Exhibit 10.31

 

 

FIRST AMENDMENT TO LOAN AGREEMENT AND OMNIBUS LOAN

MODIFICATION AGREEMENT

Dated as of August 14, 2009

Between

COLONY RESORTS LVH ACQUISITIONS, LLC,

as Borrower,

and

GOLDMAN SACHS MORTGAGE COMPANY,

as Lender

Secured by;

The Las Vegas Hilton

Las Vegas, Nevada

 

 

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FIRST AMENDMENT TO LOAN AGREEMENT AND OMNIBUS LOAN

MODIFICATION AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT AND OMNIBUS LOAN MODIFICATION AGREEMENT
(this “Amendment”), dated as of August 14, 2009 (the “Effective Date”), between
COLONY RESORTS LVH ACQUISITIONS, LLC, a Nevada limited liability company, as
borrower (“Borrower”) and GOLDMAN SACHS MORTGAGE COMPANY, a New York limited
partnership, as lender (“Lender”).

W I T N E S S E T H:

WHEREAS, Borrower and Goldman Sachs Commercial Mortgage Capital, L.P. (“Original
Lender”) entered into that certain Loan Agreement dated as of May 11, 2006 (the
“Original Loan Agreement” and as modified by the Letter Agreements (as
hereinafter defined), the “Loan Agreement”) pursuant to which Original Lender
made, and Borrower accepted, a mortgage loan in the original principal amount of
$250,000,000.00 (the “Loan”);

WHEREAS, the Loan is (i) evidenced by, among other things, that certain
Promissory Note dated as of May 11, 2006 and made by Borrower to the order of
Original Lender, its successor and assigns, in the original principal amount of
the Loan (the “Note”) and (ii) secured by, among other things, that certain Deed
of Trust, Security Agreement, Assignment of Leases, Rents and Revenues and
Fixture Filing dated as of May 11, 2006 and made by Borrower to Original Lender,
is successors and assigns (the “Mortgage”);

WHEREAS, the Loan, the Original Loan Agreement, the Note, the Mortgage and all
of the other Loan Documents were assigned by Original Lender to Lender;

WHEREAS, the maturity date of the Loan was June 2, 2009, and Borrower and Lender
entered into those certain Letter Agreements dated as of June 1, 2009, June 29,
2009 and July 30, 2009 respectively, (collectively, the “Letter Agreements”)
pursuant to which the maturity date of the Loan has been extended until
August 14, 2009;

WHEREAS, Borrower and Lender have agreed to further extend the term of the Loan
and amend the Loan, the Loan Agreement and the other Loan Documents as
hereinafter set forth, effective as of the Effective Date.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
Lender and Borrower hereby covenant, agree, represent and warrant as follows:

 

1. Definitions Added. Section 1.1 of the Loan Agreement is hereby amended by
adding the following defined terms thereto:

“Additional Principal Repayment” shall mean Five Million Dollars
($5,000,000.00).

“Additional Principal Repayment Date” shall mean October 30, 2009.

“Applicable Gaming Reserve Amount” shall have the meaning set forth in
Section 9.1.1.

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“Corporate Expenses” shall mean (i) the applicable allocation of corporate
expenses set forth on Schedule 6.1.1.1 attached hereto under the categories of
“Payroll”, “Expenses”, “Rent” and “Misc”, (ii) amounts payable by Borrower under
any Property Management Agreement entered into in accordance with the provisions
of this Agreement, (iii) the salary of Nick Ribis set forth in the Annual Budget
and (iv) travel expenses for other investment management professionals involved
in the management of the Property and not included in clause (i) hereof; it
being understood and agreed that (x) corporate expenses set forth on Schedule
6.1.1.1 attached hereto under the categories of “Payroll”, “Expenses”, “Rent”
and “Misc” shall be allocated among the Property and the other properties listed
on Schedule 6.1.1.1 in accordance with Schedule 6.1.1.1, (y) the aggregate
amount of expenses related to Board members and travel expenses for investment
management professionals involved in the management of the Property shall not
exceed $75,000 per annum and (z) in no event shall the aggregate amount of
Corporate Expenses exceed an amount per annum equal to the lesser of (1) 1.25%
of the line item entitled “Net Revenues” reported in Borrower’s Statement of
Operations (which reflects “Net Revenues” for a twelve (12) month period) or
(2) $2,725,000 per annum.

“First Amendment” shall mean the First Amendment to Loan Agreement and Omnibus
Loan Modification Agreement dated as of August 14, 2009 among Borrower,
Guarantor and Lender.

“Gaming Reserve Account” shall have the meaning set forth in Section 9.1.4.

“Initial Seasonality Reserve Funding Period” shall mean the period commencing on
November 1, 2009 and ending on the Payment Date occurring in March, 2010.

“Initial Sweep Period” shall mean the period commencing on November 1, 2009 and
ending on the Payment Date occurring in June, 2010.

“LIBOR Floor” shall mean one and fifty one hundredths of one percent (1.50%) per
annum.

“License Agreement” shall mean that certain license agreement dated as of
January 1, 2009 by and between Hilton Inns, Inc. and Borrower pursuant to which
Borrower licenses the use of the Hilton flag and reservation system.

“Monthly Corporate Expenses” shall have the meaning set forth in Section 9.2.3.

“Monthly Expenses” shall have the meaning set forth in Section 9.2.3.

“Operating Expense Reserve Account” shall have the meaning set forth in
Section 9.2.1.

“Required Gaming Reserves” shall have the meaning set forth in Section 9.1.4.

“Required Prepayment Reserve Account” shall have the meaning set forth in
Section 9.2.1.

 

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“Seasonality Reserve Account” shall have the meaning set forth in Section 9.2.1.

“Subsequent Seasonality Reserve Funding Period” shall mean, collectively,
(i) the period commencing on August 1, 2010 and ending on September 30, 2010 and
(ii) the period commencing on January 1, 2011 and ending on May 31, 2011.

“Subsequent Sweep Period” shall mean the period commencing on the day after the
Payment Date occurring in June, 2010 and ending on the Payment Date occurring in
June, 2011.

“Surplus Cash” shall mean amounts deposited into the Surplus Cash Account in
accordance with Section 9.4.1 of this Agreement.

“Surplus Cash Account” shall have the meaning set forth in Section 9.4.1.

 

2. Definitions Amended. The following terms defined in Section 1.1 of the Loan
Agreement are hereby amended and restated in their entirety to read as follows:

“Alteration” shall mean any demolition, alteration, installation, improvement or
decoration of or to the Property or any part thereof or the Improvements
(including FF&E) thereon (other than any of the foregoing that (i) is
contemplated to be done by the Plans and Specifications or (ii) is paid for out
of the Reserve Account described in Section 9.2.1(f)).

“Annual Budget” shall mean the annual operating and capital budget for the
Property for any Fiscal Year setting forth, in reasonable detail, the Borrower’s
good faith estimates of (i) all Operating Income, (ii) all Operating Expenses,
(iii) Management Fees and License Fees, and (iv) Capital Expenditures, which is
approved by Lender pursuant to Section 5.1.17 hereof.

“Borrower Hotel Account” shall have the meaning set forth in Section 9.2.3 of
this Agreement.

