, civil disturbance or any other cause beyond the reasonable control
of either party hereto (“Force Majeure”). Insolvency or financial condition
shall not be a Force Majeure event.

Section 21.16 [Intentionally Omitted.]

Section 21.17 Landlord and Tenant each waive any claim or defense based upon the
characterization of this Lease as anything other than a true lease and
irrevocably waive, any claim or defense which asserts that this Lease is
anything other than a true lease. Landlord and Tenant covenant and agree that
they will not assert that this Lease is anything but a true lease for all
purposes hereunder. Landlord and Tenant each stipulate and agree not to
challenge the validity, enforceability or characterization of this Lease of the
Premises as a true lease and further stipulate and agree that nothing contained
in this Lease creates or is intended to create a joint venture, partnership
(either de jure or de facto), equitable mortgage, trust, financing device or
arrangement, security interest or the like. Landlord or Tenant each shall
support the intent of the parties that this Lease of the Premises pursuant to
this Lease is a true lease and does not create a joint venture, partnership
(either de jure or de facto), equitable mortgage, trust, financing device or
arrangement, security interest or the like, if, and to the extent that, any
challenge occurs.

Section 21.18 Tenant acknowledges and agrees that Tenant’s obligations to pay
rent hereunder, and the rights of Landlord in and to such Operating Lease Rent,
shall be absolute, unconditional and irrevocable. Except as expressly provided
for in this Lease, Tenant shall not have any right to terminate this Lease or to
be released, relieved, or discharged from any obligations or liabilities
hereunder (including, without limitation, the payment of Operating Lease Rent)
or entitled to any abatement, suspension, determent, reduction, setoff,
counterclaim or defense for any reason whatsoever, including, without
limitation, any of the following reasons:

(a) Any defect in, damage to, or destruction of, the Premises or any portion
thereof;

(b) Any condemnation, confiscation, requisition, or other taking or sale of the
possession, use, occupancy, or title to the Premises or any portion thereof;

(c) Any limitation, restriction, deprivation, or prevention of, or any
interference with, the use, occupancy, or possession of the Premises or any
portion thereof;

(d) Any set-off, abatement, counterclaim, suspension, recoupment, reduction,
rescission, defense or other right or claim that Tenant may have against
Landlord, any vendor or manufacturer of or contractor or subcontractor for the
Premises or any part of any thereof, or any other person for any reason
whatsoever;

(e) The inadequacy, incorrectness, or failure of the description of the Premises
or any portion thereof;

 

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(f) Any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, or other proceeding affecting Landlord, any assignee
of Landlord, or Tenant or any action with respect to this Lease which may be
taken by any receiver, trustee, or liquidator (or other similar official), or by
any court;

(g) Force Majeure;

(h) Any title defect, lien or matter affecting title to the Premises or eviction
by paramount title or otherwise; or

(i) Any default by Landlord under this Lease or the impossibility or illegality
of performance by Landlord, Tenant or both.

Tenant hereby waives, to the extent permitted by applicable law, any and all
rights that it may now have or that at any time hereafter may be conferred upon
it, by applicable law or otherwise, to modify, terminate, cancel, quit or
surrender this Lease or to effect or claim any diminution or reduction of
Operating Lease Rent payable by Tenant hereunder, except in accordance with the
express terms hereof. Tenant agrees that, if for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or otherwise
(except as expressly permitted under this Lease), then Tenant shall pay, to the
maximum extent permitted by applicable law, to Landlord or any other Person
entitled thereto, an amount equal to each installment of Operating Lease Rent at
the time such payment would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part. Each
payment of Operating Lease Rent made by Tenant hereunder shall be final and
Tenant shall not seek or have any right to recover all or any part of such
payment from Landlord or any Person for any reason whatsoever. It is the
intention of the parties hereto that the obligations of Tenant hereunder shall
be separate and independent covenants and agreements, that the Operating Lease
Rent or other sums payable by Tenant hereunder shall continue to be payable in
all events and that the obligations of Tenant hereunder shall continue
unaffected, unless the requirement to pay or perform the same shall have been
abated, reduced or terminated pursuant to an express provision of this Lease.

Section 21.19 Officer’s Certificate. On the execution of this Lease, Tenant has
delivered an Officer’s Certificate as to the corporate/LLC execution, delivery
and authorization of this Lease, good standing of Tenant and incumbency of
Persons signing this Lease.

Section 21.20 Governing Law/Consent to Jurisdiction/Venue. Irrespective of the
place of execution and/or delivery of this Lease or the location of the
Premises, this Lease shall be governed by and shall be construed in accordance
with, the Legal Requirements of the State of New York applicable to agreements
entered into and to be performed entirely within New York without regards to
conflicts of law principles, provided, however, that if, notwithstanding such
agreement as to the application of the governing law of the State of New York by
the parties, Legal Requirements in the jurisdiction where the Premises are
located require local law to govern particular claims under this Lease, then to
the extent of such requirement, such local law shall govern. Landlord and Tenant
hereby consent and submit to the exclusive jurisdiction of the state and Federal
courts located in New York with respect to any claim or litigation arising
hereunder or any alleged breach of the covenants or provisions contained herein,
and

 

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acknowledge that proper venue in any matter so claimed or litigated shall be in
the state and Federal courts located in New York; provided, however, that
(1) Landlord shall be permitted, in addition, if required by Legal Requirement
in the jurisdiction where the Premises are located, to bring any action against
Tenant and/or to enforce this Lease in the jurisdiction where the Premises are
located and (2) Tenant shall be permitted, in addition, if required by Legal
Requirement in the jurisdiction where the Premises are located to bring any
action against Landlord and/or to enforce this Lease in the jurisdiction where
the Premises are located.