“Debt Service Reserve Account” shall have the meaning set forth in
Section 9.2.1.

“Debt Yield” shall mean the percentage obtained by dividing Net Operating Income
by the Principal Indebtedness outstanding at the time of calculation.

“Exit Fee Percentage” shall mean fifty one hundredths of one percent (0.50%).

“Extension Interest Rate Cap Agreement” shall mean an interest rate cap
agreement or agreements (together with the confirmations and schedules relating
thereto), each from an Acceptable Counterparty and in substantially the form set
forth on Exhibit A hereto.

“FF&E Reserve Account” has the meaning set forth in Section 9.2.1 hereof.

“Gross Casino Revenues” shall mean (x) all Casino Revenues plus (y) any
non-gaming revenues generated by casino operations from whatever source to the
extent not otherwise included in Casino Revenues or Gross Hotel Revenues;
provided, however, that Gross Casino Revenues shall in all instances be
calculated net of promotional allowances in accordance with the NRS.

 

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“Joint Services Agreement” means that certain Amended and Restated Joint
Services Agreement dated as of April 26, 2005 by and among Borrower, Resorts
International Hotel, Inc. and Resorts International Holdings, LLC, as modified
by Amendment to Amended and Restated Joint Services Agreement dated as of
May 11, 2006, as further amended by Amendment to Amended and Restated Joint
Services Agreement dated as of September 18, 2007 and as same may be amended by
that certain Second Amendment Joint Services Agreement in the form attached
hereto as Schedule 6.1.1.2 in accordance with Section 6.1.1 hereof

“knowledge” or words of similar import shall mean the actual knowledge of Robert
Schaffhauser, Executive Vice President, Finance, of Borrower, Rodolfo Prieto,
the Chief Executive Officer and General Manager of Borrower and Eric Matejevich
after making reasonable inquiry and the knowledge of the officers and directors
of Borrower.

“Maturity Date” shall mean June 1, 2011.

“Monthly FF&E Reserve Amount” shall mean commencing with the Payment Date
occurring in August, 2009 and for each Payment Date thereafter, 2.0% of Gross
Hotel Revenues of the Property for the calendar month then most recently ended
plus 1.0% of the Gross Casino Revenues for the calendar month then most recently
ended.

“Required Repairs Reserve Account” shall have the meaning set forth in
Section 9.2.1 hereof.

“Spread” shall mean:

(i) initially,

(a) with respect to each Interest Accrual Period occurring prior to the Interest
Accrual Period commencing in July 2009, two and ninety one hundredths of one
percent (2.90%) per annum,

(b) with respect to the Interest Accrual Period commencing in July 2009 and each
Interest Accrual Period occurring thereafter through and including the Interest
Accrual Period commencing in May 2010, three and fifty one hundredths of one
percent (3.50%) per annum, and

(c) with respect to the Interest Accrual Period commencing in June 2010 and each
Interest Accrual Period occurring thereafter through and including the Interest
Accrual Period commencing in May 2011, four percent (4.00%) per annum,

and

 

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(ii) following the bifurcation of the Note into multiple Note Components
pursuant to Section 2.3.8, the weighted average of the Component Spreads at the
time of determination, weighted on the basis of the corresponding Component
Balances.

 

3. Definitions deleted. Section 1.1 of the Loan Agreement is hereby amended by
deleting the following defined terms from such Section:

“Casino Shortfalls”.

“Excess Cash Flow”.

“Casino Working Capital and Operations Amount”.

 

4.

Net Operating Income. Lender and Borrower hereby acknowledge and agree that the
term “Net Operating Income” shall continue to have the meaning set forth in the
Loan Agreement except that the reference in such definition to “or any payments
into the Debt Service Reserve Account” shall be deleted and replaced with “or
any payments into the Debt Service Reserve Account, the Seasonality Reserve
Account or the Required Prepayment Reserve Account”. Furthermore, and in
amplification of the foregoing, Borrower and Lender acknowledge and agree that
the calculation of Net Operating Income, (i) shall include all payments made by
Borrower to the FF&E Reserve Account and the Tax and Insurance Escrow Account as
required under the Loan Agreement for the applicable trailing twelve (12) month
period, (ii) shall not include any disbursements made to the Borrower from the
FF&E Reserve Account or the Tax and Insurance Escrow Account for the applicable
trailing twelve (12) month period, (iii) shall not include a reduction in the
amount deposited in the FF&E Reserve Account or the Tax and Insurance Escrow
Account for disbursements to the Borrower from such Reserve Accounts, provided,
however, that any funds expended by Borrower for capital expenditures relating
to FF&E at the Property in excess of the required payments to the FF&E Reserve
Account will not be included as Operating Expenses, (iv) shall not include
Corporate Expenses in excess of an amount per annum equal to the lesser of
(X) 1.25% of the line item entitled “Net Revenues” reported in Borrower’s
Statement of Operations (which reflects “Net Revenues” for a twelve (12) month
period) or (Y) $2,725,000 per annum and (v) Operating Expenses and Operating
Income shall be determined in accordance with GAAP and any adjustments for
non-recurring or extraordinary expenses will be subject to Lender’s approval in
its reasonable discretion. A copy of Borrower’s Statement of Operations for the
twelve (12) month period ending on May 31, 2009 is attached hereto as Schedule I
(the “Sample Statement of Operations”); it being hereby acknowledged and agreed
that the Sample Statement of Operations shall serve solely as an example of how
Debt Yield, Net Operating Income, Operating Income and Operating Expenses should
be calculated by the parties from and after the date of this Amendment for the
purposes of establishing the Debt Yield, and the Sample Statement of Operations
shall not in any way be, or be deemed to be, an acknowledgement or agreement as
to how Debt Yield, Net Operating Income, Operating Income and/or Operating
Expenses were

 

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and/or should have been calculated prior to the date of this Amendment. All
future statements and calculations of Debt Yield, Net Operating Income,
Operating Income and Operating Expenses to be delivered by Borrower after the
date of this Amendment pursuant to the terms of the Loan Agreement, as modified
by this Amendment, shall be in the form of Schedule I.

 

5. Extension Fee. It is hereby acknowledged and agreed that, on the date hereof,
Borrower shall pay to Lender an extension fee in the amount of One Million One
Hundred Seventy Five Thousand Dollars ($1,175,000.00) in order to induce Lender
to execute and deliver this Amendment.

 

6. Initial Principal Repayment; Release of Amounts From the FF&E Reserve
Account. It is hereby acknowledged and agreed that on the date hereof and
simultaneously herewith, Borrower is (i) repaying a portion of the Principal
Indebtedness in an amount equal to Fifteen Million Dollars ($15,000,000.00) (the
“Initial Principal Repayment”) and (ii) paying the Exit Fee due in connection
with the payment of the Initial Principal Repayment in the amount of Seventy
Five Thousand Dollars ($75,000.00). Borrower and Lender acknowledge and agree
that Borrower has requested and Lender has agreed, notwithstanding the
provisions of Section 9.2.8 of the Loan Agreement, to release a portion of the
funds on deposit in the FF&E Reserve Account in the amount of Two Million Seven
Hundred Thousand Dollars ($2,700,000.00) (the “FF&E Disbursement Amount”) on the
date hereof and apply the same to repayment of the Principal Indebtedness as a
portion of the Initial Principal Repayment. On the Payment Date next occurring
after the date of this Amendment (unless the date of this Amendment is a Payment
Date, in which case, on such Payment Date), Borrower shall pay, in addition to
other amounts due to Lender on that Payment Date, all interest on the Initial
Principal Repayment from and including the first day of the related Interest
Accrual Period through and including the date hereof.

 

7. Section 2.2.2(a) Amended. Section 2.2.2(a) of the Loan Agreement is amended
and restated in its entirety to read as follows:

(a) The rate or rates at which the Principal Indebtedness bears interest from
time to time shall be referred to as the “Applicable Interest Rate”. The
Applicable Interest Rate with respect to the Loan shall be, with respect to each
applicable Interest Accrual Period, the Spread for such Interest Accrual Period
plus LIBOR, provided, however, that in the event that LIBOR for the Interest
Accrual Period commencing in July 2009 or any Interest Accrual Period occurring
thereafter through and including the Interest Accrual Period commencing in May
2011 shall be less than the LIBOR Floor, then the Applicable Interest Rate for
such Interest Accrual Period shall be, the Spread for such Interest Accrual
Period plus the LIBOR Floor.

 

8. Section 2.3.4(b) Amended. Section 2.3.4(b) of the Loan Agreement is amended
and restated in its entirety to read as follows:

(b) On each Payment Date occurring after the transfer of any monies in
accordance with Section 9.4 hereof from the Deposit Account into the Required
Prepayment Reserve Account, the amounts on deposit in the Required Prepayment
Reserve Account shall be applied to (i) repay the Principal Indebtedness and
(ii) pay the portion of the Exit Fee that is payable in accordance with
Section 2.6 hereof with respect to such repayment of the Principal Indebtedness.

 

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9. Section 2.4.5 Added. Article II of the Loan Agreement is amended by adding
the following thereto as Section 2.4.5:

2.4.5 Additional Principal Repayment. Borrower shall repay the Principal
Indebtedness in an amount equal to the Additional Principal Repayment, and pay
the Twenty Five Thousand Dollars ($25,000.00) Exit Fee due in connection
therewith, on the Additional Principal Repayment Date, it being acknowledged and
agreed that interest accrued on the Additional Principal Repayment through the
date of payment of the Additional Principal Repayment shall be paid on the
Payment Date following the Additional Principal Repayment Date. Borrower shall
not be required to give Lender a Prepayment Notice with respect to the
Additional Principal Repayment. Provided no Event of Default shall have occurred
and be continuing on the Additional Principal Repayment Date Lender shall, at
Borrower’s request, release from the FF&E Reserve Account to extent of available
funds up to Two Million Dollars ($2,000,000.00) and apply same towards the
payment of a portion of the Additional Principal Repayment.

 

10. Section 2.7(e) Amended. Section 2.7(e) of the Loan Agreement is amended and
restated in its entirety to read as follows:

(e) Borrower has obtained or has in place an Extension Interest Rate Cap
Agreement (i) having a term through the end of the Interest Accrual Period
commencing in May 2010, (ii) in a notional amount at least equal to Two Hundred
Thirty Five Million Dollars ($235,000,000.00), and (iii) having a strike rate
equal to the Strike Rate, and such Extension Interest Rate Cap Agreement has
been collaterally assigned to Lender in accordance with subsection 2.7(c) above;
it being understood that the notional amount may be decreased to Two Hundred
Thirty Million Dollars ($230,000,000.00) following payment to Lender of the
Additional Principal Repayment and the applicable Exit Fee. On or before May 31,
2010, Borrower shall obtain an Extension Interest Rate Cap Agreement (i) having
a term through the end of the Interest Accrual Period commencing in May 2011,
(ii) in a notional amount at least equal to the outstanding balance of the
Principal Indebtedness as of May 31, 2010, and (iii) having a strike rate equal
to the Strike Rate, and shall cause such Extension Interest Rate Cap Agreement
to be collaterally assigned to Lender in accordance with subsection 2.7(c)
above.

 

11. Section 5.1.10.(d) Amended. Section 5.1.10(d) of the Loan Agreement is
amended and restated in its entirety to read as follows:

(d) Borrower shall furnish to Lender, the items described in clause (c) above on
a monthly basis within twenty-five days after the end of each calendar month,
together with unaudited financial statements, aged accounts receivable reports,
occupancy, ADR reports, the minimum bankroll numbers and copies of monthly
revenue reports filed with the Gaming

 

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Authorities, in each case, for the Property covering the month just ended and a
reconciliation of the corporate expenses set forth on Schedule 6.1.1.1 as of end
of such calendar month and the year to date. Borrower shall also furnish to
Lender copies of the Hilton Lead Reports and Hilton Booking Reports promptly
after receipt thereof from Licensor.

 

12. Section 5.1.17 Amended. The first sentence of Section 5.1.17 of the Loan
Agreement is amended and restated in its entirety to read as follows:

For each Fiscal Year, Borrower shall prepare or cause to be prepared and
delivered to Lender for its approval, which approval shall not be unreasonably
withheld, at least forty five (45) days prior to the beginning of the applicable
Fiscal Year, a proposed Annual Budget (including all drafts of such Annual
Budget and including all amendments and drafts of such amendments) as it is
prepared in respect of the Property for such Fiscal Year.

 

13. Section 6.1.1 Amended. The last sentence of Section 6.1.1 of the Loan
Agreement is amended and restated in its entirety to read as follows:

Borrower shall be permitted to enter into the Second Amendment to Joint Services
Agreement and the Second Amendment to Joint Marketing Agreement attached hereto
as Schedule 6.1.1.2, provided, no Event of Default shall have occurred and be
continuing and Borrower delivers a Confirmation of Subordination Agreement with
respect to each of the Joint Services Agreement and the Joint Marketing
Agreement in form and substance reasonably acceptable to Lender.

 

14. New Section 6.1.14 Added. Article VI of the Loan Agreement is amended by
adding the following thereto as new Section 6.1.14:

6.1.14 Dividend Stopper. Borrower acknowledges and agrees that the Debt Yield
for the trailing twelve (12) month period ending on May 31, 2009 is 7.1% (the
“May 2009 Debt Yield”); it being hereby acknowledged and agreed that the
calculation of the May 2009 Debt Yield shall serve solely as an example of how
Debt Yield should be calculated by the parties from and after the date of the
First Amendment, and the calculation of the May 2009 Debt Yield shall not in any
way be, or be deemed to be, an acknowledgement or agreement as to how Debt Yield
was and/or should have been calculated prior to the date of the First Amendment.
Notwithstanding anything contained in this Agreement or any of the other Loan
Documents, from and after the date of the First Amendment, Borrower shall not
make any distributions, pay any dividends or make any loans to its partners,
shareholders, members or affiliates unless the Debt Yield, as measured for the
12 month period ending as of the calendar quarter occurring immediately prior to
the date of calculation (and calculated using an amount equal to the Principal
Indebtedness at the end of such calendar quarter as the denominator), is at
least fifteen percent (15%), provided however that, the foregoing shall not
limit or restrict the payment of any Corporate Expenses set forth in the
approved Annual Budget required to be paid to Affiliates of Borrower provided,
that the aggregate amount of all Corporate Expenses does not exceed an amount
per annum equal to the lesser of (x) 1.25% of the line item entitled “Net
Revenues” reported in Borrower’s Statement of Operations (which reflects “Net
Revenues” for a twelve (12) month period) or (y) $2,725,000 per