Section 21.21 In the event that a claim or adjudication is made that Landlord or
any Lender or any of their respective agents has acted unreasonably or
unreasonably delayed acting in any case where by law or under this Lease,
Landlord, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, Tenant agrees that none of Landlord, Lender and such
agents shall be liable for any monetary damages, and Tenant’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 Landlord or a Lender has acted reasonably shall be determined by an
action seeking declaratory judgment.

Section 21.22 Regulatory Provisions.

(a) [Landlord will promptly notify Tenant in writing upon the happening of any
change in ownership in the Premises to permit Tenant to comply with Regulation
3.020 of the Nevada Gaming Regulations promulgated pursuant to NRS Chapter 463.
Landlord will use its commercially reasonable best efforts to cooperate and
provide all information necessary to comply with the information and disclosure
requirements applicable to compliance with said Regulation 3.020 and all other
applicable Gaming Laws, including, without limitation, the requirements of the
Nevada Gaming Control Act and the regulations thereunder.

(b) Landlord agrees to cooperate, at Tenant’s sole cost and expense, with all
applicable Gaming Authorities in connection with the administration of their
regulatory jurisdiction over Tenant and its subsidiaries, including the
provision of such documents or other information as may be requested by such
Gaming Authorities relating to Tenant or to the Lease and Landlord and
Mortgagee, by their acceptance hereof, acknowledge that each of them and their
respective assignees are subject to being called forward by the Nevada Gaming
Authorities, in their discretion, for licensing or a finding of suitability in
order to remain entitled to the benefits of the Lease and the Mortgage Loan
Documents.

(c) Notwithstanding anything to the contrary contained herein or in any of the
Mortgage Loan Documents, Landlord and Mortgagee expressly acknowledge and agree
that the exercise of their respective rights and remedies under this Lease is
subject to the mandatory provisions of the Gaming Laws. Without limiting the
foregoing, Landlord and Mortgagee, by their acceptance hereof, acknowledge,
understand and agree that, to the extent the prior approval of the Nevada Gaming
Authorities is required pursuant to applicable law for the exercise, operation
and effectiveness of any right or remedy hereunder, or the taking of any action
that may be taken by Landlord or Mortgagee hereunder, including, without
limitation, the taking of possession and disposition of collateral consisting of
gaming devices, cashless wagering systems and mobile gaming systems (as those
terms are defined in the Gaming Laws), such right or remedy shall be subject to
such prior approval of the Nevada Gaming Authorities.]

 

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Section 21.23 The parties hereto hereby agree, confirm and acknowledge
that neither this Lease, nor a memorandum of this Lease, may be recorded (or
will be recorded) in the property or other records.

Section 21.24 The parties hereto hereby agree that the Original Lease 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 Lease shall replace the terms
and conditions of the Original Lease.

[SIGNATURES FOLLOW]

 

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The parties hereto have executed this Amended and Restated Operating Lease as of
the day and year first above set forth.

 

Landlord:    

[PROPCO],

a Delaware limited liability company

    By:            

Name:

Title:

Tenant:         [OPCO], a [                ]     By:            

Name:

Title:

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SCHEDULE A-1

PREMISES

 

Schedule A-1

--------------------------------------------------------------------------------

SCHEDULE B

OTHER OPERATING LEASES

[Casino Leases

 

  1. Amended and Restated Operating Lease, 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, dated as of the date hereof, between
Rio Propco, LLC and Rio Properties, Inc.

 

  3. Amended and Restated Operating Lease, dated as of the date hereof, between
Flamingo Las Vegas Propco, LLC and Flamingo Las Vegas Operating Company, LLC

 

  4. Amended and Restated Operating Lease, 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, dated as of the date hereof, between
Harrah’s Laughlin Propco, LLC and Harrah’s Laughlin, Inc.

Hotel Leases

 

  1. Amended and Restated Operating Lease, 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, dated as of the date hereof, between
Rio Propco, LLC and Rio Properties, Inc.

 

  3. Amended and Restated Operating Lease, dated as of the date hereof, between
Flamingo Las Vegas Propco, LLC and Flamingo Las Vegas Operating Company, LLC

 

  4. Amended and Restated Operating Lease, 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, dated as of the date hereof, between
Harrah’s Laughlin Propco, LLC and Harrah’s Laughlin, Inc.

Combined Leases

 

  1. 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]

 

Schedule B-1

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[EXHIBIT A

CASINO/HOTEL COMPONENTS FLOOR PLANS]

 

Exhibit A-1