 

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annum. If the Debt Yield for the trailing twelve (12) month period ending as of
the most recently ended calendar quarter is at least fifteen percent (15%) and
no Event of Default shall have occurred and be continuing, Borrower shall be
permitted to distribute (i) any Surplus Cash, (ii) any other amounts held by
Borrower to the extent same do not constitute Rents that are or were at any time
required to be deposited into or otherwise held in the Rent Account, the Deposit
Account, the Borrower Hotel Account or the Gaming Reserve Account pursuant to
the terms of this Agreement, and (iii) equity contributed to Borrower by
Borrower’s direct and indirect owners to the extent such funds do not constitute
Rents (but no other funds of Borrower) to its partners, shareholders, members or
Affiliates. It is expressly understood and agreed that Borrower shall not enter
into any amendment to the Joint Services Agreement or any Property Management
Agreement that would increase amounts payable by Borrower under the applicable
agreement, extend the term of such agreement or otherwise increase the financial
burden on the Property.

 

15. Section 9.1.1 Amended. Section 9.1.1 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.1.1. On or prior to the Closing Date, Borrower established with the Hotel Bank
an account (the “Rent Account”) for the collection of Rents paid by credit card
and paid by tenants under the Leases. All Rents collected by or on behalf of
Borrower shall be deemed to be collateral for the Debt and shall be held in
trust for the benefit of, and as the property of, Lender, other than the
Required Gaming Reserves to the extent prohibited by applicable law. From and
after the date of the First Amendment, all Rents paid by credit card and paid by
tenants under the Leases shall continue to be paid directly into the Rent
Account and Borrower shall deposit, or shall cause to be deposited, all other
Rents received by or on behalf of Borrower less an amount equal to the
Applicable Gaming Reserve Amount into the Rent Account within one (1) Business
Day of receipt. On or before August 31, 2009, Borrower shall cause the Hotel
Bank to execute and deliver an agreement which provides, inter alia, that
(x) for purposes of perfecting its first priority security interest, Lender
shall have sole control and dominion over the Rent Account and (y) that
commencing on September 1, 2009 and until otherwise directed by Lender (which
direction shall only be given in accordance with the provisions of this
Agreement), all funds deposited into the Rent Account will be transferred each
Business Day to the Deposit Account. Provided that no Event of Default shall
occur and be continuing, funds on deposit in the Rent Account shall continue to
be transferred to the Borrower Hotel Account during the period commencing on the
date of the First Amendment and ending on August 31, 2009 to pay Monthly
Expenses for the calendar month of August, 2009 and any such amounts that are
not used to pay Monthly Expenses for the calendar month of August, 2009 shall be
deposited into the Rent Account on September 1, 2009. The fees and expenses of
the Hotel Bank shall be paid by Borrower. On or before August 31, 2009, Borrower
shall send to all tenants under the Leases and all issuers of credit cards
accepted at the Property a direction to remit all net sums payable to Borrower
or with respect to the Property to the Rent Account, which direction shall be
irrevocable absent consent of Lender. If, after the date of the First Amendment,
Borrower enters into any new Leases and/or elects to accept any additional
credit card, Borrower shall send a similar letter to such tenant and/or the
issuer of any such new credit card, as applicable.

 

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Amounts that are swept from the Rent Account into the Deposit Account shall be
applied in accordance with Section 9.1.4 below. Borrower shall not be required
to deposit into the Rent Account or the Deposit Account any funds which may be
contributed to Borrower as equity, from time to time, by any of Borrower’s
direct or indirect owners; provided, however, that Borrower shall not be
permitted to distribute any of such funds except to the extent permitted to do
so pursuant to Section 6.1.14 hereof. Upon the occurrence and continuation of an
Event of Default, Lender may apply any funds deposited into the Rent Account in
accordance with Section 9.6.2 of this Agreement. “Applicable Gaming Reserve
Amount” shall mean (x) for the period commencing on August 14, 2009 and ending
on the earlier of (i) March 31, 2010 and (ii) the date that an amount equal to
or in excess of $3,000,000 has been on deposit in the Seasonality Reserve
Account for a period of at least thirty (30) days, an amount equal to 120% of
the Required Gaming Reserves required to be maintained by Borrower as of the
date of calculation and (y) for the period commencing on the earlier of
(i) April 1, 2010 and (ii) the date that an amount equal to or in excess of
$3,000,000 has been deposit in the Seasonality Reserve Account for a period of
at least thirty one (31) days and ending on date the Debt is paid in full, an
amount equal to 115% of the applicable Required Gaming Reserves required to be
maintained by Borrower as of the date of calculation.

 

16. Section 9.1.4 Amended. Section 9.1.4 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.1.4 On the fifteenth day of each calendar month (or the immediately preceding
Business Day, if such date is not a Business Day) and the last Business Day of
each calendar month, Borrower shall deliver to Lender its calculation of the
amount of Required Gaming Reserves that Borrower is required to maintain as of
such date and the detailed worksheet showing its calculation of the “Minimum
Bankroll Requirement” in accordance with Nevada Gaming Commission Regulation
6.150. On the fifteenth day of each calendar month (or the immediately preceding
Business Day , if such date is not a Business Day) and the last Business Day of
each calendar month, Borrower shall cause any excess amounts held by or on
behalf of Borrower as Applicable Gaming Reserve Amount as of such date due to
any decrease in the amount of the Required Gaming Reserves to be deposited into
the Deposit Account. “Required Gaming Reserves” shall mean collectively, (i) the
“Minimum Bankroll Requirement,” as computed pursuant to Nevada Gaming Commission
Regulation 6.150 and (ii) to the extent not included in clause (i), any taxes or
fees imposed by the Gaming Authorities of any kind. The Applicable Gaming
Reserve Amount shall be held in an account with the Hotel Bank maintained by
Borrower (the “Gaming Reserve Account”).

 

17. Section 9.2.1 Amended. Section 9.2.1 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.2.1 Establishment and Maintenance of Reserve Accounts. Borrower shall
establish with Lender, or if Lender is not a depository institution or if Lender
shall otherwise elect, a depository institution designated by Lender, the
following subaccounts of the Deposit Account which shall be maintained on a
ledger entry basis:

a. an account (the “Debt Service Reserve Account”), which shall be maintained in
accordance with Section 9.2.7 hereof;

 

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b. an account (the “Operating Expense Reserve Account”), which shall be
maintained in accordance with Section 9.2.3 hereof;

c. an account (the “FF&E Reserve Account”), which shall be maintained in
accordance with Section 9.2.8 hereof;

d. an account (the “Seasonality Reserve Account”), which shall be maintained in
accordance with Section 9.2.9 hereof;

e. an account (the “Required Prepayment Reserve Account”), which shall be
maintained in accordance with Section 9.2.6 hereof; and

f. an account (the “Required Repairs Reserve Account”) into which the amount of
$5,781,562.50 was deposited by Borrower on the Closing Date for the payment of
the cost of completing the Required Repairs; which account shall be maintained
in accordance with Section 9.2.2 hereof.

In addition, Borrower shall establish the Tax and Insurance Escrow Account as
provided in Section 9.3 below. If Borrower enters into a Property Management
Agreement in accordance with the provisions hereof and such Property Management
Agreement provides for the payment of an incentive management fee, Lender shall
have the right to establish an additional subaccount of the Deposit Account into
which amounts required for the payment of such incentive management fees will be
deposited.

Each of the Deposit Account, the Operating Expense Reserve Account, the FF&E
Reserve Account, the Seasonality Reserve Account, the Debt Service Reserve
Account, the Required Prepayment Reserve Account, the Required Repairs Reserve
Account and the Tax and Insurance Escrow Account (except for the Deposit
Account, each, a “Reserve Account” and collectively, the “Reserve Accounts”)
shall be interest bearing accounts in the name of and under the sole dominion
and control of Lender, subject only to Lender’s obligations hereunder to advance
funds therefrom in accordance with this Agreement, and Borrower shall not have
the authority or power to make withdrawals from the Reserve Accounts. Funds in
each Reserve Account shall not be commingled with any other monies. Borrower
shall pay the costs of establishing and maintaining any Reserve Account and
shall pay the costs to maintain and shall maintain all Reserve Accounts
throughout the term of the Loan. Interest earned on amounts deposited in any of
the Reserve Accounts shall be deposited in the applicable Reserve Account.

 

18. Section 9.2.3 Amended. Section 9.2.3 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.2.3 Operating Expense Reserve Account. (a) On each Payment Date commencing
with the Payment Date occurring in October, 2009, provided no Event of Default
has occurred and is

 

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continuing, Lender shall cause amounts on deposit in the Operating Expense
Reserve Account to be transferred to an account with the Hotel Bank maintained
by Borrower (the “Borrower Hotel Account”) to pay for (i) operating expenses for
the Property actually paid or accrued in such calendar month pursuant to the
approved Annual Budget, or as otherwise approved by Lender in its reasonable
discretion and (ii) taxes or fees imposed by the Gaming Authorities to the
extent amounts on deposit in the Gaming Reserve Account are insufficient to pay
such taxes or fees (collectively, the “Monthly Expenses”). Monthly Expenses may
include Corporate Expenses payable by Borrower during the calendar month in
which such Payment Date occurs which are set forth in the approved Annual Budget
(collectively, the “Monthly Corporate Expenses”). The fees and expenses of the
Hotel Bank shall be paid by Borrower. In the event the Hotel Bank can no longer
maintain the Borrower Hotel Account as an Eligible Account, Lender shall have
the right to cause the Borrower Hotel Account to be moved to a depositary
institution, reasonably acceptable to Lender, that can maintain same as an
Eligible Account.

(b) If the actual Monthly Expenses paid by Borrower in any month are less than
the amount transferred to Borrower for the payment of such items for such month
pursuant to Section 9.2.3(a) above, the amount of such excess shall be deducted
from future deposits into the Operating Expense Reserve Account in accordance
with Section 9.4.1 hereof or upon request of Lender shall be deposited by
Borrower back into the Deposit Account and applied in accordance with the terms
of this Section 9.4.1. If the actual Monthly Expenses to be paid by Borrower in
any month are more than the amount set forth in the approved Annual Budget,
provided, no event of Default shall have occurred and be continuing, Borrower
may request that Lender approve a disbursement for such additional amounts from
the Operating Expense Reserve Account, which approval shall not be unreasonably
withheld or delayed. Within twenty (20) days after the end of each month,
Borrower shall prepare and deliver to Lender a financial statement in form and
substance satisfactory to Lender in all material respects setting forth all
amounts expended for Monthly Expenses during such month, including showing
variances from the Approved Budget and setting forth a short explanation of any
variance in excess of five percent (5%) of the budget line item in question and
identifying any payments made to an Affiliate of Borrower and the reasons
therefor. Each such financial statement shall be certified by an officer of
Borrower as being true, correct and complete in all material respects and
include a certification that all amounts transferred to Borrower pursuant to
Section 9.2.3(a) above were expended for Monthly Expenses in accordance with
said Section 9.2.3(a). Borrower shall promptly, but not later than five
(5) Business Days after Lender’s request therefor, deliver to Lender such
further documentation (including, without limitation, invoices, checks or copies
of contracts, if any) and information as Lender may reasonably request regarding
any payments described in Borrower’s financial statements. If Borrower shall
fail to deposit any excess funds into the Deposit Account as provided in this
subsection or provide its required financial statements or, after written
request of Lender, reasonable evidence of expenditures, in each case, within the
time periods provided in the preceding sentences of this subsection and such
failure continues for ten (10) or more days after notice of such failure, then,
in addition to any other remedies which Lender may have with respect thereto,
Lender may elect not to fund any additional amounts into the Operating Expenses
Reserve Account and/or Lender may continue to hold the funds in the Operating
Expenses Reserve Account until such failure is cured.

 

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19. Section 9.2.6 Amended. Section 9.2.6 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.2.6 Required Prepayment Reserve Account. By no later than each Payment Date,
monies shall be transferred in accordance with Section 9.4 hereof from the
Deposit Account into the Required Prepayment Reserve Account, in each case in
the amount required under Section 9.4 hereof. Amounts on deposit in the Required
Prepayment Reserve Account shall be applied to payment of the Principal
Indebtedness and the Exit Fee in accordance with Section 2.3.4(b) hereof.

 

20. Section 9.2.9 Amended. Section 9.2.9 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.2.9 Seasonality Reserve Account. To the extent that the Seasonality Reserve
Account shall contain less than Three Million Dollars ($3,000,000.00) at any
time during the Initial Seasonality Reserve Funding Period or the Subsequent
Seasonality Reserve Funding Period, then monies shall be transferred in
accordance with Section 9.4 hereof from the Deposit Account into the Seasonality
Reserve Account in an amount necessary to cause the Seasonality Reserve Account
to contain Three Million Dollars ($3,000,000.00). If Borrower reasonably
anticipates that, on any Payment Date, funds in the Deposit Account shall be
insufficient to make the deposits required by clauses (a), (b), (c), (d) and
(e) of Section 9.4.1, then, within three (3) Business Days after receipt of
written request of Borrower, provided no Event of Default shall have occurred
and be continuing, an amount equal to the shortfall shall be transferred from
the Seasonality Reserve Account, to the extent sufficient funds are available
therein, to the Deposit Account and applied in the manner and order set forth in
Section 9.4.1. Any amounts that are transferred into the Operating Expense
Reserve Account from the Seasonality Reserve Account in accordance with this
Section 9.2.9 and disbursed to the Borrower pursuant to Section 9.2.3 hereof
shall be used to pay Monthly Expenses, including, without limitation, Monthly
Corporate Expenses. Borrower shall not be permitted to make requests for
disbursements from the Seasonality Reserve Account in accordance with this
Section 9.2.9 or the Operating Expense Reserve Account more than two (2) times
in any calendar month. Borrower shall be required to pay a disbursement request
fee in an amount equal to $5,000 per request for each disbursement request in a
calendar month following the first request made during such calendar month.

 

21. Section 9.2.12 Amended. Section 9.2.12 of the Loan Agreement is amended and
restated in its entirety to read as follows:

9.2.12 Funding of Certain Reserve Accounts. (a) Notwithstanding any other
provisions in this Section 9.2 to the contrary, Borrower may satisfy the
obligation to fund each or any of the Reserve Accounts (or subaccounts thereof)
other than the Debt Service Reserve Account by delivering to Lender, on or
before the Closing Date, a Qualified Letter of Credit pledged to Lender
permitting the drawing thereunder by Lender upon presentation to the issuing
bank of a notice from Lender that it is entitled to draw on such Qualified
Letter of Credit pursuant to this Agreement and otherwise in form and substance
acceptable to Lender in the total amount of the

 

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sum required to be maintained in such Reserve Account (or any subaccount
thereof), provided that, if the sum required to be maintained in such Reserve
Account (or any subaccount thereof) should change, the Borrower shall
immediately change the total amount of such Qualified Letter of Credit to
reflect the same. In addition, at any time subsequent to the Closing Date,
Borrower may also satisfy the obligation to fund each or any of the Reserve
Accounts (or subaccounts thereof) other than the Debt Service Reserve Account,
the Operating Expense Reserve Account, the Seasonality Reserve Account and the
Required Prepayment Reserve Account by delivering to Lender a Qualified Letter
of Credit pledged to Lender permitting the drawing thereunder by Lender upon
presentation to the issuing bank of a notice from Lender that it is entitled to
draw on such Qualified Letter of Credit pursuant to this Agreement and otherwise
in form and substance acceptable to Lender in the total amount of the sum
required to be maintained in each Reserve Account (or any subaccount thereof),
provided that, if the sum required to be maintained in such Reserve Account (or
any subaccount thereof) should change, the Borrower shall immediately change the
total amount of such Qualified Letter of Credit to reflect the same. Upon the
issuance of a Qualified Letter of Credit as described in the previous sentence,
all funds on deposit in the applicable Reserve Account (or subaccount thereof)
shall be released to Borrower.

(b) Notwithstanding anything to the contrary contained herein, to the extent
funds deposited in any of Reserve Accounts have not been utilized during any
Fiscal Year, such funds shall not be released to the Borrower and shall continue
to remain in such Reserve Account, provided that, funds remaining in the Tax and
Insurance Escrow Account shall be credited against future amounts required to be
deposited into such Reserve Account pursuant to the terms hereof.

 

22. Section 9.4.1 Amended. Section 9.4.1 of the Loan Agreement is amended and
restated in its entirety to read follows:

9.4.1 Disbursements. Commencing on September 1, 2009 and on each Business Day
thereafter (or as otherwise provided for in the Deposit Account Agreement),
provided no Event of Default has occurred and is continuing, and subject to
Section 9.4.2 hereof, Lender shall transfer from the Deposit Account (or
authorize such transfer) in accordance with the terms of the Deposit Account
Agreement, to the extent sufficient funds are available therein, the following
amounts in accordance with the following priorities:

a. First, to the Gaming Reserve Account, the amount required to fund any
shortfall in the Applicable Gaming Reserve Amount required to be maintained by
Borrower;

b. Second, to the Operating Expense Reserve Account, the amount set forth in the
Approved Budget for Monthly Expenses for the following calendar month or such
other amount as is directed by Lender in accordance with Section 9.2.3 hereof;

c. Third, to the Tax and Insurance Escrow Account, payment of all amounts in the
Deposit Account until the amounts required to be deposited in the Tax and
Insurance Escrow Account by the next Payment Date pursuant to Section 9.3 hereof
have been so deposited;

 

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d. Fourth, to the Debt Service Reserve Account, the amount of all scheduled and
delinquent interest on the Loan and any other amounts payable to Lender under
this Agreement;

e. Fifth, to the FF&E Reserve Account, payment of all amounts in the Deposit
Account until the amounts required to be deposited in the FF&E Reserve Account
by the next Payment Date (or if such Business Day is a Payment Date, by such
Payment Date) pursuant to Section 9.2.8 hereof have been so deposited;

f. Sixth, (i) during the Initial Seasonality Reserve Funding Period, to the
Seasonality Reserve Account, payment of all amounts in the Deposit Account until
the amounts required to be deposited in the Seasonality Reserve Account during
the Initial Seasonality Reserve Funding Period pursuant to Section 9.2.9 hereof
(if any) have been so deposited and (ii) during the Subsequent Seasonality
Reserve Funding Period, to the Seasonality Reserve Account, payment of all
amounts in the Deposit Account until the amounts required to be deposited in the
Seasonality Reserve Account during the Subsequent Seasonality Reserve Funding
Period pursuant to Section 9.2.9 hereof have been so deposited;

g. Seventh, during the Initial Sweep Period:

(i) First, all of the amounts remaining in the Deposit Account to the Required
Prepayment Reserve Account until the aggregate amount disbursed into the
Required Prepayment Reserve Account during the Initial Sweep Period shall equal
Eight Million Forty Thousand Dollars ($8,040,000.00);

(ii) Second, sixty percent (60%) of the remaining amounts in the Deposit Account
to the Required Prepayment Reserve Account and, provided, no Default or Event of
Default is then continuing, forty percent (40%) of the remaining amounts to such
account of Borrower as Borrower may direct (the “Surplus Cash Account”) which
amounts shall be subject to Section 6.1.14 of this Amendment, until the
aggregate amount disbursed into the Required Prepayment Reserve Account during
the Initial Sweep Period under Section 9.4.1(g)(i) and this Section 9.4.1(g)(ii)
shall equal Ten Million Fifty Thousand Dollars ($10,050,000.00); and

(iii) Third, fifty percent (50%) of the remaining amounts in the Deposit Account
to the Required Prepayment Reserve Account and, provided, no Default or Event of
Default is then continuing, fifty percent (50%) of the remaining amounts to the
Surplus Cash Account which amounts shall be subject to Section 6.1.14 of this
Amendment.

h. Eighth, during the Subsequent Sweep Period:

(i) First, all of the amounts remaining in the Deposit Account to the Required
Prepayment Reserve Account until the aggregate amount disbursed into the
Required Prepayment Reserve Account during the Subsequent Sweep Period shall
equal Eight Million Forty Thousand Dollars ($8,040,000.00);

 

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(ii) Second, sixty percent (60%) of the remaining amounts in the Deposit Account
to the Required Prepayment Reserve Account and, provided, no Default or Event of
Default is then continuing, forty percent (40%) of the remaining amounts to the
Surplus Cash Account which amounts shall be subject to Section 6.1.14 of this
Amendment, until the aggregate amount disbursed into the Required Prepayment
Reserve Account during the Subsequent Sweep Period under Section 9.4.1(h)(i) and
this Section 9.4.1(h)(ii) shall equal Ten Million Fifty Thousand Dollars
($10,050,000.00); and

(iii) Third, fifty percent (50%) of the remaining amounts in the Deposit Account
to the Required Prepayment Reserve Account and, provided, no Default or Event of
Default is then continuing, fifty percent (50%) of the remaining amounts to the
Surplus Cash Account which amounts shall be subject to Section 6.1.14 of this
Amendment.

h. Ninth, prior to the Initial Sweep Period any remaining amounts shall be
transferred to the Surplus Cash Account. All amounts transferred into the
Surplus Cash Account shall be subject to Section 6.1.14 of this Amendment.

Notwithstanding anything to the contrary set forth in Section 5.1.10 hereof,
Borrower shall furnish to Lender on a monthly basis, within twenty days after
the end of each calendar month, a reconciliation of cash flows at the Property
and the Reserve Accounts in connection with Borrower’s operation of the Property
during the month just ended. Notwithstanding anything contained herein, Borrower
shall not make any distributions, pay any dividends or make any loans to its
partners, shareholders, members or Affiliates from the Surplus Account unless
the Debt Yield, as measured for the twelve (12) month period ending as of the
calendar quarter occurring immediately prior to the date of calculation (and
calculated using an amount equal to the Principal Indebtedness at the end of
such calendar quarter as the denominator), is at least fifteen percent (15%).
Within five (5) days after request from Borrower, Lender shall or shall endeavor
to cause the Deposit Bank to furnish Borrower with the account balances for the
Deposit Account and each Reserve Account.

 

23. Section 9.4.2 Amended. Section 9.4.2 of the Loan Agreement is amended by
deleting the references therein to “Sections 9.4.1(a) through and including (c)”
and replacing same with “Sections 9.4.1(a) through and including (e)”.

 

24. Section 10.1.1(o) Amended. Section 10.1.1(o) of the Loan Agreement is
amended and restated in its entirety to read as follows:

(o) Interest Rate Cap. If (i) (A) any Interest Rate Cap Agreement is terminated
for any reason by the Counterparty or (B) the Counterparty under any Interest
Rate Cap Agreement defaults in the performance of its monetary obligations under
the Interest Rate Cap Agreement, and Borrower does not, within ten (10) days
(1) replace the Interest Rate Cap Agreement with an interest rate cap agreement
in a notional amount equal to Principal Indebtedness as of the date of such
termination and with a creditworthy Counterparty satisfactory to Lender and
otherwise on terms and conditions satisfactory to Lender, and (2) deliver to

 

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Lender, in form and substance reasonably satisfactory to Lender (x) an
assignment of the replacement Interest Rate Cap Agreement, (y) a recognition
letter from the Counterparty to the replacement Interest Rate Cap Agreement
acknowledging the assignment of the replacement Interest Rate Cap Agreement, and
(z) following a securitization, a Rating Confirmation ((1) and (2) above are
collectively herein referred to as the “Replacement Cap Requirements”) or
(ii) any Interest Rate Cap Agreement is terminated for any reason by Borrower
and Borrower has not, at the time of such termination, fully satisfied the
Replacement Cap Requirements or (iii) Borrower does not obtain the Extension
Interest Rate Cap Agreement in accordance with Section 2.7(e) and/or fails to
satisfy the Replacement Cap Requirements on or before May 31, 2010.

 

25. Modification to Schedules and Exhibits.

a. Schedule C. Schedule C attached to the Loan Agreement is deleted and replaced
with Schedule C attached to this Amendment.

b. Schedules 4.1.24, 4.1.33, 4.1.44, 4.1.45, 4.1.1.47, 6.1.1.1 and 6.1.1.2.
Schedules 4.1.24, 4.1.33, 4.1.44, 4.1.45, 4.1.47, 6.1.1.1 and 6.1.1.2 attached
to the Loan Agreement are deleted and replaced with Schedules 4.1.24, 4.1.33,
4.1.44, 4.1.45, 4.1.47, 6.1.1.1 and 6.1.1.2 attached to this Amendment,
respectively.

c. Exhibit A. Exhibit A attached to the Loan Agreement is deleted and replaced
with Exhibit A attached to this Amendment.

d. Exhibit D. Exhibit D attached to the Loan Agreement is deleted and replaced
with Exhibit D attached to this Amendment.

 

26. Acknowledgment, Ratification and Reaffirmation of Representations,
Warranties, Covenants and Obligations.

a. Borrower acknowledges and agrees that as of the date hereof, (i) following
payment of the Initial Principal Repayment, the Principal Indebtedness is
$235,000,000.00 and that there is accrued and unpaid interest on the Loan in the
amount of $198,750.00, (ii) the amount on deposit in the Tax and Insurance
Escrow Account is $1,863,195.04 (consisting of $970,882.75 for Taxes and
$892,312.29 for Insurance Premiums), (iii) the amount on deposit in the FF&E
Reserve Account following disbursement of the FF&E Disbursement Amount is
$3,791,200.14, (iv) there are no amounts on deposit in the Debt Service Reserve
Account and (v) there are no amounts on deposit in the Required Repairs Reserve
Account. A copy of the approved Annual Budget for 2009 is attached hereto as
Schedule II. Borrower covenants and agrees to deliver to Lender, on or before
September 30, 2009, a reforecasted budget for calendar year 2009 for Lender’s
review and approval, which approval shall not be unreasonably withheld. Borrower
shall use commercially reasonable efforts to obtain (but shall not be required
to pay any amounts to do so) a subordination agreement in substantially the form
attached hereto as Schedule VI from Highgate Hotels, L.P. (“Highgate”) with
respect to that certain Consulting Agreement between Borrower and Highgate dated
as of July, 2009.

 

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b. Borrower acknowledges, reaffirms all of its obligations under the Loan
Documents and hereby acknowledges and reaffirms that the representations and
warranties set forth in the Loan Documents (as modified by this Amendment) are
true and accurate in all material respects, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
in all material respects on and as of such earlier date) and except for changes
disclosed to Lender in writing. Except as modified hereby, the Loan Agreement
remains unmodified and in full force and effect. All terms, covenants and
conditions of the Loan Agreement and the other Loan Documents, in each case as
amended by this Amendment, are hereby ratified and confirmed in all respects by
Borrower.

 

27. No Defaults Due to Execution Subsequent to Original Maturity Date. By
execution of this Amendment, Lender acknowledges and agrees that Borrower’s
failure to do or have done the following shall not constitute or be deemed to
constitute or have constituted, a Default or Event of Default: (1) Borrower’s
failure to have satisfied any of the Replacement Cap Requirements subsequent to
June 2, 2009 and prior to the date hereof (including, without limitation,
replacement of the Interest Rate Cap Agreement that terminated on June 2, 2009),
(2) Borrower’s failure to have delivered direction letters to the credit card
companies and tenants listed on Schedule IV attached hereto prior to the date
hereof, it being understood that Borrower shall have until August 31, 2009 to
deliver such direction letters, (3) Borrower’s failure to have delivered an
assignment and subordination of license agreement with respect to the License
Agreement, in form satisfactory to the Lender, prior to the date hereof and
(4) Borrower’s failure to have delivered the June 2009 quarterly financial
reports and other information required pursuant to Section 5.1.10(c) of the Loan
Agreement on or before the date hereof, it being understood that Borrower shall
have until August 24, 2009 to deliver such financial reports and other
information. Lender has no actual knowledge of any other Defaults or Events of
Default as of the date hereof. Notwithstanding the foregoing, except as
expressly set forth in the first sentence of this Section 27, nothing herein
shall be deemed to be a waiver of, or to limit any rights and remedies of Lender
with respect to, any Default or Event of Default that may exist as of the date
hereof or that may occur subsequent to the date hereof.

 

28.

Additional Representations and Warranties. Borrower represents and warrants that
(i) no Event of Default or to Borrower’s knowledge, Default, has occurred and is
continuing, (ii) there are no offsets, defenses, crossclaims or counterclaims of
any nature whatsoever (in contract, tort or otherwise) with respect to the Debt,
the Loan Agreement or any of the other Loan Documents, as modified by this
Amendment, (iii) this Amendment has been duly authorized by all necessary
limited liability company action, executed and delivered by it and constitutes
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally and general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) without offset, defense or counterclaim,
(iv) the execution, delivery and

 

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performance of this Amendment by Borrower will not violate any provision of any
applicable legal requirements, decree, injunction or demand of any court or
other governmental authority applicable to Borrower, any organizational document
of Borrower and will not conflict with or result in a breach of any of the
material terms or provisions of, or constitute a default under any document or
agreement to which Borrower is a party and (v) all consents, authorizations and
approvals required for the execution and delivery by Borrower of this Amendment
and the documents executed in connection herewith by Borrower have been obtained
and remain in full force and effect, all conditions thereof have been duly
complied with, and no other action by, and no notice to or filing with any
governmental authority or regulatory body is required for such execution,
delivery or performance. Although not required in order for Borrower to execute,
deliver or perform this Amendment, Borrower is required to file a report of the
transactions contemplated by this Amendment, together with a copy of this
Amendment with the Nevada Gaming Control Board within thirty (30) days after
September 30, 2009 as required by Nevada Gaming Commission Regulation 8.130.
Borrower represents and warrants that true correct and complete copies of the
Joint Services Agreement and the Joint Marketing Agreement are attached hereto
as Schedule III and it has not entered into any Property Management Agreement.
Borrower represents and warrants that the accounts listed on Schedule V attached
hereto are, as of the date hereof, the only accounts maintained by or on behalf
of Borrower. During the term of the Loan Borrower shall not maintain any
accounts, reserves or escrows other than the accounts listed on Schedule V and
the Required Gaming Reserves.

 

29. Release. Borrower hereby releases, remises, acquits and forever discharges
each of Lender, the loan participants, Gramercy Loan Services LLC and every
servicer (including any subservicer of the Loan), and their respective
employees, agents, representatives, consultants, attorneys, fiduciaries,
servants, officers, directors, partners, predecessors, successors and assigns,
subsidiaries, parents and affiliates (all of the foregoing hereinafter called
the “Released Parties”), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities, obligations,
damages and expenses of any and every character, including legal fees, known or
unknown, direct and/or indirect, at law or in equity, of whatsoever kind or
nature, whether heretofore or hereafter arising, for or because of any matter or
things done, omitted or suffered to be done by any of the Released Parties prior
to and including the date of this Amendment that, in any way directly or
indirectly, arise out of or in any way are connected to, or related to, this
Amendment, the Loan or the Loan Documents, including but not limited to, claims
relating to any settlement negotiations (all of the foregoing hereinafter called
the “Released Matters”). Borrower acknowledges that the agreements in this
Section 29 are intended to be in full satisfaction of all or any alleged
injuries or damages arising in connection with the Released Matters. Borrower
hereby represents and warrants to Lender that it has not purported to transfer,
assign or otherwise convey any of its right, title or interest in any Released
Matter to any other Person and that the foregoing constitutes a full and
complete release of all Released Matters.

 

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30. Expenses. In connection with the execution and delivery of this Amendment,
Borrower shall pay to Lender all reasonable fees and expenses, including without
limitation attorneys’ fees and out-of-pocket expenses incurred by Lender and its
servicer in the negotiation, preparation and implementation of this Amendment.

 

31. No Oral Modification. This Amendment may not be amended except upon the
written agreement of all of the parties hereto.

 

32. Binding Upon Successors and Assigns. This Amendment shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective
successors and permitted assigns under the Loan Agreement.

 

33. Headings. The headings of the sections and subsections of this Amendment are
for convenience of reference only and shall not be considered a part hereof nor
shall they be deemed to limit or otherwise affect any of the terms or provisions
hereof.

 

34. Validity of Provisions. Any provision of this Amendment which may prove
unenforceable under law shall not affect the validity of the other provisions
hereof.

 

35. Conflicting Provisions. In the event of any conflict between this Amendment
and the terms of the Loan Agreement, the Note, the Mortgage or any of the other
Loan Documents, the terms of this Amendment shall govern and control.

 

36. Entire Agreement. This Amendment and the documents executed and delivered in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof, and all understandings (oral or written)
and agreements heretofore had among the parties are merged in or contained in
this Amendment and such documents.

 

37. No Waiver. Except as may be expressly provided in this Amendment, nothing
contained in this Amendment shall be construed as a waiver by Lender of (i) any
rights or remedies available to Lender pursuant to the Loan Agreement or any of
the other Loan Documents or (ii) any past, present or future breach or default
on the part of Borrower under the Loan Agreement or the other Loan Documents.

 

38. Conforming Modifications. This Amendment modifies and amends the Loan
Agreement and the other Loan Documents. This Amendment shall constitute a “Loan
Document” as that term is defined in the Loan Agreement. Except as specifically
modified and amended hereby, all other terms, conditions, and covenants
contained in the Loan Agreement and the other Loan Documents shall remain
unmodified and in full force and effect.

 

39. Capitalized Terms. All capitalized terms used herein but not defined herein
shall have the meaning ascribed thereto in the Loan Agreement as modified by
this Amendment.

 

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40. Counterparts; Facsimile Signatures. This Amendment may be executed in one or
more counterparts with the same effect as if all parties hereto had signed the
same document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be necessary
to produce one such counterpart. Each party may rely upon a facsimile or other
electronic counterpart of this Amendment or any instrument delivered in
connection herewith signed by the other party with the same effect as if such
party had received an original counterpart signed by such other party.

 

41. Authority; Servicer. Lender hereby represents that as of the date hereof it
is the holder of the Loan subject to certain participation interests held by one
or more parties. Lender hereby represents and warrants that this Amendment has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting rights
of creditors generally and general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law). From and after the
date hereof, the Loan shall continue to be serviced by Archon Group, L.P. unless
and until Borrower is notified otherwise by Lender.

 

42. Exculpation. Section 12.24 of the Loan Agreement is hereby incorporated
herein by this reference with the same force and effect as if set forth herein
in its entirety.

 

43. Governing Law. This Amendment shall be governed by New York law, without
regard to conflicts of law principles.

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

BORROWER: COLONY RESORTS LVH ACQUISITIONS, LLC,
a Nevada limited liability company By:  

 

  Name:   Title:

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LENDER: GOLDMAN SACHS MORTGAGE COMPANY,
a New York limited partnership By:   Goldman Sachs Real Estate Funding Corp. its
general partner   By:  

 

    Name:     Title: